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business
intermediate microeconomics
Microeconomics 10th Edition Stephen Slavin - Solutions
A monopoly is a fi rm that produces. (LO1)
This fi rm is . (LO2)a) making a profi t of $25b) making a profi t of 0c) taking a loss of $25d) taking a loss of $30e) taking a loss of $50
If this fi rm produced at optimum effi ciency, it would have an output of . (LO2)a) less than 10b) 10c) more than 10, but less than 14d) 14e) more than 14
Which is the most accurate statement? (LO6)a) The rationale for natural monopoly has been strengthened by deregulation.b) Your local phone and electric companies will probably continue to be monopolies for at least another 50 years.c) Deregulation and competition tend to lower costs.d) Natural
Each of the following is an example of successfully setting a standard except . (LO5)a) Microsoft Windowsc) the VHS formatb) QWERTYd) the electric car
The monopolist produces at the minimum point of her ATC curve . (LO2)a) all the timec) some of the timeb) most of the timed) none of the time
Which statement is true? (LO7)a) The monopolist is just as driven as the competitive fi rm to control costs and use resources effi ciently.b) The monopolist often charges his customers higher prices and provides poorer service than he would if he had competitors.c) Growing foreign competition has
The average American CEO earns times the earnings of the average worker. (LO7)a) 10 to 15d) 300 to 600b) 25 to 40e) 1,000 to 1,200c) 100 to 150
An example of government ownership of a monopoly is . (LO6)a) the Tennessee Valley Authorityb) the New York State Public Service Commissionc) AT&Td) General Motors
Which of the following is a natural monopoly? (LO6)a) The National Football Leagueb) A local phone companyc) DeBeers Diamond Companyd) IBM
Which statement is true? ( LO4 , 5 )a) It is impossible for monopolies to exist in the United States.b) Once a monopoly is set up, it is impossible to dislodge it.c) Monopolies can be overcome only by market forces.d) Monopolies can be overcome only by the government.e) None of these statements is
The basis for monopoly in the automobile industry would most likely be . (LO4)a) control over an essential resourceb) economies of scalec) legal barriers
The most effi cient output is found . (LO3)a) where MC and MR crossb) at the bottom of the ATC curvec) when the demand and MR curves are equald) where the ATC and demand curves cross
Price is always read off the curve. ( LO1 , 2 )a) MCc) ATCb) MRd) demand
The monopolist produces . ( LO1 , 2 )a) where MC equals MRb) at the minimum point of ATCc) at maximum outputd) when price is highest
The monopolist’s demand and marginal revenue curves . (LO1)a) are exactly the sameb) are completely differentc) coincide only at one unit of outputd) cross
Which statement is true? (LO1)a) All monopolists’ products have close substitutes.b) Most fi rms in the United States are monopolies.c) There are no monopolies in the United States.d) A monopoly is a fi rm that produces all the output in an industry.e) None of these statements is true.
Practical Application: Walmart wants to open a superstore near you. List the reasons why you think they (a) should be allowed to do so; (b) should not be allowed to do so.
If the fi rms in a competitive industry are earning profi ts, in the long run new fi rms will. But if most fi rms are losing money, then in the long run some of the fi rms will . (LO6)
The perfect competitor operates at the point of her average total cost curve in the long run. (LO5)
In the short run the perfect competitor may make a or take a ; in the long run the perfect competitor will . (LO5)
A perfect competitor would never charge more than market price because ; the perfect competitor would never charge less than market price because . (LO5)
The perfect competitor’s demand curve is a; the marginal revenue curve is a. ( LO1 , 5 )
The determination that a product is identical takes place in . (LO3)
Under perfect competition there are so many fi rms that no one fi rm has any infl uence over. (LO3)
If a perfectly competitive fi rm sells 10 units of output at a price of $10 per unit, its marginal revenue per unit is . ( LO1 , 5 )a) $1d) more than $1, but lessb) $10 than $10c) $100e) more than $10, but less than $100
When an industry is in long-run equilibrium economic profi ts are and will be entering or leaving the industry. (LO5)a) zero, someb) zero, nonec) positive, somed) positive, none
Statement I: No fi rm will stay in business more than one year if it is losing large sums of money.Statement II: Many dot-coms have lost money in the short run. (LO3)a) Statement I is true, and statement II is false.b) Statement II is true, and statement I is false.c) Both statements are true.d)
Statement I: The advent of the Internet has brought“perfect knowledge” closer to reality.Statement II: The cost of businesses buying their supplies online is convenient, but they generally pay more than they would if they used customary channels. (LO3)a) Statement I is true, and statement II is
The fi rm’s most effi cient output . (LO7)a) is OKb) is OLc) is OMd) cannot be determined on this graph
Profi t per unit is . (LO3)a) MFd) FJb) MGe) GJc) MJ
Output . (LO3)a) is OKb) is OLc) is OMd) cannot be found on this graph
Total profi t . (LO3)a) is the rectangle bounded by EFJIb) is the rectangle bounded by EFGHc) is the rectangle bounded by HGJId) cannot be found on this graph
The most effi cient output . (LO7)a) is always equal to the most profi table output for the perfect competitorb) is never equal to the most profi table output for the perfect competitorc) is equal to the most profi table output for the perfect competitor only in the long rund) is equal to the most
The perfect competitor’s demand and marginal revenue curves are . (LO5)a) identical only in the long runb) identical only in the short runc) never identicald) always identical
Figure 2 shows the perfect competitor. (LO5)
Under perfect competition profi ts are always zero in the long run. (LO5)a) accountingb) economicc) both economic and accountingd) neither accounting or economic Use the choices below to answer questions 30 and 31.a) in the long run making a profi tb) in the long run breaking evenc) in the long run
In the long run the perfect competitor will. (LO5)a) make a profi tb) break evenc) take a loss
In the short run the perfect competitor will probably. (LO5)a) make a profi t or break evenb) take a loss or break evenc) make a profi t or take a loss
Each of the following is a characteristic of perfect competition except . (LO4)a) many fi rmsb) identical productsc) perfect mobilityd) varying prices charged by different fi rms
Which statement about the perfect competitor is true? (LO4)a) She may charge a little below market price to get more customers.b) She may charge a little above market price to imply that her product is superior.c) She will always charge the market price.d) None of these statements is true.
The perfect competitor’s demand curve is. (LO4)a) always horizontalb) always verticalc) sometimes horizontald) sometimes vertical
The determination of whether two products are identical . (LO4)a) is done by market researchb) takes place in the minds of the buyersc) is done by the governmentd) is done by the sellers
The perfect competitor is . (LO4)a) a price maker rather than a price takerb) a price taker rather than a price makerc) a price taker and a price makerd) neither a price maker or a price taker
Under perfect competition, . (LO4)a) many fi rms have some infl uence over priceb) a few fi rms have infl uence over pricec) no fi rm has any infl uence over price
Which one of these markets would defi nitely not be perfectly competitive? (LO4)a) Foreign currencyb) Wheatc) HDTVsd) The New York Stock Exchange
The most effi cient output of a fi rm is located. ( LO1 , 7 )a) at the shut-down pointb) at the break-even pointc) where MC 5 MRd) when the vertical distance between AVC and ATC is at a maximum
If the price is between the shut-down point and the break-even point, the fi rm is in the. (LO6)a) short run making a profi tb) short run taking a lossc) long run making a profi td) long run taking a loss
A business fi rm is in the short run. (LO6)a) virtually all the timed) rarelyb) most of the timee) neverc) occasionally
At an output of 5, MC 5 $49 and ATC 5 $52. At an output of 6, MC 5 $59 and ATC 5 $53. At the breakeven point, ATC is . (LO6)a) above $53b) $53c) between $52 and $53d) $52e) less than $52
A fi rm will operate at that output at which MC 5 MR. ( LO1 , 6 )a) only in the short runb) only in the long runc) in both the short run and the long rund) in neither the short run nor the long run
The fi rm’s long-run supply curve runs along its curve. (LO6)a) ATCc) MCb) AVCd) MR
Which statement is true? (LO2)a) Accounting profi ts are greater than economic profi ts.b) Economic profi ts are greater than accounting profi ts.c) Accounting profi ts are equal to economic profi ts.
When marginal cost is rising but is less than average total cost, we are defi nitely below the. (LO6)a) shut-down pointb) break-even pointc) maximum profi t point
The lowest point on a fi rm’s short-run supply curve is at the . (LO6)a) break-even pointb) shut-down pointc) most profi table output pointd) lowest point on the marginal cost curve
In Figure 1 , at which output is the fi rm operating most effi ciently? (LO7)a) 30c) 46b) 39d) 50
A fi rm with explicit costs of $2,000,000, no implicit costs, and total revenue of $3,000,000 would have. (LO2)a) zero economic profi tb) zero accounting profi tc) an accounting profi t and an economic profi t of$1,000,000d) a higher economic profi t than an accounting profi te) a higher accounting
Practical Application: I’m going to make you an offer you can’t refuse. I’ll sell you my highly profi table indoor batting and driving range for just $1,000,000. I clear$100,000 a year in profi ts, and the place practically runs itself. I’m the manager, but basically I just hang out all day
Practical Application: Calculate the economic cost of your college education. How much more is it than the accounting cost?
Practical Application: Why might a fi rm produce at a loss in the short run rather than shut down? Make up an example to illustrate your answer.
Explain why a perfectly competitive fi rm won’t advertise.
What is the difference between the fi rm’s short-run supply curve and its long-run supply curve? Make up an example to explain your answer.
Total revenue divided by output equals. (LO8)
When AVC is less than price, in the short run the fi rm will . (LO8)
A fi rm will operate in the short run as long as are greater than ; a fi rm will operate in the long run as long as are greater than . (LO8)
In the short run a fi rm has two options:(1) or (2) . (LO3 , 8 )
The short run is the length of time it takes all fi xed costs to become . (LO3)
At zero units of output, total cost is equal to. (LO1)
Variable costs change with . (LO1)
In the long run a business has two options: to or to . (LO3 , 8 )
Which of the following is the most accurate statement? (LO1 , 8 )a) Virtually no one getting married thinks that considering whether or not to have a large wedding is mainly an economic decision.b) Most American families holding large weddings get by for less than $2,000.c) When making a wedding,
When total output is maximized, marginal output is. (LO6)a) risingb) fallingc) positived) negativee) zero
A production function shows a fi rm how to. (LO6)a) maximize profi tb) maximize outputc) minimize lossesd) minimize output
The marginal cost curve intersects the average variable cost curve at the . (LO5)a) shut-down pointb) break-even pointc) maximum profi t point
We fi nd price by dividing . (LO8)a) total revenue by outputb) output by total revenuec) total cost by outputd) output by total cost
Each of the following provides an example of economies of scale except . (LO7)a) the computer software industryb) the pharmaceutical industryc) Adam Smith’s pin factoryd) movie and TV productione) the services of psychiatrists, personal trainers, barbers, and beauticians
The law of diminishing returns may also be called the law of . (LO6)a) diminishing marginal outputb) diminishing positive returnsc) negative returnsd) increasing returns
As output rises, the difference between ATC and AVC. (LO5)a) risesb) stays the samec) falls
Which statement is false? (LO4 , 5 )a) AFC plus AVC equals ATC.b) Marginal cost equals AVC at an output of one.c) AVC equals ATC at an output of one.d) None is false.
In Figure 1, if you want to produce an output of 200, in the long run you will choose a plant whose size is represented by . (LO7)a) ATC 1b) ATC 2c) ATC 3d) ATC 4e) ATC 5
In Figure 1 , if you want to produce an output of 100, in the long run you will choose a plant whose size is represented by . (LO7)a) ATC 1b) ATC 2c) ATC 3d) ATC 4e) ATC 5
Average variable cost is found by dividing. (LO4)a) variable cost by outputb) output by variable costc) marginal cost by outputd) output by marginal cost
The marginal cost curve intersects at its/their minimum point(s). (LO5)a) the ATC, but not the AVCb) the AVC, but not the ATCc) both the ATC and the AVCd) neither the ATC nor the AVC
As output expands to larger and larger numbers, continues to decline. (LO5)a) AFCb) AVCc) ATCd) MC
In the short run, a fi rm has two options:. (LO8)a) stay in business or go out of businessb) stay in business or shut downc) operate or go out of businessd) operate or shut down
Parkinson’s Law is an example of. (LO7)a) economies of scaleb) diseconomies of scalec) Adam Smith’s pin factoryd) the fi rm’s search for its most profi table output
Which statement is true? (LO8)a) A fi rm will operate in the short run when total revenue exceeds fi xed costs.b) A fi rm will operate in the short run when total revenue exceeds variable costs.c) A fi rm will shut down when total cost exceeds total revenue.d) None of these statements is true.
In the short run, . (LO3)a) all costs are fi xed costsb) all costs are variable costsc) some costs are fi xed costsd) all costs are marginal costs
Total cost is the sum of . (LO1)a) marginal cost and fi xed costb) marginal cost and variable costc) variable cost and fi xed cost
Which of these statements is false? (LO8)a) When the fi rm shuts down, output is zero.b) When variable cost is zero, output is zero.c) When output is zero, total cost is zero.d) None of these is false.
When output is 0, fi xed cost is and variable cost is . (LO1)a) 0, 0b) 0, more than 0c) more than 0, 0d) more than 0, more than 0
Which of the following is most likely to be a variable cost? (LO1)a) Real estate taxesb) Rental payments of IBM equipmentc) Interest on bonded indebtednessd) Fuel and power payments
If AVC is declining, then . (LO5)a) marginal cost must be less than AVCb) marginal cost must be greater than ATCc) AVC must be greater than AFC
When MC is rising but still below ATC, then. (LO5)a) ATC is decliningb) ATC is constantc) ATC is risingd) there is no way of determining what ATC is doing
The decision to shut down is made in. (LO8)a) both the short run and the long runb) neither the short run nor the long runc) the long rund) the short run
Practical Application: You have decided to open some movie theaters. Should you open six 200-seat theaters at six different locations, or open the six 200-seat theaters in one large building? Explain your answer in terms of economies of scale and diseconomies of scale.
Can a fi rm losing money go out of business in the short run? If it can’t, explain why not.
How would you distinguish between the short run and the long run?
Suppose Table 2 shows your demand schedule for CDs. (a) What is your total utility from four CDs?(b) What is your marginal utility from the fourth CD?(c) If the price is $2, how much will your consumer surplus be? ( LO1 , 3 , 6 )
Suppose Table 1 shows your demand schedule for cans of soda. (a) What is your total utility from three cans of soda? (b) What is your marginal utility from the third can of soda? (c) If price were $1.50, how much would your consumer surplus be? ( LO1 , 3 , 6 )
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