Business
In a perfectly competitive market
firms are price takers.
there is no product differentiation.
in the long-run, price will equal the minimum average total cost of production.
All of the above.
Question 2 5 pts
Farmers are often heard to complain about the high costs of machinery, labor, and fertilizer, suggesting that these costs drive down their profits. Does it follow that if, for example, the price of fertilizer fell by 10 percent, farming (a highly competitive industry with low barriers to entry) would be more profitable? Identify the BEST Answer.
Profit is revenue less cost, so any reduction in cost will naturally increase profit.
A decrease in cost might allow for profits, but it is likely to encourage new competitors to just enter; pulling prices back down to costs.
A decrease in cost will cause farmers to produce more, until marginal revenue equals marginal cost, at which point there will no longer be any profit.
Question 3 5 pts
A firm temporarily earning short-run losses should remain open if
their revenues can cover their variable costs of production.
their price is greater than the marginal cost of production.
the revenues can cover the fixed costs of production.
None of the above.
Question 4 2 pts
Suppose total costs can be described as TC=6q2+50 (this cost function has a marginal cost curve of MC=12q) for a price-taking firm in a market with a price of $180.
The profit maximizing quantity is
15.0000
Question 5 2 pts
Suppose total costs can be described as TC=6q2+50 (this cost function has a marginal cost curve of MC=12q) for a price-taking firm in a market with a price of $180.
Fixed costs for this firm are $.
50.0000
Question 6 2 pts
Suppose total costs can be described as TC=6q2+50 (this cost function has a marginal cost curve of MC=12q) for a price-taking firm in a market with a price of $180.
Is this firm operating in the short or long-run?
Short-run
Long-run
Question 7 2 pts
Suppose total costs can be described as TC=6q2+50 (this cost function has a marginal cost curve of MC=12q) for a price-taking firm in a market with a price of $180.
If q=10 (note: this is NOT the answer to the profit maximizing quantity question from earlier), then total profit would be
Question 8 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, the short-run market price of the product will
Increase
Decrease
Stay the same
Question 9 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, coffee production from the original suppliers of coffee (quantity supplied) in the short run will
Increase
Decrease
Stay the same
Question 10 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, profitability in the short run will
Increase
Decrease
Stay the same
Question 11 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, the new long-run market price in the industry will
Increase
Decrease
Stay the same
Question 12 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, industry coffee production (the sum of all coffee producers, new and original) in the long run will
Increase
Decrease
Stay the same
Question 13 2 pts
Suppose coffee suppliers are competitive price takers that were in a long-run equilibrium, but now an unanticipated increase in demand for their product has occurred.
Compared to the original long-run equilibrium, profits for coffee producers (new and original) after in the new long run equilibrium will
Increase
Decrease
Stay the same
Question 14 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the short-run price of corn
Increase
Decrease or Stay the Same
Question 15 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the profitability of corn farmers who quickly adopt the new technology will
Increase
Decrease
Stay the same
Question 16 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the output of corn farmers who quickly adopt the new technology (i.e. in the short-run) will
Increase
Decrease
Stay the same
Question 17 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the new long run price of corn
Increase
Decrease
Stay the same
Question 18 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the profitability of corn farmers who do not adopt the new technology quickly enough will
Increase
Decrease
Stay the same
Question 19 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the industry output of all suppliers in the new long-run will
Increase
Decrease
Stay the same
Question 20 2 pts
Assume that corn producers are competitive price takers in a state of long-run equilibrium. Now suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology.
Compared to the original long-run equilibrium, the profitability of firms in the new long-run equilibrium will
Increase
Decrease
Stay the same
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