Chapter 11 Micro

Total cost divided by the quantity of output produced is: a. average total cost. b. average fixed cost. c. average product. d. marginal cost.

a. average total cost.

Marginal cost is the: a. increase in total cost when one more unit of output is produced. b. reduction in cost from economies of scale. c. ratio of average total cost to total cost. d. increase in output from the addition of one unit of labor.

a. increase in total cost when one more unit of output is produced.

If a firm has lower costs per unit as it increases production in the long run, this is an example of: a. increasing returns to scale. b. decreasing returns to scale. c. increasing opportunity costs. d. scale reduction

a. increasing returns to scale.

The marginal cost curve intersects the average variable cost curve at: a. its lowest point. b. its maximum. c. its end point. d. no point; the curves don't intersect.

a. its lowest point.

The long run is a planning period: a. over which a firm can consider all inputs as variable. b. that is at least 5 years in length. c. that must be over 6 months in length. d. that must be between 6 months and 5 years.

a. over which a firm can consider all inputs as variable.

The sum of fixed and variable costs is: a. total cost. b. marginal cost. c. variable cost. d. average cost.

a. total cost.

An input whose quantity cannot be changed in the short run is: a. a marginal input. b. a fixed input. c. an incremental input. d. a variable input.

b. a fixed input.

Diminishing marginal returns occur when: a. each additional unit of a variable factor adds more to total output than the previous unit. b. an additional variable factor adds less to total output than the previous unit. c. the marginal product of a variable factor is increasing but at a decreasing rate. d. total product decreases.

b. an additional variable factor adds less to total output than the previous unit.

A cost that does not depend on the quantity of output produced is called a: a. marginal cost. b. fixed cost. c. variable cost. d. average cost.

b. fixed cost.

The marginal product of labor is: a. the change in labor divided by the change in total product. b. the slope of the total product of labor curve. c. the change in average product divided by the change in the quantity of labor. d. the change in output that occurs when capital increases by one unit.

b. the slope of the total product of labor curve.

Average total cost is: a. the change in cost divided by the change in output. b. total cost divided by output. c. the change in output divided by the change in costs. d. total cost times output.

b. total cost divided by output.

Average variable cost is: a. the firm's variable cost per unit multiplied by the output. b. total variable cost divided by output. c. the difference between average total cost and total variable cost. d. the difference between total cost and total variable cost.

b. total variable cost divided by output.

When marginal cost is below average variable cost, average variable cost must be: a. at its minimum. b. at its maximum. c. falling. d. rising

c. falling.

Decreasing and increasing returns to scale account for the shape of the: a. short-run average total cost curve. b. short-run average variable cost curve. c. long-run average total cost curve. d. marginal cost curve in both the short run and the long run.

c. long-run average total cost curve.

The ________ is the increase in output that is produced when hiring an additional worker. a. average product b. total product c. marginal product d. marginal cost

c. marginal product

In the short run: a. all inputs are fixed. b. all inputs are variable. c. some inputs are fixed and some inputs are variable. d. all costs are variable

c. some inputs are fixed and some inputs are variable.

The term diminishing returns refers to: a. a falling interest rate that can be expected as one's investment in a single asset increases. b. a reduction in profits caused by increasing output beyond the optimal point. c. a decrease in total output due to the firm hiring uneducated workers. d. a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

d. a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

An input whose quantity can be changed in the short run is: a. a marginal input. b. a fixed input. c. an incremental input. d. a variable input.

d. a variable input.

The curve that shows the additional cost of producing each additional unit of output is called the: a. average cost curve. b. total cost curve. c. marginal product curve. d. marginal cost curve.

d. marginal cost curve.

When marginal cost is above average variable cost, average variable cost must be: a. at its minimum. b. at its maximum. c. falling. d. rising.

d. rising.