MC. What should the firm do to maximize its;profits?;The firm should do nothing? it;wants to maximize the difference between MR and MC in order to maximize its;profits.;The firm should increase output.;The firm should increase price.;The firm should hire less labor.;Question;45;The law of diminishing returns;begins first to affect a firm's short-run cost structure when;average variable cost begins to;increase.;marginal cost begins to increase.;average cost begins to increase.;average fixed cost begins to;decrease.;Question;46;A firm that seeks to maximize its;revenue is most likely to adhere to which of the following?;MR = MC;MR =0;MR MLC, it means that a;firm should;use less labor.;use more labor.;increase its fixed capacity.;decrease its fixed capacity.;Question;50;Which of the following is not;true when a monopoly market is in equilibrium?;Price > MR.;Price = Average Revenue.;Price > MC.;Consumer well being would be;improved if less resources were allocated to the industry in which the;monopoly operates.;Question;51;If a firm experiences constant;returns to the variable input in the short run;marginal product and average;variable product will be equal over the range of output in question.;marginal product will be greater;than average variable product, but the two will become more equal as output;increases.;marginal product will be less than;average variable product, but the two will become more equal as output;increases.;marginal product will be greater;than average variable product, and the difference between the two will become;larger as output increases.;Question;52;Which of the following statements;about the short-run production function is true?;MP always equals AP at the maximum;point of MP.;MP always equals zero when TP is;at its maximum point.;TP starts to decline at the point;of diminishing returns.;When MP diminishes, AP is at its;minimum point.;None of the above is true.;Question;53;Assume the four major grocery stores;in a large metropolitan area decide to meet secretly to fix prices for meat. It;would be easiest to maintain this arrangement when;demand for meat and fresh;vegetables is falling.;individual firms are able to offer;secret price discounts to selected buyers.;the number of additional;competitors is very small.;the cost conditions for the four;firms differ substantially.;Question;54;An implicit cost is defined as;the amount by which the money;spent on an input to production exceeds its opportunity cost.;the difference between an input's;explicit cost and its actual cost.;the opportunity cost of using a;resource that is not explicitly paid out by the firm.;the amount by which economic;profit exceeds accounting profit.;Question;55;Financial Risk occurs due to;variations in returns which;is induced by leverage;is due to the ups and downs of the;economy;is due to changes in government;regulations;is a result of changes in exchange;rates;Question;56;If the income elasticity coefficient;equals 1, the proportion of a consumer's income spent on a given product after;a change in income will be _________ the proportion of income spent on that;product prior to the income change.;greater than;equal to;less than;either greater than or equal to;Question;57;A tax that is imposed as a specific;amount per unit of a product is a(n);sales or ad valorem tax.;excise or specific tax.;income tax.;compound duty.;Question;58;The derived demand curve for a product;component will be more inelastic;the larger is the fraction of;total cost going to this component.;the less essential is the;component in question.;the more inelastic is the demand;curve for the final product.;the more elastic are the supply;curves of cooperating factors.;Question;59;The fact that the firms in an;oligopoly are mutually interdependent means that each firm;must consider the reactions of its;competitors when it sets the price for its output.;produces a product that is;similar, but not identical, to the products of its competitors.;faces a perfectly elastic demand;curve for its product.;produces a product that is;identical to the products of its competitors.;Question;60;In the market for pizza, which of;the following would cause a change in quantity supplied, as opposed to a change;in supply?;A decrease in the price of pizzas.;A decrease in the price of sub;sandwiches.;A decrease in the price of;ingredients used to make pizza.;An increase in the number of pizza;restaurants.;Question;61;Which of the following statements is;false?;Economic profit is the difference;between total revenue and the full opportunity cost of all the resources used;in production.;The owners of a firm must be;compensated for the use of their funds, because those funds have alternative;uses.;Accounting profit is typically;measured as the difference between total revenue and explicit costs.;Economic profit is the difference;between total revenue and implicit costs.;Question;62;When a firm increased its output by;unit, its AFC decreased. This is an indication that;the law of diminishing returns has;taken effect.;MC < AFC.;AVC < AFC.;the firm is spreading out its;total fixed cost.;Moving to another question will save this response.;Question;63;Much of the empirical evidence on;the behavior of costs for real-world firms suggests that;there is no relationship between;the marginal and average variable costs of production.;for many firms, marginal and;average variable costs are constant over wide ranges of output.;average costs functions are;U-shaped as suggested by economic theory.;for most firms, marginal costs are;declining in the range in which the firms operate.;Question;64;The possible alternatives for an;oligopoly range from the monopoly case with ________ to the perfectly;competitive case with ________.;low output, high output;high output, low output;no cooperation among the firms;much cooperation among the firms;low prices, high prices;low profits, high profits;Question;65;When price is less than average;variable cost at the profit-maximizing level of output, a firm should;shutdown, because it will lose;nothing in that case.;shutdown, because it cannot even;cover all of its variable costs let alone its fixed costs if it stays in;business.;continue to produce the level of;output at which marginal revenue equals marginal cost if it is operating in;the long run.;continue to produce the level of;output at which marginal revenue equals marginal cost if it is operating in;the short run.;Question;66;Nike is a firm in monopolistic;competition. If Nike is earning an economic profit from new cross-training;shoe, over time the demand for these shoes;increases as firms exit the;market.;does not change as new firms enter;the market.;decreases as firms exit the;market.;decreases as new firms enter the;market.;increases as new firms enter the;market.
Paper#55817 | Written in 18-Jul-2015Price : $31