ECON100 PASS Midsession Practice
10 Questions
10 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Equilibrium in a competitive market results in the economically efficient level of output where

  • marginal benefit is zero
  • marginal benefit is greater than the marginal cost
  • marginal benefit equals marginal cost (correct)
  • marginal cost is zero

    • What explains why the ATC and marginal cost curves are U-shaped in the short run

  • The ATC and marginal cost curves are U-shaped in the short run because of the gravitational pull affecting production efficiency.
  • The law of diminishing returns states that as production increases, marginal costs initially decrease due to specialization and increasing returns to scale. However, beyond a certain point, diminishing returns set in, causing marginal costs to rise, hence the U-shape of the curves. (correct)
  • It's due to the fluctuating prices of unicorn tears, which impact production costs and create the U-shape.
  • The difference between average total cost and average variable cost to get smaller as output increases

    • A market demand curve reflects the:

  • aggregate preferences of consumers for a product. (correct)
  • government-imposed taxes on consuming a product.
  • the total revenue generated from consuming a product.
  • individual preferences of consumers for a product.

    • Which of the following statements about monopoly is true?

    <p>Monopoly causes a reduction in consumer surplus. (A)</p> Signup and view all the answers

    Why might private producers be disinclined to supply public goods?

    <p>Government subsidies for public goods are generally excessive, discouraging private involvement due to reduced potential profits. (D)</p> Signup and view all the answers

    Lattes are priced at $4.00 each, and chocolate chip cookies are priced at $2.00 each. What is the opportunity cost of buying a latte?

    <p>2 chocolate chip cookies (C)</p> Signup and view all the answers

    What could lead to an inward movement of a nation's production possibility frontier?

    <p>A decrease in the availability of raw materials (B)</p> Signup and view all the answers

    When do you have a comparative advantage?

    <p>If you can produce something at a lower opportunity cost than others (A)</p> Signup and view all the answers

    The profit-maximising level of output is

    <p>where the difference between total revenue and total cost is the greatest (D)</p> Signup and view all the answers

    Australia has a comparative advantage in the production of

    <p>Laptops (B)</p> Signup and view all the answers

    Study Notes

    Market Equilibrium and Efficiency

    • Equilibrium in a competitive market results in the economically efficient level of output.

    Cost Curves

    • The Average Total Cost (ATC) and Marginal Cost (MC) curves are U-shaped in the short run due to diminishing returns and increasing marginal costs.

    Demand Curve

    • A market demand curve reflects the quantity of a good or service that all consumers are willing and able to purchase at a given price level.

    Monopoly

    • One true statement about monopoly is that a single firm produces the entire market output.

    Public Goods

    • Private producers may be disinclined to supply public goods because they are non-rivalrous and non-excludable, making it difficult to charge for them and recover production costs.

    Opportunity Cost

    • The opportunity cost of buying a latte is the next best alternative that is given up, which is the value of the chocolate chip cookie that could have been purchased instead (in this case, 2 cookies).

    Production Possibility Frontier

    • An inward movement of a nation's production possibility frontier can be caused by a decline in factors of production, technological regress, or an increase in unemployment.

    Comparative Advantage

    • You have a comparative advantage when you can produce a good or service at a lower opportunity cost than someone else.
    • Australia has a comparative advantage in the production of goods such as minerals, coal, and agricultural products.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge on how equilibrium in a competitive market leads to the economically efficient level of output. Explore the concept of market equilibrium and its impact on the allocation of resources.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser