ECN 212 COMPREHENSIVE STUDY
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ Firms in a competitive market.
Answer: maximize proft
◍ Profit.
Answer: total revenue minus total cost
◍ Government policies can change the costs and benefits that people face.
Those policies have the potential to.
Answer: All of the above are correct.
◍ Average revenue.
Answer: AR = TR/ Q
◍ Your professor loves her work, teaching economics. She has been offered
other positions in the corporate world that would increase her income by 25
percent, but she has decided to continue working as a professor. Her
decision would not change unless the marginal.
Answer: cost of teaching increased.
◍ Marginal revenue.
Answer: MR = ∆TR / ∆Q
◍ Acme Home Builders, Inc., has built 24 houses so far this year at a total cost
to the company of $4.80 million. If the company builds a 25th house, its
total cost will increase to $5.05 million. Which of the following statements
is correct?.
Answer: The marginal cost of the 25th house, if it is built, will equal
$250,000.
,◍ For Competitive firms.
Answer: AR = P MR = P
◍ Maximize Profit.
Answer: - Produce quantity where total revenue minus total cost is greatest -
Compare marginal revenue with marginal cost - If MR > MC: increase
production - If MR < MC: decrease production - Maximize profit where MR
= MC
◍ Market failure can be caused by.
Answer: externalities and market power.
◍ Shutdown.
Answer: - Short run decision not to produce anything - During a specific
period of time - Because of current market conditions - Firm still has to pay
fixed costs
◍ Exit.
Answer: Long run decision to leave the market -Firm doesn't have to pay
any costs
◍ Hamid spends an hour studying instead of watching TV with his friends.
The opportunity cost to him of studying is.
Answer: the enjoyment he would have received if he had watched TV with
his friends.
◍ Refer to Figure 2-4. Inefficient production is represented by which point(s)?.
Answer: T
◍ The firm's short run decision to shut down.
Answer: Shut if TR < VC (or P < AVC)
◍ Firms long run decisions.
Answer: Exit the market if P < ATC Enter the market if P > ATC
◍ Refer to Figure 2-13. Which of the following statements is true about point
G for this economy?.
Answer: There is unemployment at point G.
, ◍ Short Run: Market supply with a fixed number of firms.
Answer: -Short run: number of firms is fixed -Each firm supplies quantity
where P = MC - For P > AVC: supply curve is MC curve- Market supply
-Add up quantity supplied by each firm
◍ Long Run: Market supply with a fixed number of firms.
Answer: -Firms can enter and exit the market -If P > ATC firms make
positive profit - New Firms enter the market - If P < ATC, firms make
negative profit - Firms exit the market
◍ Long run.
Answer: -Process of entry and exit ends when - Firms still in market make
zero economic profit (p= ATC) - Because MC = ATC: Efficient scale -
Long run supply curve is perfectly elastic - Horizontal at minimum ATC
◍ Market in long run equilibrium.
Answer: - p = minimum ATC - zero economic profit
◍ Increase in demand.
Answer: - Demand curve shifts outward -Short run -Higher quantity - higher
price: P > ATC, positive e economic profit
◍ Positive economic profit in short run.
Answer: - Long run - firms enter the market - Short run supply curve - shifts
right - Price - decreases back to minimum ATC - Quantity - increases -
Because there are more firms in the market - Efficient scale
◍ Monopoly.
Answer: - Firm that is the sole seller of a product without close substitutes -
Price Maker - Cause: barriers to entry
◍ Barriers to entry.
Answer: - A monopoly remains the only seller in the market - because other
firms cannot enter the market and compete with it 1. Monopoly resources 2.
Government regulation 3. The production process
◍ Monopoly resources.
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ Firms in a competitive market.
Answer: maximize proft
◍ Profit.
Answer: total revenue minus total cost
◍ Government policies can change the costs and benefits that people face.
Those policies have the potential to.
Answer: All of the above are correct.
◍ Average revenue.
Answer: AR = TR/ Q
◍ Your professor loves her work, teaching economics. She has been offered
other positions in the corporate world that would increase her income by 25
percent, but she has decided to continue working as a professor. Her
decision would not change unless the marginal.
Answer: cost of teaching increased.
◍ Marginal revenue.
Answer: MR = ∆TR / ∆Q
◍ Acme Home Builders, Inc., has built 24 houses so far this year at a total cost
to the company of $4.80 million. If the company builds a 25th house, its
total cost will increase to $5.05 million. Which of the following statements
is correct?.
Answer: The marginal cost of the 25th house, if it is built, will equal
$250,000.
,◍ For Competitive firms.
Answer: AR = P MR = P
◍ Maximize Profit.
Answer: - Produce quantity where total revenue minus total cost is greatest -
Compare marginal revenue with marginal cost - If MR > MC: increase
production - If MR < MC: decrease production - Maximize profit where MR
= MC
◍ Market failure can be caused by.
Answer: externalities and market power.
◍ Shutdown.
Answer: - Short run decision not to produce anything - During a specific
period of time - Because of current market conditions - Firm still has to pay
fixed costs
◍ Exit.
Answer: Long run decision to leave the market -Firm doesn't have to pay
any costs
◍ Hamid spends an hour studying instead of watching TV with his friends.
The opportunity cost to him of studying is.
Answer: the enjoyment he would have received if he had watched TV with
his friends.
◍ Refer to Figure 2-4. Inefficient production is represented by which point(s)?.
Answer: T
◍ The firm's short run decision to shut down.
Answer: Shut if TR < VC (or P < AVC)
◍ Firms long run decisions.
Answer: Exit the market if P < ATC Enter the market if P > ATC
◍ Refer to Figure 2-13. Which of the following statements is true about point
G for this economy?.
Answer: There is unemployment at point G.
, ◍ Short Run: Market supply with a fixed number of firms.
Answer: -Short run: number of firms is fixed -Each firm supplies quantity
where P = MC - For P > AVC: supply curve is MC curve- Market supply
-Add up quantity supplied by each firm
◍ Long Run: Market supply with a fixed number of firms.
Answer: -Firms can enter and exit the market -If P > ATC firms make
positive profit - New Firms enter the market - If P < ATC, firms make
negative profit - Firms exit the market
◍ Long run.
Answer: -Process of entry and exit ends when - Firms still in market make
zero economic profit (p= ATC) - Because MC = ATC: Efficient scale -
Long run supply curve is perfectly elastic - Horizontal at minimum ATC
◍ Market in long run equilibrium.
Answer: - p = minimum ATC - zero economic profit
◍ Increase in demand.
Answer: - Demand curve shifts outward -Short run -Higher quantity - higher
price: P > ATC, positive e economic profit
◍ Positive economic profit in short run.
Answer: - Long run - firms enter the market - Short run supply curve - shifts
right - Price - decreases back to minimum ATC - Quantity - increases -
Because there are more firms in the market - Efficient scale
◍ Monopoly.
Answer: - Firm that is the sole seller of a product without close substitutes -
Price Maker - Cause: barriers to entry
◍ Barriers to entry.
Answer: - A monopoly remains the only seller in the market - because other
firms cannot enter the market and compete with it 1. Monopoly resources 2.
Government regulation 3. The production process
◍ Monopoly resources.
