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Economics and Marginal Cost Curve Essay

Minimum point of the average variable cost is a. At the same level of output as the minimum average total cost b. At a smaller level of output than the minimum average total cost c. At a larger level of output than the minimum average total cost d. At the same level of output as the average fixed costs e. Same as minimum marginal cost 2. The multipart monopolist maximizes profits when a. Marginal cost equals marginal revenue b. When marginal cost in each plant are equal c. When average cost in each plant is equal d. When marginal revenue in each plant is zero .

When he produces only in the low cost plant 3. If the market price is exactly equal to average cost, a. The firm shuts down as there is no profit b. The firm shuts down as the variable costs cannot be covered c. Continues to operate in the short run d. The firm shuts down as it cannot cover its fixed e. The firm shuts down if the price is lower than average variable cost 4. Which of the following would shift a firms short run average cost upward a. An advance in technology b.

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An increase in wages c. An increase in demand for the product d. Reduction in excise taxes e. Reduction in interest costs 5.

Which of the following is the supply curve under perfect competition? A. Marginal cost curve b. Average cost curve c. Marginal cost curve above shut down point d. Marginal cost curve above break- even point e. Average variable cost curve 6. U shape of Long Run Average cost is due to the incidence of a. External economies of scale b. Internal economies of scale c. Internal and external economies of scale d. Internal economies and discomposes of scale e. External economies and discomposes of scale The LACK curve is tangent to the lowest point on the SAC curves, when LACK is falling a.

Economics and Marginal Cost Curve By Seagram b. Sometimes c. Never d. Cannot say e. None of the above 9. In the long run at equilibrium, a perfectly competitive firm operates minimum point of LACK b. At minimum point of PVC c. At minimum point of AFC d. Anywhere on the LACK curve e. Only on the falling portion of the LACK 10. In the case of price leadership by the dominant firm, a. At a. All the firms in the oligopoly will maximize their output. B. Only the dominant firm will maximize its profits c. No firm will maximize its profits d.

Only the small firms will maximize their profits e. Only the dominant firm will maximize its profits and the small firms may or may not maximize their profits 11. When one company is the sole purchaser off product, it is example of a. Monopoly b. Oligopoly c. Monopolistic competition d. Monopoly . 12. Which of the following items is most likely to be an implicit cost of production? A. Property taxes on a building owned by the firm b. Transportation costs paid to a trucking supplier c. Rental payments for a building utilized by the company and rented from another arty d. Interest income foregone on funds invested in the firm by the owners e. Salaries paid to managers 13. Which of the following does not contribute to the monopoly power of the firm? A) A patent or copyright on a product b) exclusive control over a vital input for the production of a good. License from the Government d) charging a high price for a good e) all of the above 14. In a cartel, at equilibrium, a) marginal revenue of all member firms are equal c) profit of the member firms are equal d) the price is fixed by the low cost firm e) marginal revenue of the cartel is zero.

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