Econ 202 – Quiz 5 – KEY
The short run is
a period of time in which some inputs are fixed.
The competitive firm produces at the output level where
price equals marginal cost.
What is the average total cost of producing 45 units of output?
$2.44
Which of the following is NOT a characteristic of a monopoly?
A monopolist is a price-taker.
Which of the following is not a characteristic of perfect competition?
a heterogeneous product
Which of the following is NOT a barrier to entry for monopoly?
a large number of existing firms in a market
If the long-run average total cost curve for a firm is downsloping, then it indicates that there
are economies of scale.
A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases,
we can expect:
firms to exit the market.
Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf
ball production, Kevin has marginal costs equal to $2. If the market price of golf balls is $1, Kevin
should:
decrease the level of golf ball production.
Harry’s Hotdogs is a small street vendor business owned by Harry Huggins. If Harry works 8
hours and makes 100 hotdogs and incurs a total cost of $160, his average variable cost is
Cannot be determined without knowing the variable cost of each hotdog.
The curve labeled "X" represents the firm's
marginal cost curve.
If a firm suffers an economic loss, its:
price is less than its average total cost.
The primary goal of a firm in a capitalistic market is to
maximize profits.
If the marginal contribution to a series is less than the average,
the average is falling.
A firm that has market power has the ability:
to affect the price of its own product.
A firm will not shut down in the short run as long as:
price exceeds average variable cost at the level of output where marginal revenue equals
marginal cost.
The difference between accounting profits and economic profits relates to
the manner in which costs are defined.
An increasing-cost industry is one in which the average cost of production ________ as the total
output of the industry ________.
increases; increases
One difference between the short run and the long run is that perfectly competitive firms:
can earn positive, negative, or zero economic profit in the short run, but will earn zero
economic profit in the long run.