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ARE 201 Midterm: ARE 201 NCSU Exam3s98key

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turquoisegnu128
15 Feb 2019
School
NCSU
Department
Agri Resource Econ
Course
ARE 201
Professor
All

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Document Summary

Depreciation = (purchase price - salvage value) / years of useful life. Average value or average value of investment = (purchase price + salvage value) / 2. Slope = change in y / change in x, or change in p / change in q, or rise / run. Percent change = [(to - from)/ from] * 100. Percent change in qd = [(q1 - q0) / q0] * 100. Percent change in p = [(p1 - p0) / p0] * 100. Marginal revenue = change in total revenue / change in quantity of control variable. Marginal cost = change in total cost / change in quantity of control variable. Physical efficiency = units of output / units of input. Economic efficiency = value of output / value of input. = (units of output * price of output) / (units of input * price of input) = pe * (price of output / price of input)

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Related Questions

Question 16

  1. If price is cut and demand is elastic, total revenue will rise because

    the change in quantity demanded is greater than the percent change in price.

    the percent change in quantity demanded is greater than the change in price.

    the percent change in quantity demanded is greater than the percent change in price.

    customers can't find substitutes.

3 points

Question 17

  1. If price is cut and demand is inelastic, total revenue will fall because

    the change in quantity demanded is less than the percent change in price.

    the percent change in quantity demanded is less than the change in price.

    the percent change in quantity demanded is less than the percent change in price.

    customers can find substitutes.

3 points

Question 18

  1. If something is addictive, then

    price and demand are inversely related.

    price elasticity of demand is equal to one.

    demand is perfectly inelastic.

    demand is perfectly elastic.

3 points

Question 19

  1. In general, elasticities measure

    the change in quantity demanded when a product attribute changes.

    the change in consumer spending when income changes.

    the change in an attribute for a percentage change in price.

    the percentage change in the quantity demanded resulting from a fixed percentage change in some attribute.

3 points

Question 20

  1. Average total costs are defined as

    total costs divided by the change in output.

    total costs divided by output.

    the change in total costs when output changes.

    average variable costs plus marginal costs.

3 points

Question 21

  1. If a firm is experiencing economies of scale, then the long-run average cost curve is

    falling.

    rising.

    horizontal.

    shifting.

3 points

Question 22

  1. If average total cost is rising

    marginal cost is above average total cost.

    marginal cost is rising.

    marginal product is rising.

    marginal cost is above average total cost and is falling.

3 points

Question 23

  1. The period of time over which all inputs are variable is the

    market horizon.

    short run.

    calendar year.

    long run.

3 points

Question 24

  1. The supply chain refers to

    the supply curve.

    the process of outsourcing.

    the process of downsizing.

    the process of creating and selling a product.

3 points

Question 25

  1. When the capital (a fixed input) changes

    short-run marginal costs rise.

    short-run average total costs fall but do not shift.

    labor inputs decline.

    the short-run average total cost curve shifts.

3 points

Question 26

  1. A market of price takers is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 27

  1. A market with a single seller is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 28

  1. A market that mainly stresses product differentiation is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 29

  1. Entry into a competitive market will continue until

    economic profits are zero.

    normal profits are zero.

    when accounting losses are zero.

    a. and b. are true

3 points

Question 30

  1. Firms in an oligopoly

    act independently.

    engage in strategic behavior.

    have perfect knowledge of the behavior of others.

    openly collude.

1-7 True or False

1) In the short run, a perfectly competitive firm can earn positive, zero, or negative profit depending on the market price of the firm's output.

2)In the model of the perfectly competitive firm, the firm's fixed costs are equal to its implicit costs of production.

3)Assume the market price is greater than average total cost at the perfectly competitive firm's profit-maximizing level of output. In this case, the firm is earning positive economic profits, which act as an incentive for new firms to enter the market.

4)Assume that at the current level of output, price equals marginal revenue, but is less than average total cost. So long as price is greater than average variable cost, the firm should continue to operate in the short run to minimize its losses.

5)The fact that a firm is a price-setter does not ensure it will make a positive economic profit in the short run and over time.

6)Barriers to entry serve to limit the number of firms that operate in a particular market and, as 11) such, reduce the amount of total profit earned in the market.

7)In the prisoner's dilemma game, each player's dominant strategy is also the Nash equilibrium.

14-17 Multiple Choice

14) Marginal revenue is equal to:
A) the change in P x Q due to a one unit change in output. B) the change in quantity divided by the change in price.

C) the change in price divided by the change in output. D) price, but only if the firm is a price searcher.

15) In order to maximize its profits, a price-taking firm should produce the level of output at which:

A) marginal revenue = marginal cost. B) total revenue = total cost.

C) variable revenue = variable cost. D) average revenue = average cost.

16) Assume that there is an improvement in the technology used by firms in a perfectly competitive industry that is initially in long-run equilibrium. In the short run this would cause:

A) cannot be determined with the information given. B) no change in the firm's economic profit.
C) a decrease in the firm's economic profit. D) an increase in the firm's economic profit.

17) Assume at the firm's profit-maximizing level of output P = AVC. In this case, the firm will be:

A) incurring an economic loss. B) earning a positive economic profit.

C) earning economic profit = 0. D) breaking even.

Question 1

  1. If economic profits are zero

    accounting profits is less than the cost of capital.

    accounting profit is just covering the cost of capital.

    the cost of capital is negative.

    the entrepreneur should go to his/her next best alternative.

3 points

Question 2

  1. Markets provide

    information.

    prices.

    incentives.

    all of these choices.

3 points

Question 3

  1. The entrepreneur is always searching for

    positive profit.

    normal profit.

    accounting profit.

    economic profit.

3 points

Question 4

  1. Social regulations can create

    a more competitive market place.

    network externalities.

    a lower HHI.

    barriers to entry.

3 points

Question 5

  1. According to economic theory, profits are maximized where

    total revenue equals total cost.

    marginal revenue equals marginal cost.

    price and average cost are equal.

    where marginal product and average cost are equal.

3 points

Question 6

  1. Brand names help

    create commodities.

    maintain market power.

    create competition.

    keep economic profits at zero.

3 points

Question 7

  1. Entry of new firms causes

    accounting profits to go to zero.

    market share to grown.

    economic profits to go to zero.

    total revenue to be maximized.

3 points

Question 8

  1. Fixed costs

    do not vary with output

    vary with output

    do not vary with price

    vary with price

3 points

Question 9

  1. Variable costs

    do not vary with price.

    do not vary with output.

    vary with price.

    vary with output.

3 points

Question 10

  1. Value maximization means

    that managers make decision so as to increase the long-run market value of the financial claims on the firm.

    that a firm should make products that have the highest price.

    that managers make decision so as to increase the short-run market value of the financial claims on the firm.

    all of these choices.

3 points

Question 11

  1. A manager can determine if her product is viewed as a normal good or an inferior good by considering

    price elasticity.

    cross elasticity.

    income elasticity.

    advertising elasticity.

3 points

Question 12

  1. If demand is perfectly elastic,

    the smallest increase in price will cause quantity demanded to fall to zero.

    the smallest increase in price will cause demand to fall to zero.

    the smallest increase in price will cause quantity demanded to fall.

    the smallest increase in price will cause demand to fall.

3 points

Question 13

  1. If demand is perfectly elastic, then

    demand and price are inversely related.

    quantity demanded and price are inversely related.

    the demand curve is a vertical line.

    the demand curve is a horizontal line.

3 points

Question 14

  1. If price elasticity is 3.25 then

    for every one percent change in price, there will be a 3.25 percent change in quantity demanded.

    for every one percent change in price, there will be a 3.25 percent change in demand.

    for every one percent change in price, there will be a 32.5 percent change in quantity demanded.

    for every one percent change in price, there will be a .0325 percent change in quantity demanded.

3 points

Question 15

  1. If price elasticity is 3.25, then demand is

    inelastic.

    elastic.

    unitary.

    negative.