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Mr. Gregory White
Mr. Gregory White, Master's Degree
Category: Multiple Problems
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Experience:  M.A., M.S. Education / Educational Administration
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Perfectly Competitive Firms Must Make All Of The Following

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1. Perfectly competitive firms must make all of the following decisions EXCEPT (Points : 1)
how much output to supply.
which production technology to use.
how much of each input to demand.
what price to charge for its output.

2. Short-run costs that depend on the level of output are (Points : 1)
total fixed cost only.
total variable costs only.
total costs only.
both total variable costs and total costs.

3. A firm that is earning positive profits in the short run has an incentive to ________ its scale of operation in the long run. (Points : 1)
expand
contract
not change
encourage another firm to expand

4. A firm will begin to experience diminishing returns at the point where (Points : 1)
marginal cost increases.
marginal cost decreases.
marginal product increases.
Both B and C

5. The short-run industry supply curve for a perfectly competitive industry is the (Points : 1)
horizontal sum of the individual firms'marginal cost curves above AVC.
vertical sum of the individual firms'marginal cost curves above AVC.
horizontal sum of the individual firms'marginal cost curves above ATC.
vertical sum of the individual firms'marginal cost curves above ATC.

6. If we assume that labor is the only variable input, the slope of the total product curve in the short run (Points : 1)
has no economic significance.
measures the average product of labor.
measures the marginal product of labor.
measures both the marginal and average product at all points on the total product curve.

7. An act of production, as economists use the term, is demonstrated by which of the following? (Points : 1)
A worker placing money in a pension fund
A local nonprofessional theater company performing a play
An individual buying municipal bonds to avoid taxes
A firm buys a pre-existing building in order to expand its operations.

8. A point on a total variable cost curve shows the ________ variable cost a firm will bear to produce a certain output. (Points : 1)
highest
lowest
change in
average

9. Salaries of NFL quarterbacks, like Tom Brady, are (Points : 1)
too high.
related to the additional revenues team owners expect to enjoy as a result of having them on the team roster.
the result of perfectly competitive markets.
All of the above are correct.

10. If Microsoft is earning a rate of return greater than the return necessary for the business to continue operations in the long run, then (Points : 1)
total costs exceed total revenue.
total costs exceed a normal rate of return.
the normal rate of return is zero.
the firm is earning an economic profit.

1. Perfectly competitive firms must make all of the following decisions EXCEPT (Points : 1)
how much output to supply.
which production technology to use.
how much of each input to demand.
what price to charge for its output.

2. Short-run costs that depend on the level of output are (Points : 1)
total fixed cost only.
total variable costs only.
total costs only.
both total variable costs and total costs.

3. A firm that is earning positive profits in the short run has an incentive to ________ its scale of operation in the long run. (Points : 1)
expand
contract
not change
encourage another firm to expand

4. A firm will begin to experience diminishing returns at the point where (Points : 1)
marginal cost increases.
marginal cost decreases.
marginal product increases.
Both B and C

5. The short-run industry supply curve for a perfectly competitive industry is the (Points : 1)
horizontal sum of the individual firms'marginal cost curves above AVC.
vertical sum of the individual firms'marginal cost curves above AVC.
horizontal sum of the individual firms'marginal cost curves above ATC.
vertical sum of the individual firms'marginal cost curves above ATC.

6. If we assume that labor is the only variable input, the slope of the total product curve in the short run (Points : 1)
has no economic significance.
measures the average product of labor.
measures the marginal product of labor.
measures both the marginal and average product at all points on the total product curve.

7. An act of production, as economists use the term, is demonstrated by which of the following? (Points : 1)
A worker placing money in a pension fund
A local nonprofessional theater company performing a play
An individual buying municipal bonds to avoid taxes
A firm buys a pre-existing building in order to expand its operations.

8. A point on a total variable cost curve shows the ________ variable cost a firm will bear to produce a certain output. (Points : 1)
highest
lowest
change in
average

9. Salaries of NFL quarterbacks, like Tom Brady, are (Points : 1)
too high.
related to the additional revenues team owners expect to enjoy as a result of having them on the team roster.
the result of perfectly competitive markets.
All of the above are correct.

10. If Microsoft is earning a rate of return greater than the return necessary for the business to continue operations in the long run, then (Points : 1)
total costs exceed total revenue.
total costs exceed a normal rate of return.
the normal rate of return is zero.
the firm is earning an economic profit.

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