Final, Ch 13-16

Question 1

How is marginal product represent in the production function?

Answer 1

Slope of the function

Question 2

What happens when MC < AC?

Answer 2

AC is falling

Question 3

What happens in economies of scale?

Answer 3

Long Run average total cost falls as the quantity of output increases. More common when Q is low. Can be caused by increasing specialization of workers.

Question 4

What are explicit costs?

Answer 4

Input costs that require an outlay of money by the firm (paying wages to workers)

Question 5

Can perfectly competitive firms earn profits in the long run?

Answer 5

No

Question 6

In what period of costs are some input fixed and costs of these inputs fixed costs

Answer 6

Costs in the Short run

Question 7

In what market structures does P = MC?

Answer 7

Perfect competition

Question 8

What is higher because it ignores implicit costs?

Answer 8

Accounting profit

Question 9

Does Monopolistic competition produce welfare-maximizing level of output?

Answer 9

N

Question 10

What happens when AC is Falling?

Answer 10

MC < AC

Question 11

What is long Run average total cost falls as the quantity of output increases?

Answer 11

economies of scale

Question 12

How is Price associated with marginal cost in perfect competition?

Answer 12

P = MC

Question 13

What are the four types of market structure?

Answer 13

Monopoly, oligopoly, monopolistic competition, perfect competition

Question 14

What is accounting profit?

Answer 14

TR - Explicit costs,

Question 15

What is more likely to occur by increasing specialization of workers?

Answer 15

Economies of scale

Question 16

How is Price associated with marginal revenue in perfect competition?

Answer 16

MR = P

Question 17

What happens to inputs during costs in the long run?

Answer 17

All inputs are variable (e.g, firms can build more factories or sell existing ones)

Question 18

What is the rule for profit maximization?

Answer 18

MR = MC

Question 19

What happens to the production function as production rises?

Answer 19

Function gets flatter

Question 20

What are input costs that require an outlay of money by the firm?

Answer 20

Explicit costs

Question 21

Does Oligopoly produce welfare-maximizing level of output?

Answer 21

No

Question 22

In what market structures does MR = P?

Answer 22

Perfect Competition

Question 23

Can monopolistically competitive firms earn profits in the long run?

Answer 23

No

Question 24

What market structures do not produce welfare-maximizing level of output?

Answer 24

Monopoly, monopolistic competition, oligopoly

Question 25

What market structures Can have entry in the LR?

Answer 25

Perfect competition, monopolistic competition, oligopoly

Question 26

Does Perfect competition produce welfare-maximizing level of output?

Answer 26

yes

Question 27

How is Price associated with marginal revenue in Oligopolies?

Answer 27

MR < P

Question 28

Is price discrimination possible in oligopoly?

Answer 28

Yes

Question 29

Is price discrimination possible in Monopoly?

Answer 29

Yes

Question 30

How is Price associated with marginal cost in Monopolistic competition?

Answer 30

P > MC

Question 31

∆Q/∆L represents what?

Answer 31

Marginal product of Labor

Question 32

Is price discrimination possible in perfect competition?

Answer 32

No

Question 33

How is Price associated with marginal revenue in monopolies?

Answer 33

MR < P

Question 34

How is Price associated with marginal cost in Monopoly?

Answer 34

P > MC

Question 35

What is represented as TR - Explicit costs

Answer 35

Accounting profit

Question 36

What are implicit costs?

Answer 36

Input costs that do not require an outlay of money by the firm (opportunity cost of the owner’s time)

Question 37

Marginal product of labor is represented by what equation?

Answer 37

∆Q/∆L

Question 38

What firms cannot earn profits in the long run?

Answer 38

Perfect competition, monopolistic competition

Question 39

In what market structures is price discrimination possible?

Answer 39

Monopoly, oligopoly, monopolistic competition

Question 40

MR = MC represents what?

Answer 40

Profit maximization

Question 41

Can Monopolistic competition have entry in the LR?

Answer 41

Yes

Question 42

What market structures produce welfare-maximizing level of output?

Answer 42

Perfect competition

Question 43

What firms can earn profits in the long run?

Answer 43

Monopoly/oligopoly

Question 44

Can Monopolies have entry in the LR?

Answer 44

No

Question 45

Can monopolies earn profits in the long run?

Answer 45

Yes

Question 46

Can Oligopolies have entry in the LR?

Answer 46

Yes

Question 47

What happens when AC is minimum?

Answer 47

MC = AC

Question 48

What market structures Cannot have entry in the LR?

Answer 48

Monopoly

Question 49

What are Input costs that do not require an outlay of money by the firm?

Answer 49

Implicit costs

Question 50

Is price discrimination possible in monopolistic competition?

Answer 50

Yes

Question 51

What happens when AC is rising?

Answer 51

MC > AC

Question 52

Can Perfect competition have entry in the LR?

Answer 52

Yes

Question 53

What is higher? Accounting or Economic Profit?

Answer 53

Accounting profit, because it ignores implicit costs

Question 54

What is represented as TR - TC (Explicit costs + implicit costs)

Answer 54

Economic profit

Question 55

What is economic profit?

Answer 55

TR - TC (Explicit costs + Implicit costs)

Question 56

In what market structures is P > MC?

Answer 56

Monopoly, Monopolistic competition

Question 57

What is the slope of the product function?

Answer 57

Marginal product

Question 58

What equation represents total cost and average cost?

Answer 58

TC = TFC + TVC, A(T)C = AFC + AVC

Question 59

What happens when AC = MC?

Answer 59

AC is minimum

Question 60

What assumptions are made for production function?

Answer 60

Production is in short term, factory size is fixed, to increase production: hire more workers

Question 61

What happens to inputs during Costs in the Short Run?

Answer 61

Some inputs are fixed (e.g., factories land), costs of inputs are FC

Question 62

What happens when MC > AC?

Answer 62

AC is rising

Question 63

Does Monopoly produce welfare-maximizing level of output?

Answer 63

No

Question 64

What happens in diseconomies of scale?

Answer 64

Long Run average total cost rises as the quantity of output increases. Can be caused by increasing Increasing coordination problems in large organization. More common when Q is high

Question 65

In what market structures is MR < P?

Answer 65

Monopoly, monopolistic competition, oligopoly

Question 66

How is Price associated with marginal revenue in monopolistic competition?

Answer 66

MR < P

Question 67

What causes the production function to get flatter?

Answer 67

Happens as production rises

Question 68

In what market structures does P ≠ MC?

Answer 68

Monopoly, monopolistic competition