AskSia
Plus
50. Which of the following is true for a firm that uses labor as a variable inpu...
Mar 28, 2024
50. Which of the following is true for a firm that uses labor as a variable input and capital as a fixed input in the short run?
(A) If the marginal product of labor is negative, the average product of labor must also be negative.
(B) If the marginal product of labor is rising, the average product of labor must be greater than the marginal product of labor.
(C) If the average product of labor is rising, the marginal product of labor must be rising.
(D) If the average product of labor is falling, the marginal product of labor must be less than the average product of labor.
(E) The average product of labor can never be equal to the marginal product of labor.
D
Key Concept
Relationship between Marginal Product and Average Product
Explanation
When the average product of labor is falling, it implies that the addition of one more unit of labor is contributing less to the total output than the average of the previous units, which means the marginal product of labor is less than the average product of labor.
21:19 3月28日周四
文件预览
=88% [s]
<
52. The characteristic that causes firms in a perfectly competitive industry to earn zero economic profits in the long run is
(A) firms are price takers
(B) firms produce identical products
(C) individual firms account for a small fraction of the total market
(D) the industry supply curve is horizontal
(E) there are no barriers to entry or exit
E
Key Concept
Zero Economic Profit in the Long Run
Explanation
In a perfectly competitive market, the absence of barriers to entry or exit ensures that firms can enter the market when profits are positive and exit when profits are negative, leading to zero economic profits in the long run.
53. If individual firms in a perfectly competitive market are earning positive economic profits, the number of firms and the price of the product in the market will most likely change in which of the following ways in the long run?
\begin{tabular}{ll}
\multicolumn{1}{l}{ Number of Firms } & Price \\
(A) Increase & Increase \\
(B) Decrease & Increase \\
(C) Increase & Decrease \\
(D) Decrease & Decrease \\
(E) No change & Decrease
\end{tabular}
C
Key Concept
Long-Run Market Equilibrium in Perfect Competition
Explanation
In the long run, if firms in a perfectly competitive market are earning positive economic profits, new firms will be attracted to the market due to the absence of barriers to entry. This increases the number of firms, leading to an increase in supply. As supply increases, the market price will fall until firms are earning zero economic profits, restoring long-run equilibrium.
54. Jamal quits a job that was paying him $30,000 per year and decides to start his own business. He runs his business out of his house in a room he had been renting to his colleague for $12,000 a year. Jamal withdraws the $20,000 in his savings account that had been earning him a 10 percent annual interest to purchase computers and related accessories and equipment for the business. During the first year of operation, Jamal's business incurred $30,000 in explicit costs and generated $60,000 in total sales. Jamal's economic profit is
(A) $30,000
(B) $17,000
(C) $0
(D) −$2,000
(E) −$14,000
D
Key Concept
Economic Profit Calculation
Explanation
Economic profit is calculated by subtracting both explicit and opportunity costs from total revenue. Jamal's economic profit is his total sales (60,000)minusexplicitcosts(30,000), minus the opportunity cost of his job (30,000),therentalincome(12,000), and the interest from savings (2,000,whichis1020,000). This calculation yields 60,000−30,000 - 30,000−12,000 - 2,000=−14,000. However, since Jamal is running the business himself, we do not subtract his salary again, so we add back the 30,000,resultingin60,000 - 30,000−12,000 - 2,000=16,000 in accounting profit. Since economic profit also considers opportunity costs, we subtract the 18,000(opportunitycostofjobandinterest)fromtheaccountingprofittogettheeconomicprofit,whichis16,000 - 18,000=−2,000.
55. Firms in monopolistic competition do not attain allocative efficiency because at the long-run equilibrium output, which of the following is true?
(A) Price is greater than marginal cost.
(B) Marginal cost is greater than minimum average total cost.
(C) Marginal revenue is greater than marginal cost.
(D) There is an overallocation of resources to the market.
(E) Products are homogeneous.
56. A perfectly competitive firm is producing 10 units of output and sells the product for $5 per unit. At this level of output the average total cost is $4, the average variable cost is $3 and the marginal cost is $7. What should this firm do to maximize short-run profits?
(A) Increase output until price equals average total cost.
(B) Increase output until price equals marginal cost.
(C) Leave output unchanged because price is greater than average total cost.
(D) Decrease output until price is equal to marginal cost.
(E) Decrease output until price is equal to average total cost.
57. Assume accountants and teachers have identical marginal revenue product schedules. Which of the following provides an explanation for why accountants receive higher starting salaries than school teachers?
(A) Accountants have less human capital than school teachers.
(B) Accountants have lower opportunity cost than school teachers.
(C) Accounting firms provide a more pleasant work environment than schools provide.
(D) The supply of accountants is low relative to the supply of teachers.
(E) Fewer teaching majors graduate from college each year than accounting majors.
58. Assume that firms providing health-care services to older people operate in a perfectly competitive market. What must happen in the market for health-care workers if there is an increase in the number of older people in a country?
(A) The demand for health-care workers will increase.
(B) The marginal factor cost in the health-care industry will decrease.
(C) The number of health-care workers will decrease.
(D) The quality of health-care services will increase.
(E) The wages of health-care workers will decrease.
59. As an unregulated monopolist, City Cable is earning positive economic profits. If the government regulated the firm by requiring it to produce the level of output that allowed the firm to earn zero economic profit, City Cable would set a price that is equal to its
(A) marginal cost
(B) marginal revenue
(C) average total cost
(D) average variable cost
(E) total cost
60. A progressive income tax is characterized by
(A) a higher average tax rate at low income levels than at high income levels
(B) tax rates that increase total tax revenues
(C) marginal tax rates that do not change as income changes
(D) marginal tax rates that increase as income increases
(E) marginal tax rates that decrease as income increases
A
Key Concept
Allocative Efficiency in Monopolistic Competition
Explanation
In monopolistic competition, firms do not achieve allocative efficiency because the price charged is greater than the marginal cost at the point of long-run equilibrium, indicating that the price consumers pay is higher than the value of the last unit produced, leading to a deadweight loss.
D
Key Concept
Profit Maximization in Perfect Competition
Explanation
A perfectly competitive firm maximizes profit by producing at the output level where price equals marginal cost. Since the marginal cost is greater than the price at the current output, the firm should decrease output to maximize profits.
D
Key Concept
Differential in Starting Salaries
Explanation
Accountants receive higher starting salaries than school teachers due to the lower supply of accountants relative to demand compared to the supply of teachers, which increases the equilibrium wage rate for accountants.
A
Key Concept
Market Dynamics in Healthcare
Explanation
An increase in the number of older people will increase the demand for health-care services, which in turn increases the demand for health-care workers in a perfectly competitive market.
C
Key Concept
Regulation of Monopolies
Explanation
If a monopolist is regulated to earn zero economic profit, it must set a price equal to its average total cost, as this is the point where the firm covers all its costs, including normal profit.
D
Key Concept
Progressive Income Tax
Explanation
A progressive income tax system is characterized by marginal tax rates that increase as income increases, which means that individuals with higher incomes will pay a higher percentage of their income in taxes on the last dollar earned.
© 2023 AskSia.AI all rights reserved