Questions and Answers
What is the correct alternative for choosing a relevant time period if firms can neither enter nor leave an industry?
In the short-run production function, which statement is true?
How many units should be produced to break even if fixed costs are $15,000, variable cost per unit is $5, and selling price per unit is $10?
What differentiates monopolistic competition from perfect competition?
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Which true statement reflects a monopoly market structure?
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When does total utility coincide with marginal utility?
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What can be inferred about demand if the price of product A drops from 100 to 90 lei and demand increases from 70 to 75 units?
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What is the price elasticity of a vertical demand curve?
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What does an indifference curve represent?
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What is Gross National Product?
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Study Notes
Firms in Industries
- In the intermediate run, firms can neither enter nor leave an industry.
- In the short run, at least one resource is fixed and others are variable.
Production Function and Costs
- Fixed costs are fixed, whereas variable costs vary with the quantity produced.
- The break-even point is the quantity at which total revenue equals total cost.
- In the given example, the break-even point is 5,000 units, where fixed costs are 15,000,variablecostperunitis15,000, variable cost per unit is 15,000,variablecostperunitis5, and selling price per unit is $10.
Market Structures
- The main difference between monopolistic and perfect competition is the market power of competitors.
- In a monopoly, there are no competitors on the relevant market, and input barriers are low.
Consumer Theory
- Total utility coincides with marginal utility at the level of the last unit consumed.
- If the demand for a product increases from 70 to 75 units when the price is reduced from 100 to 90 lei, the demand is elastic.
- A vertical demand curve is perfectly inelastic.
- An indifference curve represents equal utility from the consumption of two combinations of goods.
National Income
- Gross National Product is Gross Domestic Product plus net property income from abroad.
- Net National Product is Gross National Product minus depreciation.
- Real national income is nominal national income adjusted for inflation.
Time Value of Money
- A unit of money obtained today is worth more than a unit of money obtained in the future due to the time value of money.
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Description
Test your knowledge of economics with this quiz on production functions and time periods, including short run, long run, and intermediate run. Explore the fixed and variable resources in production.
