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ECON 1123: EXAM 2

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