ECON 1123: EXAM 2

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ECON 1123
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The short run is a period of time in which...
The use of at least one input is fixed
The average product of labor is...
total product divided by the quantity of labor
If a firm's marginal product of labor is less than its average product of labor, then an increase in its use of labor will...
reduce its average product of labor
Diminishing marginal product refer to a situation in which the...
marginal product of the last worker hired is less than the marginal product of the previous worker hired
Total variable cost is the sum of all...
costs that rise as output rises
The amount of money that a firm receives from the sale of its output is called...
total revenue
Average variable cost is at a minimum at the same output at which...
average product is at its maximum
In perfect competition, restrictions on entry into an industry...
do not exist
In a simple model of a perfectly competitive firm, economists assume that the firm’s single objective is to maximize its...
profit
Economic profit is...
the difference between revenue and cost, including all opportunity costs
The marginal cost (MC) curve intersects the...
ATC and AVC curves at their minimum points
The elasticity of demand that a price-taking firm faces for its output is...
infinite
In perfect competition, the marginal revenue of an individual firm equals...
both its price and its average revenue
In perfect competition, price is determine where the industry...
supply curve and industry demand curve intersect
At a firm's break even point, its...
total revenue equals its total cost
A perfectly competitive firm will have an economic profit of zero if, at its profit maximizing output, its marginal revenue equals...
average total cost
The increase in output obtained by hiring an additional worker is known as...
the marginal product
Marginal product eventually...
declines because some inputs are fixed
EBay.com is a vast auction site that has some similarities to a competitive market and some differences. Which of the following describes how ebay resembles a competitive market?
it is easy to enter and easy to leave
In a perfectly competitive market the demand curve faced by an individual firm is:
perfectly elastic
A perfectly competitive firm's marginal revenue is:
equal to the selling price
To maximize profits, a perfectly competitive firm should produce where marginal:
cost equals marginal revenue
The most important goal of the firm is to...
maximize its profits
A firm's economic profit is its total revenue minus its...
opportunity costs
In the long run, a firm can vary...
both its labor and capital inputs
In a perfectly competitive market, there are...
many buyers and many sellers
The price elasticity of demand for any particular perfectly competitive firm’s output is...
infinite
A firm will expand the amount of output it produces as long as its...
marginal revenue exceeds its marginal cost
A firm’s shutdown point is the quantity and price at which the firm’s total revenue just equals its...
total variable cost
To construct the industry supply curve in a perfectly competitive industry, you sum the...
supply curves of the individual firms horizontally

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