Micro Final Flashcards
LEARN (55 cards)
according to economists, the primary objective of a firm is to
maximize profit
which of the following is true about business operating in the short run?
it cannot change its fixed costs
the marginal cost curve crosses the average total cost curve at
a point where the marginal cost curve is rising, the efficient scale, the minimum point on the average cost curve
- all of the above
for a coffee shop, which of the following would be considered a fixed cost?
the salary
Teagan used to work as a marketing manager earning $50,000 per year but left to open her own bakery. To purchase the necessary equipment, she withdrew $25,000 from her savings (which earned 4 percent interest) and borrowed $35,000 from her brother, to whom she pays 5 percent interest annually. Last year, she spent $30,000 on ingredients and had total revenue of $100,000. She asked Brynn the accountant and Emily the economist to calculate her profit.
a. brynn says her profit is 100,000 and emily says her profit is 49,000
b. brynn says her profit is 70,000 and emily says profit is 20,000
c. brynn says her profit is 68,250 and emily says she lost 17,250
d. brynn says her profit is 35,000 and emily says she lost 40,000
c is the closest answer (there was not a correct answer)
frank owns a bookstore. which of the following costs would be considered by an economist but not by an accountant?
the salary frank could earn as a officer in the Army
in the short run, a business can change which of the following?
the number of workers it hires
the dill-lightful pickleball club has revenue equal to $300,000, total fixed costs equal to be $100,000, and total variable costs equal to $280,000. Based on this information, the dill-lightful pickleball club should:
stay open because shutting down would be more expensive
assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $10. Its average total cost is $4. Its profit is equal to:
$4,800
(10-4) (800)
which of these curves is the competitive firm’s short run supply curve?
the marginal cost curve above average variable cost
the term shutdown
refers to a short-run decision that a firm might make, whereas the term exit refers to a long-run decision that a firm might make
the exit of existing firms out of a competitive market will
decrease the market supply and increase market price
in the long run, if the owner of a firm in a competitive industry has positive opportunity costs, she
will earn zero economic profits but positive accounting profits
which of the following is a characteristic of a monopoly?
a unique product, barriers to entry, one seller
- all of the above
which of the following is most likely to operate as a monopoly?
a. a regional electricity provider
b. a clothing boutique
c. a ride-sharing company
d. a coffee shop chain
a
one difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where:
price equals marginal cost, while a monopolist produces where price exceeds marginal cost
which of the following is NOT an example of a barrier to entry?
a. a tech firm holds a government issues patent on a groundbreaking processor design
b. a company secures exclusive rights to a rare natural resource used in manufacturing batteries
c. a major film studio owns the copyright to a blockbuster movie franchise
d. a local baker sells a chocolate chip cookie that she makes with her own secret recipe
answer: d
excess capacity is:
an example of the the inefficiencies of monopolistically competitive markets
monopolistic competition is characterized by which of the following attributes?
free entry
product differentiation
many sellers
when an oligopoly market reaches a Nash equilibrium,
a firm will have chosen its best strategy, given the strategies chosen by other firms in the market
the equilibrium PRICE in markets characterized by oligopoly is
lower than in monopoly markets and higher than in perfectly competitive markets.
the equilibrium QUANTITY in markets characterized by oligopoly is
higher than in monopoly markets and lower than in perfectly competitive markets
a distinguishing feature of an oligopolistic industry is the tension between
cooperation and self-interest
what is a common impact of tariffs on consumers and producers in a domestic country?
consumers face higher prices, while domestic producers are protected from foreign competition
