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62 Cards in this Set
- Front
- Back
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Total cost includes:
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Only implicit cost
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What is an example of an implicit cost?
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Forgone salary
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Economic profit is equal to:
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Total revenue minus total cost
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By adding two more workers, a firm can increase its output by 10 units. What is the marginal product of a worker?
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5 units
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Short run is a time period when:
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there is at least one fixed input
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In long run production, there exists economies of scale if:
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Lower average cost is associated with higher output
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In a perfect competition market, which of below is true?
a. there is a small number of firms b. products are identical c. there are barriers to entry |
The products are identical
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In perfect competition market, the market price is $10/unit. What is the marginal revenue for a firm?
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$10/unit
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In the short run, a firm in a perfect competition market:
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may lose money or make positive profit
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Monopoly is market structure characterized by:
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1. a single seller
2. a unique product 3. impossible entry into the market |
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Which of the market below is the closest to a monopolistic competition market?
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restaurant
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GDP is defined as:
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the market value of all the final goods and services produced in a nation
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Which item below is not a final good?
a. a tire which is assembled into a car b. a hamburger c. the medical care provided by a doctor |
a tire which is assembled into a car
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Which of the expenditure below is not personal consumption expenditure?
a. expenditure on food by Tom b. the rent Tom pays for housing c. Tom’s $1 million expenditure on a new home |
Tom’s $1 million expenditure on a new home
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Gross private investment consists of__
a. the addition to the inventory by General Motor b. the construction of a new plant by General Motor c. none of the above d. a and b |
Both a and b
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In 2006, the total US government expenditure is $2500 billion; the government consumption expenditure is $1800 billion. What is the government investment?
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$700 billion
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In 2008, the personal consumption expenditure is $100 in a country; the private domestic investment is $30; Government expenditure is $20; Import is $12; Export is $15. By the expenditure approach, what is the GDP of the country?
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$153
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Which of below is a weakness of the GDP?
a. the neglect of environmental quality b. the neglect of leisure time c. the omission of underground economy d. all of the above |
all the above
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In 2008, nominal GDP is $11 trillion; GDP deflator is 110. What is the real GDP in 2008 (output measured by the based year price level)?
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$10 trillion
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The phase of business cycle from a trough to the next peak is called____
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Recovery
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Leading economic indicators change before real GDP changes. Which of below is a leading indicator?
a. new orders for plant and equipment b. personal income minus transfer payments c. unemployment rate |
new orders for plant and equipment
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In 2009, the civilian labor for in the US was 150 million. The employment was 14 million. What is the unemployment rate?
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6.6%
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A full time student is____
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not part of the labor force
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Tom just moved from Knoxville to Johnson City. He is looking for jobs now. Which of below is correct?
a. Tom experiences frictional unemployment b. Tom experiences structural unemployment c. Tom experiences cyclical unemployment |
Tom experiences frictional unemployment.
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Total variable cost:
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total cost - fixed cost
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What is the difference between perfect competition and monopolistic competition?
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In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
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A firm that is a price maker faces:
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a perfectly elastic demand curve.
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If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel, how many bushels would Farmer Brown sell?
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none
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One of the requirements for a monopoly is that
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there is a unique product with no close substitutes
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A monopoly has the ability to
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set the price for its product
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Firms in monopolistic competition have demand curves that are
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downward sloping
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Product differentiation means
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making a product that is slightly different from products of competing firms.
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In the long run in monopolistic competition, firms
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earn a normal profit but not an economic profit.
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Which of the following describes a barrier to entry?
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anything that protects a firm from the arrival of new competitors
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Patents
i. encourage the invention of new products and production methods. ii. generally discourage innovation iii. are exclusive rights granted to the inventor of a product or service. |
i and iii
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What is the main difference between the profit-maximizing actions a perfectly competitive firm can take and those a monopoly firm can take?
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A competitive firm can only change output while a monopoly can change output and price.
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Recently in a small city, building contractors lobbied the city council to pass a law requiring all people working on residential dwellings be licensed by the city. Why would the contractors lobby for this requirement?
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to create a legal barrier to entry
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In monopolistic competition, each firm supplies a small part of the market. This occurs because
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there are a large number of firms
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In monopolistic competition, the products of different sellers are assumed to
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similar but slightly different.
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The United Company competes with many other firms each producing slightly different products. Firms freely enter and exit this industry. The type of industry United Company operates in is ____.
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monopolistic competition.
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A differentiated product has
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close but not perfect substitutes
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A oligopoly is a market structure characterized by:
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1. few firms
2. barriers to entry. 3. either homogeneous or differentiated product. |
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The characteristics that describe a perfectly competitive industry include
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many firms selling an identical product
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One requirement for an industry to be perfectly competitive is that in the industry there
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are many firms for whom the efficient scale of production is small
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Normal profit is defined as
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the return to entrepreneurship.
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If a struggling perfectly competitive furniture store in Detroit shuts down, it incurs an economic loss equal to its
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total fixed cost.
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A perfectly competitive firm's short-run supply curve is
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its marginal cost curve above the AVC curve.
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A monopoly
A) is not protected by barriers to entry. B) produces a good with no close substitutes. C) faces a downward-sloping demand curve. D) Both answers A and B are correct. E) Both answers B and C are correct. |
Both answers B and C are correct.
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Which of the following is a legal barrier to entry?
i) public franchise ii) government license iii) patent |
D) i, ii, and iii
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Marginal revenue is defined as
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the change in total revenue brought about by a one-unit increase in quantity sold.
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What does monopolistic competition have in common with perfect competition?
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a large number of firms and freedom of entry and exit
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The women's dress industry is monopolistically competitive because each firm has
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a very small market share.
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Product differentiation means
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products sold by different firms are slightly different.
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Concentration ratios
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measure whether the market is dominated by a small number of firms
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When a firm maximizes its profit, which of the following is correct for firms in monopolistic competition and perfect competition?
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P = MC = MR for firms in perfect competition and P > MC = MR for firms in monopolistic competition.
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How is a firm in an oligopoly similar to a monopoly?
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Both types of firms operate behind natural or legal barriers to entry.
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Monopolistic competition market structure is characterized by:
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1. many small sellers
2. differentiated product 3. easy market entry and exit |
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Cyclical unemployment
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unemployment caused by the lack of jobs during a recession
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Structural unemployment
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unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities
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Frictional unemployment
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unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initally entering the labor force, re-entering the labor force, or seasonally unemployed
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Accounting profit
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only counts explicit cost and gives a large profit
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National income
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GDP-Depreciation
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