Economics 2

for a monopolist the maximizing rate of output occurs where P=MC rising marginal cost result from falling marginal physical product which of the following is equivalent to ATC (FC+VC which of the following are factors of production land labor, capital, entrepreneurship a firms total variable cost will depend on the prices of variable resourcesthe production techniques usedthe level of output the change in total output associated with one additional unit of input is the marginal physical product marginal cost is the change in total cost from producing one additional unit of output the only cost which do not change with the rate of output are fixed cost cost of production that change with the rate of outputare variable costs a u shaped average total cost curve implies first marginal cost below average total cost and then marginal cost above to the economist total cost includes explicit and implicit costs including a normal profit economies of scale explain why the average total costs decline as output increases in the long run the price charged by a profit maximizing monopolist in the long run occurs at a price on the demand curve above the intersection where mr=mc under perfect competition in the long run both allocative and productive efficiency are achieved which of the following is consistent with a competitive market zero economic profit in the long run if economic profits are used in a competitve market in the long run additional firms will enter the marketthe market supply curve will shift to the rightequilibrium price will fall as more firms enter examples of barriers to entry include patents in the long run competitive equilibrium prices tend to fall tot he minimum of the firms long run average total cost curve the demand curve confronting a competitive firm is horizontal while the market demand is downward sloping the essential characteristic of a perfectly competitive firm is that it is a price taker for competitive firms price is equal to marginal revenue the law of diminishing returns states that beyond some point ceteris paribus the marginal physical product of a factor of production diminishes as more of that factor is used diminishing returns are the result of a rising ratio of variable input to fixed input short runs profits are maximized at the rate of output where marginal revenue is equal to marginal cost at the profit maximizing output for a competitive firm marginal cost=price the marginal cost curve will be affected by changes in the price of factor inputs slopes upward to the right as output increases is the short run supply curve for a competitive firm a competitive firm should expand output when P>MC WHICH OF THE FOLLOWING IS A CHARACTERISTIC OF A PERFECTLY COMPETITIVE MARKET ZERO ECONOMIC PROFIT IN THE LONG RUN IN THE LONG RUN COMPETITIVE EQUILIBRIUM MARGINAL COST EQUALS THE MINIMUM OF THE ATC THE COMPETITIVE FIRM SHOWN IN THE ADJACENT GRAPH SHORT RUN TAKING A LOSS P=MC FOR FIRMS ONLY IN PERFECTLY COMPETITIVE MARKETS IF A FIRM DECIDES TO PRODUCE NO OUTPUT IN THE SHORT RUN ITS COST WILL BE ITS FIXED COSTS WHICH OF THE FOLLOWING IS CORRECT A PURELY COMPETITIVE FIRM IS A PRICE TAKER WHILE A MONOPOLIST IS A PRICE MAKER THIS FIRM IN THE THE THE GRAPH IS AN PERFECTLY COMPETITIVE MARKET JUST BREAKING EVEN ALL NATURAL MONOPOLY OCCURS WHEN LONG RUN AVERAGE COSTS DECLINE CONTINUOUSLY THROUGH THE RANGE OF DEMAND WITH RESPECT TO THE PURE MONOPOLIST S DEMAND CURVE IT CAN BE SAID THAT PRICE EXCEEDS REVENUE AT ALL OUTPUTS GREATER THAN 1 A MARKET WITH ONLY THREE OR FOUR DOMINANT FIRMS IS CALLED AN OLIGOPOLY A MARKET MADE UP OF MANY FIRMS EACH OF WHICH HAS SOME DISTINCT BRAND IMAGE IS CALLED MONOPOLISTIC COMPETITION TH OPPORTUNITY COST OF WORKING IS THE VALUE OF LEISURE TIME THAT MUST BE GIVEN UP THE MARGINAL REVENUE PRODUCT OF LABOR IS 3 UNITS PER HOUR PRODUCT PRICE IS CONSTANT AT $12 PER UNIT AND THE WAGE RATE IS $30 PER HOUR THEN AN ADDITIONAL UNIT OF LABOR SHOULD BE EMPLOYED WHICH OF THE FOLLOWING AFFECTS THE DEMAND OF LABOR THE PRODUCTIVITY OF WORKERS A FIRM SHOULD HIRE WORKERS UNTIL THE MRP IS EQUAL TO THE WAGE RATE marginal revenue product AN UPWARD SLOPING SUPPLY CURVE OF LABOR INDICATES SUPPLY OF LABOR AND THE WAGE RATES ARE DIRECTLY RELATED DEFINE THE TERM DERIVED DEMAND THE DEMAND FOR LABOR AND OTHER FACTORS OF PRODUCTION RESULTS FROM (DEPENDS ON) THE DEMAND FOR FINAL GOODS AND SERVICES PRODUCED BY THESE FACTORS