exam practice Flashcards
a firm that is threatened by the potential entry of competitions into a market builds excess production capacity. this is an example of …
a credible threat
a monopolists faces a MR function defined as MR = 20 - Q. the monopolists marginal cost is equal to $15 at all levels of output. how many units of output should the firm produce in order to max profits?
5
a nash equilibrium is always a dominant strategy equilibruim
false
a perfectly competitive firm is selling 150 units of output per week at a price of $10 . average total cost is $11, average variable cost is $8 and marginal cost is $12. from this info, it is clear that the firm,
can increase its profit by producing less output per week
business profit is equal to total revenue minus
explicit costs
if a firm raises its price by 10% and total revenue remains constant, then
the price of elasticity of demand for its output if unitary, marginal revenue is equal to 0, quantity demanded had decreased by 10 %
if a good is inferior, then
the income elasticity fo demand will be negative
if a firms average total costs are $200 per unit and average fixed costs are $70 per unit. what are the average variable costs?
$130 per unit
if the price elasticity of demand for a firms output is elastic, then the firms marginal revenue is
positive, and an increase in price will cause total revenue to decrease
if the price of a good increases while the quantitity of the good exchanged on markers decreases, then the most likely explanation is that there has been
a decrease in supply
if two goods are complements in consumption, then an increase in the price of one of these goods will cause
the demand for the other good to decrease
if we assume that the current equilibrium wage for low-skilled labor is $8 per hour and the min wage is increased from $5.75 to $7.25 per hour, then
unemployment among low-skilled workers will remain unaffected
in the short run, a monopolists will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cot and price is
less than average variable costs
learning curve represents the relationship btw
average variable costs and the cumulative number of units produced
managerial revenue is equal to price for which one of the following types of market structure
perfect competition
market equilibruim refers to a situation in which market price
is at a level where there is neither a shortage nor a surplus
graph with two downward slopes represents a
monoploists
highest line is
average total costs,
lowest line is
average fixed
suppose that the firm is an oligopolistic market engage is a price war and as a result all firms earn lower profits. game theory would describe tis as
a prisoner dilemma
a contribution margin per unit is equal to the
difference between price and average variable costs
the economic term for the costs associated with negotiating and enforcing a contract is
transactional costs
the law of demand refers to
inverse relationship btw the price of a commodity and the quality demanded for the commodity per time period
the long run average cost curve is at a minimum at a level of output where
the firm is expecting constant returns to scale, it is equal to long run marginal costs, and the long run average costs curve is tangent to the lowest point on a short run average total costs
the value of the firm is given by
present value of all expected future profits
when rent control is imposed above the market price it will
create no impact on the market
which of the following developments in the housing market will help increase housing prices
a decline in supply
which of the following is the best definition of economic profit
business profit minus implicit costs
which of the following short-run cost curves declines continuously
average fixed costs
which theory of profit holds that profit will be higher in industries where firms in the industry are able to prevent other firms from entering the industry
monopoly theory
