7.4-1, 8.2-1, 8.1-1, 8.3-2, 8.3-3

Question 1

What are the fixed costs in the long run?

Answer 1

Their are no fixed costs or inputs in the long run. All inputs are variables

Question 2

Labor-Intensive Technology

Answer 2

when a firm uses more labor (Workers) relative to capital (tools)

Question 3

Capital-Intensive Technology

Answer 3

uses more capital (tools) relative to labor (workers)

Question 4

Scale or Size of operation is a choice during the long or short run

Answer 4

Long Run. You cannot change the size of the operation during the short run, only add workers

Question 5

Is the firm able to downsize in the long run?

Answer 5

Yes, the firm can downsize or grow in the long run. All inputs are variables

Question 6

Long Run

Answer 6

A period of time in which there are no fixed inputs and no fixed costs. all inputs can be varied

Question 7

A firm can choose either a capital-intensive technology or a labor-intensive technology in the _____ _____.

Answer 7

Long Run

Question 8

In ____ _____, a firm can only add or eliminate labor

Answer 8

Short Run

Question 9

Choice of Scale

Answer 9

a firm can choose to build new factories, open new offices, or close existing operations during the long run

Question 10

Cost minimizing technique

Answer 10

the combination of labor and capital to produce output at the lowest cost

Question 11

T/F: A wheat farm that uses migrant workers to plant and harvest the crops is capital-intensive?

Answer 11

False. This farm is labor-intensive

Question 12

change in quantity demanded

Answer 12

a change in a good’s own price leads to a change in quantity demanded, a move along a given demand curve

Question 13

competitive market

Answer 13

a market where the many buyers and sellers have little market power- each buyer’s or seller’s effect on market price is negligible

Question 14

market

Answer 14

the process of buyers and sellers exchanging goods and services

Question 15

market demand curve

Answer 15

the horizontal summation of individual demand curves

Question 16

market supply curve

Answer 16

a graphical representation of the amount of goods and services that suppliers are willing and able to supply at various prices

Question 17

individual demand curve

Answer 17

a graphical representation that shows the inverse relationship between price and quantity demanded

Question 18

individual demand schedule

Answer 18

a schedule that shows the relationship between price and quantity demanded

Question 19

Total Revenue

Answer 19

the price it charges for its product multiplied by the quantity of its products it sells ina given period.

Question 20

Market Power

Answer 20

the ability to influence the price of your product

Question 21

A firm has market power if it can…

Answer 21

raise the price of its product without losing all of its customers to a competitor. or can lower its product without attracting the entire market

Question 22

Perfectly competitive

Answer 22

an industry is perfectly competitive if it’s made up of a large number of small firms each selling an identical product

Question 23

in a perfect competitive market a firm is going to have to price its product _________ the competition

Answer 23

Price their product right with the competition

Question 24

No barriers to entry

Answer 24

the firm can enter and exit whenever it likes

Question 25

P*

Answer 25

The market price or going equilibrium price

Question 26

In a perfect competition market a firm's demand curve will be ___________ at the market equilibrium price

Answer 26

horizontal. The firm could make and sell all of the product they wanted at the market equilibrium price

Question 27

Any firms profit is:

Answer 27

the difference between total revenue and total cost

Question 28

T/F: Firms that can set the product prices alone are called "price takers"

Answer 28

False - Firms with market power, such as monopolies, can set the price of a product are referred to as "price setters"

Question 29

The competitive firm will not sell at a price lower than the market price because...

Answer 29

They can sell all they want at the market price

Question 30

A competitive firm cannot sell at a price _______ the market price because _____ will sell it at the market price and the original firm will not sell any of its product

Answer 30

at a price above market price because competition will sell it at market price.

Question 31

Price takers

Answer 31

a firm that have no market power and have to accept their product's price as set by the market

Question 32

price setter

Answer 32

a firm with market power that can raise the price without losing all customers and lower price without attracting the entire market

Question 33

all firms sell identical products and customers do not distinguish between products in ___________ __________

Answer 33

perfect competition

Question 34

A firm that has ____ ____ is usually large relative to the size of the market

Answer 34

market power

Question 35

Competitive firm's demand curve is a _______ ____ at the equilibrium price

Answer 35

horizontal line

Question 36

Profit is :

Answer 36

TR-TC and (PRICE x Q) - TC

Question 37

A firm is in a competitive market when:

Answer 37

it is both unable to influence the price of its product and the firm takes as given the price of its products set by supply and demand in the market

Question 38

Capital intensive

Answer 38

production that uses a large amount of capital

Question 39

labor intensive

Answer 39

production that uses a large amount of labor

Question 40

A profitable, competitive firm divides its total revenue (TR) between its:

Answer 40

variable cost (VC), it fixed costs (FC), and its profit

Question 41

marginal costs

Answer 41

cost of labor per output unit

Question 42

equilibrium quantity

Answer 42

the quantity at the intersection of the market supply and demand curves; at the equilibrium quantity, the quantity demanded equals the quantity supplied

Question 43

equilibrium price

Answer 43

the price at the intersection of the market supply and demand curves, at this price, the quantity demanded equals the quantity supplied

Question 44

shortage

Answer 44

a situation where quantity demanded exceeds quantity supplied

Question 45

surplus

Answer 45

a situation where quantity supplied exceeds the quantity demanded

Question 46

Total Revenue (TR)

Answer 46

TR= p *y or price and quantity sold

Question 47

to determine profitability, a competitive firm must compare its average total cost (ATC) to the product price (T/F)

Answer 47

True

Question 48

Total profit for a firm is:

Answer 48

total revenue minus total cost (pq - TC)

Question 49

a firm in a competitive market will try to produce the output level for which:

Answer 49

marginal cost equals marginal revenue

Question 50

a firm that produces output at the level where marginal cost (MC) equals price and MC is increasing will be profitable (T/F)

Answer 50

true

Question 51

in 2001, producing widgets cost the firm $100,000. THe firm sold the weidgets for $125,000. What was the firm's profit or loss?

Answer 51

$25,000 profit

Question 52

rule for maximizing profit for a competitive firm

Answer 52

is the firm produces up to the point at which marginal cost equals price

Question 53

total revenue on a graph is representited as the:

Answer 53

area of the rectangle