A characteristic of the long run is
there are fixed inputs.
all inputs can be varied.
plant capacity cannot be increased or decreased.
there are both fixed and variable inputs
Sony has invested $80 million in a new flat-panel television technology called
(OLED). In 2008, Sony did not produce and sell a quantity of OLED sets to realize
economies of scale. To reach economies of scale, Sony must
produce and sell more sets at a lower average total cost.
produce and sell fewer sets at a lower average total cost.
produce and sell more sets at a higher average total cost.
produce and sell fewer sets at a lower average total cost.
Which of the following is a characteristic of a monopoly?
It is easy for new firms to enter the market.
There is only one seller in the market.
The product is not unique.
The firm has no control over price.
A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000.
The price of each good is $10. Calculate the firm's short-run profit or loss.
loss of $6,000
profit of $6,000
profit of $30,000
There is insufficient information to answer the question.
If the total cost of producing 20 units of output is $1,000 and the average variable cost
is $35, what is the firm's average fixed cost at that level of output?
$65
$50
$15
It is impossible to determine without additional information.
When the average total cost is $16 and the total cost is $800, then the
number of units the firm is producing is
impossible to determined with the information given.
12,800.
784.
50.
If, when a firm doubles all its inputs, its average cost of production decreases, then
production displays
diminishing returns.
economies of scale.
diseconomies of scale.
declining fixed costs.
Perfect competition is characterized by all of the following except
heavy advertising by individual sellers.
identical products.
sellers are price takers.
a horizontal demand curve for individual sellers.
An individual seller in perfect competition will not sell at a price lower than the
market price because
demand for the product will exceed supply.
the seller would start a price war.
the seller can sell any quantity she wants at the prevailing market price.
demand is perfectly inelastic.
In perfect competition
the market demand curve and the individual's demand are identical.
the market demand curve is perfectly inelastic while demand for an individual
seller's product is perfectly elastic.
the market demand curve is perfectly elastic while demand for an individual
seller's product is perfectly inelastic.
the market demand curve is downward sloping while demand for an individual
seller's product is perfectly elastic.
Which of the following is a factor of production that generally is fixed in the
short run?
raw materials
labor
a factory building
water
Which of the following is the best example of a short run adjustment?
A local bakery purchases another commercial oven as part of its capacity expansion.
Lulu's hires two more associates.
Smith University completed negotiations to acquire a large piece of land to build its new library.
Toyota builds a new assembly plant in Texas.
Ahmed sells salads. The cost of ingredients (lettuce, vegetables, spices, etc.) to make a salad is $2.00.
Ahmed pays his employees $60 per day. He also incurs a fixed cost of $120 per day. Calculate Ahmed's
total cost per day when he produces (sells) 50 salads using two workers?
$100
$124.40
$220
$340
If average total cost is $50 and average fixed cost is $15 when output is 20 units, then
the firm's total variable cost at that level of output is
$1,000.
$700.
$300.
impossible to determine without additional information.
One reason why, in the last four decades, the number of new auto makers in
the world has been very small compared to the past is that
the automobile cannot be improved upon in any way by new producers.
new auto makers cannot obtain necessary inputs to produce new cars.
governments restrict who can produce automobiles.
new producers cannot match the economies of scale of existing auto makers.
Economies of scale can lead to an oligopolistic market structure because
if larger firms have lower costs, new small entrants will not be able to produce at
the low costs achieved by the big established firms.
if economies of scale are insignificant, only a few firms are able to produce at
the low costs achieved by the big established firms.
a few firms can force rivals to produce at low levels of output.
a few firms can use high profits to keep out new entrants.
If a 35 percent increase in price of iphones led to a 42 percent decrease in quantity
demanded, then the price elasticity of demand for iphones is
none of these answers are correct
neither elastic nor inelastic
inelastic
Elastic
If we find that the price elasticity of demand for hamburgers is -1.7 and the
price elasticity of demand for textbooks is -.8 which of the following can we
say is true?
an increase in the demand for hamburgers will produce an increase in demand
for textbooks - they are related goods
consumers like hamburgers more than they like textbooks
the law of demand doesn't apply because textbooks are a need
the demand for hamburgers is more elastic than the demand for textbooks
Which of the following could explain why the demand for salt is inelastic?
Salt is not easily found in the world.
Salt is a luxury for high income consumers but a necessity for low income
consumers.
Households devote a very small portion of their income to salt purchases.
Salt is a luxury good.
What happens when the quantity demanded is very responsive to price changes?
the percentage change in quantity demanded will be greater than the percentage
change in price
the percentage change in quantity demanded will be less than the percentage
change in price
the percentage change in quantity demanded will be equal to the percentage
change in price
the percentage change in quantity demanded will be unrelated to the change in
price
Your teacher likes to drink coffee. But if the price goes up even a little, your teacher
says she will drink tea instead. What is your teacher's price elasticity of demand for
coffee?
Your teacher can't live without coffee
Coffee is a necessity
Coffee is inelastic
Coffee is elastic
A monopolist faces
a perfectly elastic demand curve.
a perfectly inelastic demand curve.
a horizontal demand curve.
a downward-sloping demand curve.
A monopoly differs from monopolistic competition in that
a monopoly has market power while a firm in monopolistic competition does not
have any market power.
a monopoly can never make a loss but a firm in monopolistic competition can.
in a monopoly there are significant entry barriers but there are low barriers to
entry in a monopolistically competitive market structure.
a monopoly faces a perfectly inelastic demand curve while a monopolistic
competitor faces an elastic demand curve
Which of the following is an implicit cost of production?
interest paid on a loan to a bank
wages paid to labor plus the cost of carrying benefits for workers
the utility bill paid to water, electricity, and natural gas companies
rent that could have been earned on a building owned and used by the firm
Consumers demand 20 cups of Starbucks coffee when the price is 14 dirhams. The
prices rises to 18 dirhams and consumers now demand only 16 cups of coffee.
Calculate the price elasticity of demand.
1.88
0.88
1.2
1.13
Badr's Bookshop sold 40 books at a price of 40 dhs each. When it lowered its price to
20dhs, the quantity sold increased to 60 books. Calculate the absolute value of the
price elasticity of demand. Use the midpoint formula.
0.6
0.53
1.67
1.0