ECON

The elimination principle, a general feature of competitive markets, tells us that:

Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit that the monopolist is earning

The Invisible Hand Property 2 maintains that

What condition is necessary in a constant cost industry

(Table: Competitive Firm) Refer to the table. The profit maximizing output for this firm is:

If markets are not competitive

I]n capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization...competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.” This process is called

Suppose that you own two farms on which to grow corn. In order to lower the cost of production, you determine to increase production on Farm 1 and reduce it on Farm 2. This implies that the marginal cost of production on Farm 1 is:

(Table: Barrels of Oil 2) Refer to the table. The maximum profit available to the company is:

Table: Oil Pumps) Refer to the table. Suppose that this market is producing six barrels of oil from Oil Pump One and two barrels of oil from Oil Pump Two. What happens to the total costs of production if we produce one less barrel of oil from Oil Pump One and one more barrel of oil from Oil Pump Two?

In a competitive industry, entry and exit decisions:

In a competitive market, each unit of output is produced at the lowest marginal cost possible for that level of production, so the total industry costs of production are minimized.

If Tom sells 500 sandwiches for $7 and has an average cost of $5, what is his profit?

In a monopoly market:

(Table: Barrels of Oil 2) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil?

(Table: Barrels of Oil 2) Refer to the table. What is the marginal cost of producing the seventh barrel of oil?

What happens in a competitive industry when more firms enter

A perfectly competitive industry exists under which of the following conditions?
I. The product sold is similar across firms.
II. There are many sellers, each small relative to the total market.
III. There are many sellers, each with total assets less than $2 million.
IV. The threat of competition exists from potential sellers that have not yet entered the market.

The more inelastic the demand curve for a product is, the:

The elimination principle illustrates the idea that:

The long run is the period after all exit and entry has occurred.

Competitive firms want to enter industries in which

Invisible Hand Property 1 says that without any single person in charge, free markets will result in equal ______ and price will be set to it.

A student trying to maximize her semester GPA already studies as many hours as possible but can perhaps use that time more efficiently. A marginal hour spent studying economics will raise her GPA by 0.05. A marginal hour spent studying literature will raise her GPA by 0.02. Should she reallocate her time?

In a competitive equilibrium, firms earn ______ economic profits

The oil industry is an increasing cost industry because

In competitive markets, the demand curve faced by the individual firm is:

Figure: Regulated versus Unregulated Monopolist) Refer to the figure. Calculate the change in consumer surplus from an unregulated monopoly to a regulated monopoly.

A free market can naturally allocate production across firms in an industry to minimize total costs due to:

(Figure: Profits and Competitive Firms) Refer to the four panels in the figure. Which panel shows a competitive firm making zero economic profits?

(Figure: Costs) Use the figure. At a price of $20, the firm earns profit of:

If an industry is highly profitable, it is an indication that:

Which of the following statements is TRUE?
I. A free market minimizes the total costs of producing output.
II. In a free market, P = MC1 = MC2 = . . . MCN.
III. Every firm faces the same price in a competitive market

(Table: Barrels of Oil 2) Refer to the table. How many barrels of oil should the company produce to maximize profit?

(Table: Oil Pumps) Refer to the table. Suppose that we want to produce seven barrels of oil. To minimize costs, we should produce:

To maximize profits, a firm in a highly competitive industry should set its price:

Figure: Maximum Willingness to Pay) Refer to the figure. What is the maximum price that the consumer is willing to pay for 100 units?

What is the Invisible Hand Property 1?

Table: Oil Pumps) Refer to the table. An oil producer owns two pumps: Oil Pump One and Oil Pump Two. If the market price of oil is $20 per barrel, how many barrels of oil get produced?

The marginal cost of producing the first three bushels of corn on Farm 1 is $1.00, $1.25, and $1.33, respectively. For Farm 2, the marginal cost of producing the first three bushels of corn is $0.90, $1.15, and $1.30. Three bushels should be produced if the market price is $1.15 per bushel

Which of the following statements is TRUE?

Which of the following represents the nature of a monopolist's deadweight loss?

If a firm has revenues of $100, explicit costs of $50, and implicit costs of $50, its economic profit is

Refer to the figure. How much profit is the firm making at the profit-maximizing quantity?

Economic profit differs from accounting profits because of its inclusion of:

If every firm knows its marginal cost but a central planner cannot know every firm's marginal cost, then:

In a constant cost industry, P = AC = $20. Which sequence of events follows an increase in demand?

Consider industries X and Y. Industry X has total revenue of $100 million and total costs of $77 million. Industry Y has total revenue of $80 million and total costs of $40 million. We should expect that:

Total cost equals the sum of fixed costs and average costs.

Figure: Maximum Willingness to Pay) Refer to the figure. What is the profit-maximizing quantity for this monopolist?