Econ 2106 - MicroeconomicsCollins - Spring 20021. Economic efficiency is achieved at a particular output level if: A) marginal cost is as low as possible. B) average fixed cost is as low as possible. C) average total cost is as low as possible. D) average variable cost is as low as possible. 2. To achieve economic efficiency, managers should: A) use the highest quality inputs. B) use the least costly input combination. C) hire the most highly skilled employees. D) use the most sophisticated technology. 3. A firm can use 50 workers and 10 machines, 70 workers and 9 machines, or 75 workers and 9 machines to produce 40 chairs. If each worker costs $20 and each machine is rented for $500, the economically efficient input combination is: A) 50 workers and 10 machines. B) 70 workers and 9 machines. C) 75 workers and 9 machines. D) none of these input combinations would be efficient. 4. Since labor is relatively abundant in Bangladesh while land and capital are not, the economically efficient method of producing rugs would probably: A) be labor intensive. B) not be labor intensive. C) be capital intensive. D) be land intensive. 5. A firm finds that producing 30,000 vases costs $180,000 while producing 40,000 vases costs $200,000. This pattern might be explained by: A) economies of scope. B) economies of scale. C) diseconomies of scale. D) diminishing marginal productivity. Page 16. The law of diminishing marginal productivity does not apply in the long-run because: A) some inputs are fixed in the long-run. B) some inputs are variable in the long-run. C) no inputs are fixed in the long-run. D) all inputs are fixed in the long-run. 7. Economies of scale occur when a firm's long-run average total cost curve is: A) upward sloping. B) vertical. C) downward sloping. D) horizontal. Use the following to answer questions 8-10:Quantity Cost per unit15 16 17 18 19 20 21 22 23 24485052545658606264Averagetotal costa bc8. Given the long-run average total cost curve above, the minimum efficient level of production will be 18 if the price the seller expects is roughly: A) $50. B) $52. C) $54. D) $58. Page 29. Refer to the graph above. The output range in region "a" is associated with: A) increasing marginal productivity. B) constant returns to scale. C) economies of scale. D) diseconomies of scale. 10. Refer to the graph above. The output range in region "c" is associated with: A) diminishing marginal productivity. B) constant returns to scale. C) economies of scale. D) diseconomies of scale. 11. If a firm experiences economies of scale over all relevant levels of output, its long-run average total cost curve will: A) slope upward. B) be vertical. C) slope downward. D) be horizontal. 12. The upward-sloping part of the long-run average total cost curve is explained by: A) indivisible setup costs. B) diseconomies of scale. C) output levels that exceed the minimum efficient level of production. D) decreasing marginal productivity. 13. Which of the following provides the best explanation for diseconomies of scale? A) The presence of fixed inputs. B) Reduced monitoring costs. C) Loss of team spirit. D) Indivisible set-up costs. 14. Diseconomies of scale are associated with all of the following except: A) increasing per-unit costs. B) improved team spirit. C) the long-run. D) monitoring costs. Page 315. In a perfectly competitive market: A) individual producers determine market prices. B) market supply and market demand determine the price. C) the entrepreneur determines the price. D) individual consumers determine market prices. 16. Which of the following is not one of the necessary conditions for perfect competition? A) Complete information. B) Large number of firms. C) Differentiated products. D) No barriers to entry. 17. In a competitive market: A) firms produce a differentiated product. B) the number of firms is large. C) barriers to entry limit the number of firms. D) firms maximize profits and minimize costs. 18. A firm is a price taker if: A) it sets its own price. B) it sets its own price, but only after consulting with other companies. C) it sells its output at the market-determined price. D) it sets its price based on the demand curve it faces. 19. Perfectly competitive firms: A) maximize market share. B) maximize total sales. C) minimize total costs. D) maximize profits. 20. If a firm in a perfectly competitive market experiences a technological breakthrough: A) other firms would find out about it eventually. B) other firms would find out about it immediately. C) other firms would not find out about it. D) some firms would find out about it but others would not. Page 421. In a perfectly competitive market the demand curve faced by an individual firm is: A) perfectly inelastic. B) relatively inelastic. C) perfectly elastic. D) relatively elastic. 22. A perfectly competitive seller faces a: A) downward sloping demand curve. B) downward sloping supply curve. C) horizontal demand curve. D) horizontal supply curve. 23. The demand curve for a product produced in a perfectly competitive industry is: A) a vertical line. B) upward sloping. C) a horizontal line. D) downward sloping. 24. Marginal revenue is equal to: A) total revenue divided by its output. B) marginal cost. C) the change in total revenue associated with a change in quantity. D) the change in total profits associated with a change in quantity. 25. The demand curve for a perfect competitor is equal to: A) its marginal cost curve. B) its marginal revenue curve. C) its average total cost curve. D) its average fixed cost curve. 26. A perfectly competitive firm's marginal revenue is: A) less than the selling price. B) greater than the selling price. C) equal to the selling price. D) sometimes below and sometimes above the selling price. Page 527. A market structure in which there are many firms selling differentiated products is called: A) monopolistic competition. B) monopoly. C) oligopoly. D) perfect competition. 28. Taking explicit account of a rival's expected response to a decision you are making is called: A) economic decision making. B) monopolistic decision making. C) strategic decision making. D) competitive decision making. 29. Strategic decision making is most likely to occur in which market structure? A) Monopolistic competition. B) Oligopoly. C) Perfect competition. D) All firms engage in strategic decision making. 30. Which of the following market structures do not have unique price and output decisions at which the firms will