review of paper Flashcards
economics when should a firm reduce output?
If the firm is producing at a quantity where MC > MR, like 90 or 100 packs
economics when should a firm increase output
As long as marginal revenue exceeds marginal cost,
In the language of economics, rent is
income over and above what would be necessary to incentivize someone to do the job (or
perform the task) he or she is being paid to do.
The highly successful American investor, Warren Buffet, is often concerned about whether or not a firm has
a “moat” around it (what Mr. Elzinga called a “BTE”). Why is a “moat” (or BTE) of economic relevance to
a firm?
It deters new entry, allowing a firm to earn larger economic profits.
unionized market
governs the distribution of income between workers and firms and the unemployment rate,
sherman antitrust law
The Sherman Antitrust Act of 1890 is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman
- If a monopolist must lower the price on all units in order to sell an additional unit,
. price will always be greater than marginal revenue.
. Suppose, as a result of a long-run adjustment in a perfectly competitive industry to a change in demand, price
and output both rose. Therefore, demand must have ________ in this ______ industry
increased; increasing cost.
- Which of the following is not one of the channels through which a labor union in the U.S. may raise wages
c. Promoting free trade between the U.S. and other countries
What are the ways that the labour union in the US may raise wages?
d. Restricting immigration of labor into the U.S.
e. Supporting “union shops” as opposed to “right to work” laws
a. Restricting the supply of non-union labor
b. Increasing the demand for union labor
In the theory of monopolistic competition
a. the seller picks its optimal output the same way a monopoly would.
b. in long-run equilibrium, economic profits for a seller are zero.
c. entry is relatively easy in such markets.
- What is the relationship between marginal cost and marginal product?
When marginal product increases, marginal cost falls.
To say that people make decisions at the margin suggests that
they weigh the additional costs and benefits of various activities before they make
a purchase.
. At various points along the production possibilities frontier
the maximum output from available resources is obtained
The production possibilities frontier can be used to show all of the following except
the best combination of goods and services for an economy.
In a market economy, a surplus of shoes will cause
a decrease in the price of shoes
If New York City expects that an increase in bus fares will raise mass transit revenues,
it must think that the demand for bus travel is
c. inelastic.
If fixed cost at Q = 100 is $130, then
d. fixed cost at Q = 200 is $130
Fixed cost don’t vary with output
Ron Martin advertises stereos on late-night television with the following line: “We
don’t have to worry about high overhead because our volume is so great.” Ron Martin
can make this statement because of his declining
d. average fixed cost.
The long-run average cost curve is the locus of
the least-cost segments of the short-run average total cost curves for each output
level
Which of the following is true of marginal revenue for a monopolist that charges a
single price?
P > MR, because the monopolist must decrease price on all units sold in order to
sell an additional unit
Suppose a single firm supplies all the ceramic windlasses in the U.S. The demand curve
that firm faces is
d. elastic at the profit-maximizing quantity.
A monopolist’s short-run supply curve is
d. nonexistent.
If the price of air conditioners falls, in the short-run there will be
. an increase in the quantity of air conditioners demanded.
You’re scheduling your weekend plans and trying to figure out what to do Friday night.
You have three options: Option 1) staying in your dorm and reading, which you value at
$100, Option 2) going to the basketball game, which you value at $80, and Option 3)
going to a concert, which you value at $50. What is the opportunity cost of each event?
d. Option 1) = $80, Option 2) = $100, Option 3) = $100
When a union sets a wage above the market equilibrium, each firm hiring from the union
faces
. a perfectly elastic supply curve for labor.
When all of the returns to a resource are in the form of economic rent,
the supply curve for that resource must be vertical.
If a perfectly competitive industry is in long-run equilibrium, the price of the product equals the minimum of:
*average total cost.
Which of the following statements is true about a downward-sloping demand curve that is a straight line?
*The slope remains the same, but elasticity falls as you move down the demand curve.
If the total utility curve is a straight line, the marginal utility curve would be a:
*a flat line with a slope of zero.
The U shape of the average total cost curve is because:
*average productivity rises and then falls.
If a monopolist engages in perfect price discrimination
b. the demand curve becomes the firm’s marginal revenue curve.
Which of the following is correct regarding the labor supply curve?
As the wage rate increases, the income effect can overcome the substitution effect after a certain
wage rate is reached, causing the labor supply curve to “bend backwards.”
what determines the price of a stock
The future stream of profits is what determines the price of a stock and the value of a company
Semi-strong Form:
All public information about publicly traded corporate stocks will be reflected in their current share prices.
