04 Jun The difference between the short-run and the long-run production function is: three months or one business quarter
Question
The difference between the short-run and the long-run production function is:
three months or one business quarter.
the time it takes for firms to change all production inputs.
the time it takes for firms to change only their variable inputs.
more information is required to answer this question.
Which of the following statements about the short-run production function is true?
MP always equals AP at the maximum point of MP.
MP always equals zero when TP is at its maximum.
TP starts to decline at the point of diminishing returns.
When MP diminishes, AP is at its minimum point.
None of the above is true.
Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
the firm should hire additional workers
the firm should reduce the number of workers employed
the firm should continue to employ 10 workers.
more information is required to answer this question.
A firm using two inputs, X and Y, is using them in the most efficient manner when
MPX = MPY
PX = PY and MPX = MPY
MPX/PY = MPY/PX
MPX/MPY = PX/PY
Average fixed cost is
AC minus AVC
TC divided by Q
AVC minus MC
TC minus TVC
Diseconomies of scale can be caused by
the law of diminishing returns.
bureaucratic inefficiencies.
increasing advertising and promotional costs.
all of the above.
Which of the following cost relationship is not true?
AFC = AC – MC
TVC = TC – TFC
the change in TVC divided by the change in Q = MC
the change in TC divided by the change in Q = MC
When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
maximum
normal
above normal
below normal
Which of the following is not characteristic of perfect competition?
A differentiated product
No barriers to entry
Large number of buyers
Complete knowledge of market price
Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
maintain the same price
raise its price
lower its price
not enough information to answer this question
Which of the following is true about a monopoly?
Its demand curve is generally less elastic than in more competitive markets.
It will always earn economic profit.
It will charge the highest possible price.
It will always be subject to government regulations.
If an oligopolistic firm decides to raise its price,
other firms will automatically follow.
none of the other firms will follow.
other firms may follow if it is the price leader.
None of the above.
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