Managerial Economics Questions
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In the long run, each firm in a perfectly competitive industry will:a. increase its priceb. differentiate its goodsc. produce where MR is greater than MCd. earn only enough to cover the opportunity costs of the resources used in production
In a perfectly competitive industry, the market demand curve is usuallya. perfectly inelasticb. downward slopingc. relatively elasticd. perfectly elastic
An assumption of the model of perfect competition isa. few buyers and sellersb. difficult entry and exitc. Cooperation and Interdependence between sellersd. Identical goods
Many furniture stores run "going out of business" sales but never go out of business. In order for the shut-down decision not be the appropriate one, the price of furniture must be __ than the ___ average variable cost. a. higher; minimumb. lower; minimumc. higher; maximumd. lower; maximum
If a Florida strawberry wholesaler operates in a perfectly competitive market, the wholesaler will have a ____ share of the market, and consumers will consider her strawberries to be ____. Therefore, ____ advertising will take place in the market. a. small; standardized; little, if anyb. large; differentiated; extensivec. large; standardized; nod. small; differentiated; no
Suppose the beef industry is perfectly competitive and the demand for beef rises. As long as the demand does not subsequently fall, beef producers can expect to earn economic profits in both the short and long run.A. TrueB. False
If a firm's economic profits are equal to zero, its accounting profits are most likely:a. less than zerob. greater than economic profitsc. less than economic profitsd. equal to zero
If the price is greater than the average variable cost and less than the average total cost at the profit maximizing quantity output in the short run, a perfectly competitive firm willa. produce at an economic lossb. shut down productionc. produce more than the profit-maximizing quantityd. produce at an economic profit.
If a firm wants to maximize profit, they should hire to the point where?
Example Problem #1 of Labor and Capital: We can use production functions to help us figure out the optimal amount of an input to use. Consider a cement company interested in hiring the optimal number of workers per day. Currently, it receives $15/ton for its cement (output price), and pays a typical worker $30/day (input price). Suppose it is currently employing 20 workers, and the marginal product of the 21st worker is 4 tons of cement. Should it hire the 21st worker?
What is used to illustrate long run production?
What are the two "general shapes" of APʟ and MPʟ in the Short Run?
Example #1 of total outlay (M): Monthly outlay with Pʟ = 1000 and Pᴋ = 500 (price per input per month). What would the formula look like?
Example Problem #2 of Labor and Capital: We can use production functions to help us figure out the optimal amount of an input to use. Consider a cement company interested in hiring the optimal number of workers per day. Currently, it receives $15/ton for its cement (output price), and pays a typical worker $30/day (input price). Suppose the firm is employing 30 workers, and the marginal product of the 30th worker is 1. What should it do?
What does a MPʟ (Marginal product of labor) diagram look like? (Short Run)
In general, for a given M, what is the equation of the isocost?
What is the formula for Marginal Product of Labor (MPʟ) and for Marginal Product of Capital (MPᴋ)?
Continuation of Example #1: Monthly outlay with Pʟ = 1000 and Pᴋ = 500 (price per input per month). What if we had $10,000 allocated in expenditure? What combinations of K and L could spend $10,000? Graph:
How do we select inputs (what are the two approaches), assuming a purely competitive firm (takes all prices as given)?
What does a APʟ (Avg. product of labor) diagram look like? (Short Run)