Foldvary's Econ 12 9:15 Midterm 1 Study Guide Winter MMIII

1. Refer to information provided on the owner's own money, what he borrows, and the interest rate. What is the explicit cost of operating the factory for the first year?

2. The marginal product of labor is

3. One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

4. The average total cost curve is increasing when marginal cost is ...

5. A cumulative GPA will fall if one performs worse than ...

The to-be-shown set of lines reflect information about the cost structure of a firm. Use the figure to answer which of the lines most likely represents marginal cost.
7. In the graph, line A is necessarily U-shaped because of

8. Economies of scale arise when

9. The theory of the firm states that firms exist as organizations because

10. When a firm is able to put idle equipment resources to use by hiring another worker, variable costs will ..., or fixed costs will ...

11. A reason a brain drain from less developed countries can help a less developed economy is

12. Total profit for a firm is calculated by

Use the information for a competitive firm in the table below to answer the following questions. Quantity ... Total Revenue ... Total Cost

At a production level of 3 units which of the following is true?
Fixed cost ... Marginal cost is ... Total revenue is .... Marginal revenue is

14. The Wheeler Wheat Farm sells wheat to a grain broker in Seattle, Washington. Since the market for wheat is generally considered to be competitive, the Wheeler Farm

15. When calculating marginal cost, what costs must the firm manager know?

16. When total revenue is less than total variable cost, a firm in a competitive market will

The figure shown depicts the cost structure of a profit maximizing firm in a competitive market. Use the figure to answer the following questions.

17. If the firm is in a short-run position where P < AVC, it is most likely to be on what segment of it's supply curve?

18. The relevance or irrelevance of sunk costs is best described by which of the following business decisions?

19. In a market with 1,000 identical firms, the market supply is equal to the

20. The law of diminishing returns tells us that

21. When new firms have an incentive to enter a competitive market, their entry will do what to the market price, profit, quantity of goods?

22. In a market that has free entry and exit, the process of entry and exit ends when ...

23. If the increased production of organic grapefruit decreased the price of special organic acid-controlled soils used for planting organic grapefruit, the long-run market supply of organic grapefruit could be...

24. An industry might have an upward sloping long-run supply curve if