AREC 385 EXAM 3 QUESTIONS WITH 100%
VERIFIED CORRECT ANSWERS!!
All else being equal, a MORE elastic demand curve will shift more of the incidence on..?
Producers
Measure the payments made to the firm's factors of production
Explicit Costs
If the demand for electricity is elastic, then if the local utility wants to increase its total
revenue, it should _________ its price
Lower
If the consumption of a good generates an external benefit, then market equilibrium
quantity:
Will be less than the socially optimal quantity
Economies of scale exist when:
The average cost of production falls as output rises
The profit maximizing rule MR=MC applies to
all firms
"Market Power" refers to a firm's ability to:
Raise its price without losing all of its sales
If a firm's production process exhibits increasing returns to scale, then doubling all the
firm's inputs will lead output to _____:
More than double
A price setter is a firm that:
has some degree of control over its price
, If a firm functions in an oligopoly, it is:
One of the small number of firms that produce goods that are either close or perfect substitutes
The profit maximizing rule P=MC applies to:
Perfectly competitive firms only
Both a perfectly competitive firm and a monopolist find that:
It is best to expand production until the benefit and the cost of the last unit being produced are
equal
Suppose all firms in a perfectly competitive industry are earning an economic profit. One
would expect that, over time, the number of firms in the industry will ____ and the market
price will ____:
Rise; fall
One difference between the long run and the short run in a perfectly competitive industry
is that:
Firms necessarily earn zero profit in the long run but may earn positive or negative profit in the
short run
A cost of an activity that falls on people not engaged in the activity is called a:
Negative externality
A benefit of an activity received by people not participating in the activity is called a:
Positive externality
Given that most people like the smell of baking cinnamon rolls and dislike the smell of
burning tires, baking cinnamon rolls generates ____ externality, and burning tires
generates ____ externality
Positive; negative
The tragedy of the commons refers to the:
Overuse of resources that have no price
VERIFIED CORRECT ANSWERS!!
All else being equal, a MORE elastic demand curve will shift more of the incidence on..?
Producers
Measure the payments made to the firm's factors of production
Explicit Costs
If the demand for electricity is elastic, then if the local utility wants to increase its total
revenue, it should _________ its price
Lower
If the consumption of a good generates an external benefit, then market equilibrium
quantity:
Will be less than the socially optimal quantity
Economies of scale exist when:
The average cost of production falls as output rises
The profit maximizing rule MR=MC applies to
all firms
"Market Power" refers to a firm's ability to:
Raise its price without losing all of its sales
If a firm's production process exhibits increasing returns to scale, then doubling all the
firm's inputs will lead output to _____:
More than double
A price setter is a firm that:
has some degree of control over its price
, If a firm functions in an oligopoly, it is:
One of the small number of firms that produce goods that are either close or perfect substitutes
The profit maximizing rule P=MC applies to:
Perfectly competitive firms only
Both a perfectly competitive firm and a monopolist find that:
It is best to expand production until the benefit and the cost of the last unit being produced are
equal
Suppose all firms in a perfectly competitive industry are earning an economic profit. One
would expect that, over time, the number of firms in the industry will ____ and the market
price will ____:
Rise; fall
One difference between the long run and the short run in a perfectly competitive industry
is that:
Firms necessarily earn zero profit in the long run but may earn positive or negative profit in the
short run
A cost of an activity that falls on people not engaged in the activity is called a:
Negative externality
A benefit of an activity received by people not participating in the activity is called a:
Positive externality
Given that most people like the smell of baking cinnamon rolls and dislike the smell of
burning tires, baking cinnamon rolls generates ____ externality, and burning tires
generates ____ externality
Positive; negative
The tragedy of the commons refers to the:
Overuse of resources that have no price
