Micro final

Why does a local​ McDonald's face a​ downward-sloping demand curve for its Quarter​ Pounder?

In monopolistically competitive​ markets,

• changing the price affects the quantity sold because firms are price takers.

• changing the price affects the quantity sold because firms sell differentiated products.

• changing the price does not affect the quantity sold because firms have market power.

• changing the price affects the quantity sold because there are only a few sellers.

What is true of long-run profits in a monopolistic competition?

• Firms will make profits in the short-run, but not the long-run.

• Firms will make a profit in both the short-run and the long-run.

• Firms will only make profits in the long-run, not the short-run.

• Firms will not make a profit in the short-run or the long-run.

What is true of profits in a perfectly competitive market?

• Firms will make a profit in both the short-run and the long-run.

• Firms will eventually break even in the long-run and have zero profits.

• Firms don't make a profit in the short-run or the long-run.

• Firms will make a profit in the long-run, but not in the short-run.

What is true of the profits in a monopoly?

• Firms will make profits in both the long-run and the short-run.

• Profits in the long-run stay the same because no other firms can enter.

• Profits decrease in the long-run because firms can charge whatever prices they want.

• Firms will not make a profit in the short-run or long-run.

As new firms enter the​ market, a monopolistically competitive firm can maintain profits by

• A. discovering new ways of differentiating its product.

• B. securing tax breaks​ and/or subsidies from government.

• C. finding new ways of lowering the cost of producing its product.

• D. all of the above

• A and C only

In​ economics, the best definition of technology is

• the process a firm uses to price output.

• the speed of communication.

• the process a firm uses to turn inputs into outputs.

• the sophistication of the equipment enjoyed by consumers.

• the development of new products.

​Further, positive technological change is defined as

• A. being able to produce more output using the same inputs.

• B. being able to produce the same output using fewer inputs.

• C. being able to sell more output at higher prices.

• D. Both A and B

• E. all of the above

What does the​ short-run production function hold​ constant?

• The amount of labor.

• The amount of capital.

• The amounts of all inputs.

• The amount of output.

What is the law of diminishing​ returns? The law of diminishing returns states that

• producing more output by adding more of a variable input will eventually cause the marginal cost of production to decline.

• adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the fixed input to decline.

• the​ long-run average cost of production falls as output increases.

• adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline.

From origin up until point A,

• output increases at an increasing rate.

• output increases at a decreasing rate.

• output increases at a constant rate.

• the effect of diminishing returns is greater than the effect of specialization.