Chapter 8 Homework

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26 Terms

1
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2
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3
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Economists assume the principal motivation of producers is

Profit

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Profit

Is the difference between total revenue and total cost

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The $600 paid in property taxes counts as

An explicit cost.

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Assuming the entrepreneur does not pay herself, the $1,000 she could earn as an employee elsewhere is considered

An implicit cost.

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A monopoly occurs when

There is only one producer of a good or service.

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The perfectly competitive market structure includes all of the following except

Large advertising budgets.

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In which of the following types of markets does a single firm have the most market power?

Monopoly.

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A perfectly competitive firm is a price taker because

The price of the product is determined by many buyers and sellers.

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The market price for T-shirts sold in a perfectly competitive market is determined by

Supply and demand.

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The demand curve for each perfectly competitive firm is

Horizontal.

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A firm's total revenue can be determined by

Price times quantity.

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The short run is the time period

In which some costs are fixed.

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A firm maximizes total profit when

Total revenue exceeds total cost by the greatest amount.

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Which of the following represents the change in total cost that results from a one-unit increase in production?

Marginal cost. 

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The difference between the total revenue and total cost curves at a given output is equal to

Total profit.

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%50.

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200 units.

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Short-run profits are maximized at the rate of output where

Marginal revenue is equal to marginal cost.

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D.

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Economic profits will be zero. 

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The firm will have above-normal profits.

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39.

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The firm is experiencing economic losses but should continue to produce.

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The shutdown point occurs where price is below the minimum of

AVC.