Consumers are also price takers; a single consumer`s decision cannot
influence the market price. Therefore, the correct option is D.

Market power is the ability of a single actor (or a few actors) to control or substantially influence market prices. For example, there are only three GSM operators in Turkey and the cell phone service industry is not competitive enough to keep the existing firms’ greed in check. That’s why there is room for regulating the price these firms charge to protect consumers. The answer is C.

Oligopoly is a market structure where there are only a few firms in the market due to barriers to entry. For example, the GSM market in Turkey is composed of three firms: Turkcell, Avea and Vodafone. This industry is characterized with large economies of scale due to fixed costs and small and constant marginal costs. The Correct Answer is D. 

To use more and more labor while other inputs are fixed, the marginal product will eventually become less and less. This is known as diminishing marginal returns.

Traditionally, four types of market structures have been defined based on the characteristics of the market, the number of firms in the market, the degree of product differentiation and the ease of entry and exit of firms into and out of the market. Therefore, the correct option is B.

Constant Returns to Scale, an increase in output by the same percentage as an increase in all inputs.

Explicit costs are costs that are direct expenditures or the price paid plainly for a project. The correct answer is E.

For typical cost curves, we can say that APL stands for average product of labor. Hence, given the wage rate, w, a higher APL implies a lower AVC and vice versa. So, as APL increases, AVC decreases and hits its minimum when APL is at its maximum. Once APL starts to fall, AVC begins to rise and generate a U shape. The correct answer is B.

The factors that shift the MC curve cause the market supply curve to shift. In the short run, basically two factors can cause the market supply shifts to the rightward:
(i) A decrease in production costs shifts the market supply curve rightward. For example, a technological innovation which leads to a rise in labor productivity decreases the unit labor cost and causes the market supply curve to shift to the right.
(ii) In the long run, an increase in the number of firms, i.e., new firms entering the industry, shifts the market supply curve rightward.

The correct answer is B.

Budget Constraint

Increases in money income increase the intercept of the budget line, but do not affect its slope.

Game theory is the study of how people/firms/countries make decisions in situations in which attaining their goals depends on their interactions with others. The correct answer is C.

Oligopolists would like to form cartels and act like monopolies, self interests and the difficulty to enforce cartel agreements drive them toward competition.

The ratio of change in total revenue to a small change in quantity, MR = ΔTR / ΔQ, is defined as marginal revenue, above. Similarly, marginal cost is defined as the ratio of change in total cost to a small change in quantity, MC = ΔTC / ΔQ If the firm is operating in a perfectly competitive market, then the price is given from the firm’s perspective. The more produced and sold, the higher the total revenue in this case.

Economic depreciation refers to a decrease in the market value of capital over a particular period. This decrease is the implicit cost of using the capital throughout that period. The correct answer is C.

When the wage is high enough, some of the workers may decide that they have can afford to work less and spend more leisure time, since they can make enough money to pay for their bills even if they work less. So, after a high level of wages, people may start to work less if wage increases. This may create what is called a backward-bending supply curve for labor

The rents of the firm are fixed costs, for both of which the firm must pay 1300+250=1550. As the firm has not yet started production its revenue is 0 and the profit is =0-1550= -1550.

Balancing Choices and Scarcity: Subject Matter of Economics

Economics is the study of how individuals and societies choose to use scarce resources at their disposal. The needs and desires of individuals are unlimited. Satisfying those needs and desires requires the production of goods and services. All the goods that are not sufficiently abundant to be available to everyone for free are said to be scarce. Their scarcity follows from the scarcity of resources we use to produce them. If scarcity of resources were not a problem, it would be possible to produce all goods and services in sufficiently large quantities to make them available to everyone for free. This is not possible because material inputs and factors of production needed to produce goods are not available in unlimited quantities. The economic problem arises because of this scarcity. Famous British economist Lionel Robbins views economics as a discipline studying human behavior as a relationship between ends and scarce means with alternative uses. Thus, economics could also be defined as the study of how society sets priorities in managing its scarce resources.

There is an obvious positive relationship between wages and the willingness to work. We can easily conclude that an individual worker’s labor supply curve is upward sloping. Therefore, the correct option is C.

In a perfectly competitive market, marginal revenue equals price; P=MR. Therefore, the correct option is A.