In microeconomics, the short run is defined as which of the following?

a period during which some inputs cannot be changed

the firm has time to change the level of all inputs.

A firm will earn a positive economic profit if:

its total sales revenue exceeds the sum of all its costs

Which of these are characteristic of perfect competition?

Low barriers to entry, Price taker

What is the defining characteristic of Oligopoly Markets?

Collusive agreements breakdown due to desire for more profit

The graph shows a production function. What doesthe corresponding total cost curve look like?

upward-sloping curve that increases at an increasing rate

Why would competition between Jeans brands be an example of monopolistic competition?

Most jeans are made the same but name brands can charge more

What of the following is NOT true for this firm?

They are operating at a profit.

Which of these are characteristic of a monopoly?

High barriers to entry, Price maker

Which of these are characteristic of perfect competition?

Identical products (perfect substitutes), Many, many small firms

any cost which doesn't change when a firm changes its output

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AP Microeconomics - Unit 3

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Production, Cost, Profit Maximization and basic Market Structures

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Questions 83

Answers

1
In microeconomics, the short run is defined as which of the following?
a period less than one year
a period during which some inputs cannot be changed
a period where fixed costs are greater than variable costs
a period between 1-4 years
2
On this short run cost curve graph, what does curve Y represent?
Avg Fixed Cost
Avg Variable Cost
Avg Total Cost
Marginal Cost
3
In the long run:
all inputs are more expensive.
the firm has time to change the level of all inputs.
inputs are neither variable nor fixed
at least one input is free.
4
A firm will earn a positive economic profit if:
its total sales revenue exceeds the sum of all its costs
it is regulated by government
it produces its output with the least-cost production method
its total revenue = the total cost of resources
5
Which is a source of monopoly power?
Free markets
Low profits
High elasticity of demand
Barriers to entry
6
Which of these is an example of perfect competition?
Electric company
Candy bar company
Fruit stand
Gas station
7
A PC is a price taker, making its demand curve..
Unit elastic
Perfectly inelastic
Even Dan should know this one!
Perfectly elastic
8
Using the Herfendahl-Hirschmann Index, which number best reflects an oligopoly?
10000
500
8700
0
9
At this quantity, the firm's explicit costs are equal to the firm's revenue
Q2
Q4
Q3
Q1
10
Which of these are characteristic of perfect competition?
Low barriers to entry
Price taker
Price maker
High barriers to entry
11
Firms determine their profit maximizing output at
MR=D
P=ATC
MR=MC
P=MC
12
In the long run, how many factors are variable?
All
None
Half
At least 1
13
Long run is inelastic
True
False
14
Which of the following is NOT a characteristic of monopolistic competition ?
Differentiated product
Few firms compete
Large market
Easy entry and exit
15
What do accountants look at when it comes to the costs of production?
Per unit costs
Total costs
Implicit costs
Explicit costs
16
The difference between total revenue and total explicit costs
variable costs
economic profit
fixed costs
accounting profit
17
In perfect competition, what happens in the long-run if a firm is making economic profit?
Firms will enter the market
Firms will neither leave nor enter the market
Firms will wait until the extra-long run to decide
Firms will leave the market
18
What is the defining characteristic of Oligopoly Markets?
Few buyers
Collusive agreements breakdown due to desire for more profit
Cartels that always result in benefiting both firms
Many sellers
19
The graph shows a production function. What doesthe corresponding total cost curve look like?
horizontal straight line
downward sloping curve
upward-sloping curve that increases at a decreasing rate
upward-sloping curve that increases at an increasing rate
20
In the long run ATC decreases (economies of scale) then increases (diseconomies of scale)
False
True
21
At what quantity do you produce? (Both perfect competition AND monopolies)
Where MR=MC
Where MR= ATC
Where MC=ATC
Where ATC=AR
22
Diminishing Marginal Returns begins at point
C
A
B
23
Why would competition between Jeans brands be an example of monopolistic competition?
Jeans companies often go out of business
none of the options are correct
starting a jeans company is expensive
Most jeans are made the same but name brands can charge more
24
The acronym that means price, demand & marginal revenue are the same in perfect competition:
Productive efficiency
MR. DARP
MR = MC
Allocative efficiency
25
Diminishing Marginal Returns occurs after which worker?
2st
3rd
5th
4th
26
In both monopolistic competition and perfect competition...
Firms sell identical goods
Firms are price takers
There is easy entry and exit
The marginal revenue curve and the demand curve are the same
27
On this short run cost curve graph, what does curve X represent?
Avg Fixed Cost
Avg Variable Cost
Avg Total Cost
Marginal Cost
28
All of the following are characteristics of Monopoly Markets EXCEPT:
Barriers to entry
Only good of its kind
No dead weight losses
One seller
29
What of the following is NOT true for this firm?
If they maximize profit TR will be $90.
They are operating at a profit.
They should produce 6 to maximize profit.
Marginal revenue is $15.
30
Which of these are characteristic of a monopoly?
Low barriers to entry
Price taker
High barriers to entry
Price maker
31
Which of these is an example of monopolistic competition?
Fruit stand
Gas station
Electric company
Candy bar company
32
If a firms's long run average total costs are rising it has entered
diseconomies of scale
economies of scale
constant returns to scale
33
Which of these are characteristic of perfect competition?
Identical products (perfect substitutes)
Many, many small firms
Unique product
One large firm
34
What is normal profit?
Zero Economic Profit
Total Revenue - Explicit Costs
Total Revenue - (Explicit + Implicit Costs)
Fixed Costs + Variable Costs
35
True or false: a monopoly is economically efficient
True
False
36
Price equals minimum Average Total Cost is the measure of
break even
productive efficiency
shut down
allocative efficiency
37
Price equals marginal cost is the measure of
allocative efficiency
shut down
productive efficiency
break even
38
Fixed costs are:
any cost which doesn't change when a firm changes its output
the costs of producing one more unit of capital
average cost multiplied by the firm's output
usually zero when a firm produce nothing
39
When does the law of diminishing marginal returns occur?
Only when the firm is perfectly competitive
In the short and long run
Only when the amount of labour is fixed
In the short run only
40
When marginal revenue becomes negative, total revenue must be
constant
decreasing
increasing
41
Profit maximization or loss minimization occurs at the output at which
MR=MC
MR=ATC
MR=AVC
P>TC
42
Which of the following is true of a firm’s short-run production function?
I, II and III only
I and IV only
I, II, and IV only
I and II only
43
If the Long Run Average Total Cost is rising then
The Marginal Cost curve is parallel to it
Firms have incentive to get bigger
There is diseconomy of scale
There is economy of scale
44
If a perfect competition firm's MR is greater than MC, how can the firm increase profits?
Decrease production
Decrease price
Increase price
Increase production
45
A firm's production function represents the conversion of _____ into ______.
inputs, outputs
labour, output
capital, output
labour, capital
46
Which of the following would the production function not include?
Quantity of Output
Quantity of Input
Number of workers
Marginal Cost
47
If a firm has total revenue of $100k and total costs of $60k (including opportunity costs) it has
$40k economic profit
$40k economic loss
broken even
$100k accounting profit
48
Which of these is an example of a monopoly?
Gas station
Fruit stand
Grocery store
Electric company
49
In perfect competition, additional revenue from producing one more unit always
> MR
= P
> MC
= MC
50
Diminishing marginal returns occurs after which worker? (CAREFUL)
1
5
2
4
51
This firm...
should shut down.
is in long run equilibrium.
is operating at a profit.
is operating at a loss.
52
At the profit maximizing quantity the ATC curve is experiencing
constant returns to scale
economies of scale
diseconomies of scale
53
The study of the costs and benefits of doing one more unit of an activity is known as
Opportunity cost
Marginalism
Entrepreneurship
Consumption
54
In economies of scale, what decreases as output increases?
Long Run Average Total Cost
Marginal Cost
Fixed Cost
Marginal Revenue
55
The Herfindahl-Hirschman Index is the _ of the percentage market share.
Cube
Sum
Negative
Square
56
Production possibilities curves are bowed because of
decreasing consumption
increasing marginal revenue
constant opportunity cost
increasing opportunity cost
57
Total cost / Quantity (output) =
average total cost
average variable cost
average fixed cost
total cost
58
As you add additional inputs to a fixed input at some point you'll experience smaller returns
law of supply
law of diminshing marginal utility
law of demand
law of diminishing marginal returns
59
How do you calculate Accounting Profit?
TR- ATC = AP
TR - EC = AP
TR - EC - IC = AP
TR - TC = AP
60
Which of these are characteristic of a monopoly?
Many, many small firms
Unique product
Identical products (perfect substitutes)
One large firm
61
What factor of production can be changed in the short run?
Capital
Entrepreneurship
Labor
Land
62
Which of the following best describes oligopoly market?
Few sellers with similar product and high barrier to entry
No competition among sellers and highbarriers to entry
Many sellers with identical products and nobarrier to entry
63
The marginal product of the sixth worker is
negative
15 units of output
180 units of output
30 units of output
64
Which of these is an example of an oligopoly?
Shoe store
Gas station
Fruit stand
Electric company
65
At point C on the graph the firm is beginning to enter
diminishing returns
negative returns
decreasing returns
increasing returns
66
In both monopolistic competition and perfect competition...
Firms are price takers
Firms sell identical goods
The marginal revenue curve and the demand curve are the same
There is easy entry and exit
67
If a firm's long run average total costs are remaining the same as it expands it is in
diseconomies of scale
economies of scale
constant returns to scale
68
A production function shows the relationship between inputs and
prices
outputs
none of the above
average total costs
69
Which is a characteristic of perfect competition?
No control over the price of goods
A few growers control the price of goods
Buyers control the price of goods
The largest seller controls the price of goods
70
How do you calculate Economic Profit?
TR - EC - IC = EP
TR - IC = EP
TR - TC = EP
P - TC = EP
71
All of the following are characteristics of perfect competition except
many firms
significant barriers of entry to the market
firms are price takers
identical products
72
Unrecoverable costs are called
sunk
variable
marginal
total
73
Economic profit
=ATC-AVC
=TR-TC
takes into account implicit and explicit costs.
Green means go
74
What is a business (firm) in perfect competition? (read all choices!)
B and C only
C. A firm produces a standardized good with many substitutes
B. A price-taker
A. A price-setter
75
How many firms are there in a monopoly
Not here
Below?
<--- Keep Looking
Only one-- it has total market control/ is price-setter
76
Which of the following best characterizes monopolistic competition?
Low barriers to entry and differentiated products
Small number of firms and efficiency
Large number of firms with high barriers to entry
Large number of firms with identical products
77
To maximize profit how many units should this firm produce?
3
$10
2
4
78
What is the highest possible Herfindahl-Hirschman Index number?
100
10,000
1
10
79
Profit Maximization in the SR can be achieved through all of the following EXCEPT
maximize profit by changing output
adjust output by adjusting variable resources
minimize loss by changing output
purchasing more fixed resources
80
What market is the small luxury car a part of if it has a 4 firm concentration ratio of 60%?
Oligopoly
Perfect competition
Monopoly
Monopolistic Competition
81
On this short run cost curve graph, what does curve Z represent?
Avg Fixed Cost
Avg Variable Cost
Marginal Cost
Avg Total Cost
82
An oligopoly is characterized by
More than 10 firms that produce different products
fewer than 10 firms that control the market
1 firm that controls the market
A large number of firms that have no control over price
83
Diminishing Marginal Returns to an Input
Too many mints makes Owee too minty
Too many hands on the keyboard produces less “Brad’s beard”
Too many cookies makes Matt sick
Too many Mr. Clifford videos makes ECON class smarter

AP Microeconomics - Unit 3 Flashcards | StudBud