Micro Economics

Front 1

Implicit costs involves direct cash payment for use of a resource

Back 1

False

Front 2

All other things constant, higher implicit costs result in lower accounting profit

Back 2

false

Front 3

Which of the following is NOT an explicit cost?

Back 3

Value of a firm owner's time

Front 4

Opportunity of a resource includes

Back 4

Both explicit and implicit costs

Front 5

Difference between a firm's total revenue and what must be paid to attract resources from their best alternative use

Back 5

Economic profit

Front 6

John moved his office from the building he was renting downtown to the carriage house he now owns in the back of his house. How will his cost change?

Back 6

Explicit falls, Implicit rises

Front 7

Accounting profit =

Back 7

Economic profit + Implicit Cost

Front 8

The reasons economists assume that firms try to maximize economic profit is:

Back 8

Over time, firms that don't have profits will have difficulty securing financing to survive

Front 9

A firm's opportunity cost of using resources provided by the firm's owner are called

Back 9

implicit costs

Front 10

Unlike implicit cost, Explicit cost

Back 10

Actual cash payments

Front 11

If all of my savings are invested in my consulting company, an increase in the interest rate increases my implicit cost

Back 11

True

Front 12

Opportunity Cost usually

Back 12

is involved in calculating economic profit

Front 13

Which of the following would not appear on a firm's accounting statement?

Back 13

Implicit Cost

Front 14

Zipco's accounting profit =

Back 14

Total Revenue - Explicit Costs

Front 15

If Baloney store earns more than a normal profit, its

Back 15

Economic Profit is positive

Front 16

Suppose a professor gives up her teaching job to devote her time to writing textbooks. IF Salaries of professors rise,

Back 16

Her economic profit from textbooks will fall

Front 17

In the short run, Producer Surplus =

Back 17

TR-VC

Front 18

Resources are efficiently allocated when production occurs at that point of which

Back 18

Marginal Cost

Front 19

Productive efficiency refers to

Back 19

Production of a good at lowest long-run average

Front 20

Production efficiency exists when the least cost combination of inputs is used to produce output

Back 20

True

Front 21

Economic Profits in a competitive industry are signals that

Back 21

attract new firms into the industry

Front 22

Whether the firm produces or shuts down in short run, fixed cost =

Back 22

Sunk Costs

Front 23

When an industry supply curve increases enough to erase economic profit

Back 23

Entry of new firms and expansion of existing firms stop

Front 24

In perfect competition, each firm's output is a large fraction of Total Market Supply

Back 24

False

Front 25

Which of the following is not necessarily a characteristic of perfect competition?

Back 25

Low Prices

Front 26

Perfectly competitive firms respond to changing market conditions by varying their

Back 26

Output

Front 27

Which of the following is likely to be present in a perfectly competitive market?

Back 27

Firms producing identical products

Front 28

Suppose Thelma and Louise both sell fried green tomatoes in a perfectly competitive market. If Louise increases her output

Back 28

The price Thelma can charge is unaffected

Front 29

Anything that prevents new firms from competing on an equal basis w/ existing firms is called a barrier to entry

Back 29

True

Front 30

A monopolist is

Back 30

A single seller of a product w/ no close substitutes

Front 31

Patents stimulate investment by

Back 31

giving investors incentive to incur upfront costs when developing new products

Front 32

Which of the following prevents potential competitors from entering into a monopolist market?

Back 32

Legal Restrictions

Front 33

Willy Stan obtains a patent on his new invention the bipod. After 20 years, he will

Back 33

Eventually earn no more than a normal profit

Front 34

Which of the following could not bar entry into an industry?

Back 34

Diseconomies of Scale

Front 35

After a corporate merger, Rebecca became a CEO of a monopoly firm. She was surprised to learn that one benefit of being a monopoly was that

Back 35

She was in a good position to capture the fruits of innovation

Front 36

Cell phone companies offer pricing plan alternatives in order to convert some consumer's surplus

Back 36

into profit

Front 37

If Ripco owns a building where it operates, then if the uses of the building preclude it from renting to anyone else

Back 37

it results in an opportunity cost

Front 38

Which of the following is not a characteristic of perfect competition?

Back 38

Low prices

Front 39

Market Structure

Back 39

Influences the forms of competition among firms

Front 40

Perfectly competitive firms are price takers because

Back 40

each firm is too small compared to the market to be able to affect price

Front 41

The demand curve for the output of a perfectly competitive firm is

Back 41

Perfectly elastic

Front 42

Adam's apples, a small firm supplying apples in a perfectly competitive market decides to cut its production in half this year. As a result

Back 42

The market price will not be affected

Front 43

A midwestern wheat farmer faces a horizontal demand curve because

Back 43

it is so small relate to the market as a whole that it has no impact on market price

Front 44

Which of the following is true of a monopoly?

Back 44

There are no close substitutes for the product being produced

Front 45

Innovation is the process of turning an invention into a marketable product

Back 45

True

Front 46

Patent laws promote technical progress in all of the following ways except one

Back 46

They allow other firms to copy successful products as soon as they are marketed

Front 47

Which of the following is not considered a barrier to entry?

Back 47

Diseconomies of scale

Front 48

Which of the following would not be considered a Natural Monopoly?

Back 48

Automobile Industry

Front 49

Jewelers are willing to hold large inventories of Diamonds because

Back 49

Given monopoly control of the market of Diamonds they are confident the price of Diamonds will not plummet rapidly

Front 50

A Monopolist demand curve is

Back 50

Identical to the market demand curve

Front 51

Average Revenue = Change in total revenue / Change in the quantity of output produced

Back 51

False

Front 52

If a firm's demand curve slopes downward, the firm's

Back 52

Marginal revenue will generally be less than price

Front 53

Irving R. Associates is granted a patent for a new product for which there are no close substitutes. Which of the following must be true of the profit maximum quantity?

Back 53

Marginal Revenue is Positive