26. The most important determinant of price elasticity of supply is (Points: 1) price elasticity of demand technological conditions such as how rapidly costs increase when a firm increases its output whether the production process relies heavily on capital or on labor the number and closeness of available substitutes
27. If the cross-price elasticity of demand between two goods is 0, (Points: 1) a price change for one good will be exactly offset by a price change for the other neither demand curve would shift following a change in the price of one of the goods there is no income effect between the two goods the demand for each good is price inelastic
28. Which of the following is not an explicit cost? (Points: 1) sales taxes the value of a firm owner's time insurance premiums the cost of utilities, such as gas and electricity
29. Economic profit is defined as (Points: 1) wages plus interest minus rent total revenue minus implicit costs total revenue minus implicit and explicit costs total revenue plus implicit costs
30. The law of diminishing marginal returns states that (Points: 1) long-run average cost declines as output increases if the marginal product is above the average product, the average will rise as units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable input eventually diminishes as a person consumes more of a good, the marginal satisfaction from that good eventually diminishes
31. Which of the following is true of the MC curve? (Points: 1) It intersects the ATC curve at its minimum, but it does not intersect the AVC curve at its minimum. It intersects the AVC curve at its minimum, but it does not intersect the ATC curve at its minimum. It intersects both the ATC and the AVC curves at their minimums. It intersects both the ATC and the AFC curves at their minimums.
32. Economies of scale can be caused by (Points: 1) all of the following short-run increases in marginal productivity the use of larger, more specialized machines higher information costs as a firm expands
33. For a perfectly competitive firm operating at the profit-maximizing output level in the short run, (Points: 1) MR = TR MC = price MC = ATC MC = AVC
34. If price is less than its minimum average variable cost, a perfectly competitive firm that continues to produce in the short run (Points: 1) cannot cover any of its variable cost incurs a loss greater than its fixed cost can cover all of its fixed cost and some of its variable cost can cover all of its variable cost and some of its fixed cost
35. A perfectly competitive firm in the short run determines its quantity supplied at various prices by using (Points: 1) the portion of its marginal cost curve rising above its average total cost curve the portion of its marginal cost curve rising above its average variable cost its average variable cost curve its average total cost curve
36. Firms achieve productive efficiency in the long run by (Points: 1) striving to minimize fixed cost striving to maximize revenue producing at their minimum long-run average cost producing at their minimum long-run marginal cost
37. To achieve allocative efficiency, firms (Points: 1) strive to minimize fixed costs strive to maximize profits produce at their minimum long-run average cost produce the output consumers want most
38. The term allocative efficiency refers to (Points: 1) the level of output where MC = AVC the equality between MR and MC the production of those goods and services most valued by consumers the point where marginal revenue equals average total cost
39. Which of the following does a monopoly control, that a perfectly competitive firm does not control? (Points: 1) how much to produce technology what price to charge what inputs to use
40. A monopolist (Points: 1) can charge whatever price it wants charges more than almost any consumer is willing to pay is constrained by marginal cost in setting price is constrained by demand in setting price
41. If a nondiscriminating monopolist is operating at an output level where price equals average total cost, we can conclude that (Points: 1) economic profit is $0 the firm is not maximizing profit the firm should go out of business in the long run the firm is not earning its normal profit
42. Barriers to entry (Points: 1) prevent monopolies from earning profit in the long run prevent monopolies from earning profit in the short run may allow monopolies to earn profit in the long run prevent government from regulating a monopoly
43. Unlike firms in a perfectly competitive industry, monopolists have control over (Points: 1) the price they charge for the product the quantity of output they produce the prices they pay for resources the quantities of various resources which are used improvements in technology
44. Price discrimination occurs when a monopolist charges (Points: 1) both c and d different prices to different buyers for different products different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer
45. In the short run, a monopolistically competitive firm is (Points: 1) guaranteed to earn zero economic profit guaranteed to earn an economic loss not guaranteed any level of economic profit guaranteed to earn economic profit
46. Which of the following is unique to oligopoly among all the market structures? (Points: 1) product differentiation profit maximization mutual interdependence advertising
47. A brand name may contribute to oligopolists' economic profit by (Points: 1) shifting the demand curve leftward shifting the supply curve leftward overcoming economies of scale acting as a barrier to entry
48. Collusion occurs when (Points: 1) a firm chooses a level of output to maximize its own profit firms get together to maximize joint profits firms refuse to follow their price leaders firms petition their U.S. senators for favors
49. Game theory is most useful in understanding the decision-making behavior of firms in which type of industry? (Points: 1) perfect competition monopoly natural monopoly oligopoly
50. The term strategy in terms of game theory refers to (Points: 1) the relationship between price and marginal cost the relationship between individual firm demand curves and the market demand curve each firm's game plan in making decisions the interrelationship between price and marginal revenue
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