final principle of mic. 2

21) As output increases, average fixed costs

A) decrease.

15) Which statement is TRUE? Fixed costs

A) do NOT exist in the long run.

35) Firms that are "breaking even" are

A) earning zero economic profits.

10) In the short run, a firm

A) has at least one fixed factor of production.

20) Average fixed costs

C) fall as output rises.

56) The demand for ________ is a ʺderived demand.ʺ

C) a hair stylist by a salon owner

7) The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

A) $50.

62) An example of tangible capital is

A) a restaurantʹs unsold, unopened cans of soda.

39) Refer to Scenario 9.1. Amyʹs profit is .

B) $20,000

37) Refer to Scenario 9.1. Amyʹs total fixed costs equal

C) $10,000.

51) If a pet grooming salon hires an additional groomer, that worker can groom 4 additional pets per day. The average grooming fee is $25. The most the salon would be willing to pay that groomer is

C) $100 per day.

11) Refer to Scenario 7.1. During the year your economic costs were

C) $100,000.

53) If the marginal product of a worker for a calculator manufacturer is 10 calculators, and the price of a calculator is $10, the firmʹs marginal revenue product is

C) $100.00.

42) Refer to Figure 9.1. If this farmer is maximizing his profits, his TVC is

C) $108.

44) Refer to Figure 9.1. If this farmer is maximizing profits, his total revenue will be .

C) $180

4) Refer to Figure 7.1. A corn producer's profit is $200 and is producing 100 bushels of corn. Then he must have a cost per bushel of ________.

C) $3

40) Refer to Figure 9.1. For this farmer to maximize profits he should produce ________ bushels of wheat.

C) 12

69) A university requires that all entering first-year students learn how to use word processing and spreadsheet software. This is an investment in what type of capital?

C) Human

22) ________ are likely a fixed cost of a firm.

C) Lease payments for office space

45) Operating profit is

C) TR -TVC.

41) Refer to Figure 9.1. If this farmer is maximizing profits, his total costs will be

D) $132.

2) Refer to Figure 7.1. This corn producer produces 100 bushels of corn and sells each bushel at $5. The cost of producing each bushel is $2. This corn producerʹs total revenue is ________ and profit is ________.

D) $500; $300

17) The formula for total fixed cost is

D) TFC = TC -TVC.

48) Demand for the services of Derek Jeter is

D) derived from the demand for Yankee's tickets when Jeter plays.

8) If economic profit is zero, a firm

D) earns exactly a normal rate of return.

34) Assume firms break even in an industry. New firms ________ attracted to the industry and current ones ________ exiting it.

A) are not; are not

55) When a large amount of output is produced per unit of the input, the input is said to 5exhibit

A) high productivity.

63) You take a class that improves your critical thinking skills. This represents an investment in your

A) human capital.

6) Economic costs

A) include both a normal rate of return on investment and the opportunity cost of each factor of production.

58) In the capital market, households ________ supply the financial resources to firms that allow them to purchase ________.

A) indirectly; capital

33) Marginal cost

A) is the increase in total cost resulting from producing one more unit.

52) The marginal revenue product of labor is

A) the additional revenue a firm earns by employing one additional unit of labor.

65) The term investment as it is used by an economist refers to

A) the creation of new capital.

18) Total cost is calculated as

A) the sum of total fixed cost and total variable cost.

43) Refer to Figure 9.1. This farmerʹs fixed costs are

B) $24.

13) Refer to Scenario 7.1. Your accounting profit last year was

B) $30,000.

12) Refer to Scenario 7.1. A yearly normal rate of return for your computer software firm would be

B) $40,000.

38) Refer to Scenario 9.1. Amyʹs total costs equal

B) $40,000.

19) The formula for average fixed costs is

B) TFC/q.

14) In the short run

B) all firms have costs that they must bear regardless of their output.

57) Goods produced by the economic system that are used as inputs in the production of future goods and services are

B) capital goods.

47) The idea that the demand for auto workers stems from the demand for automobiles is

B) derived demand.

50) The marginal revenue product

B) eventually increases as labor input increases. C) measures the benefit to the firm from hiring an additional unit of labor. D) Both A and C are correct.

36) In the short run, firms earning a profit will want to ________ their profits while firms suffering losses will want to ________ their losses.

B) maximize; minimize

61) A clothing manufacturer produced 5,000 sweaters, but sold only 4,000 of them. The remaining 1,000 sweaters would be classified as

B) part of the firmʹs tangible capital.

68) A firm's capital is measured as a(n) ________ while investment in new capital is measured as a(n) ________.

B) stock; flow

9) In the long run,

B) there are no fixed factors of production.

67) The measure of a firm's ________ is the current market value of its plant, equipment, inventories, and intangible assets.

C) capital stock

59) As the inventory of a firm falls,

C) its tangible capital decreases.

64) Capital goods yield benefits

C) over their life span.

1) Total revenue minus total cost is equal to

C) profit.

60) Firms that offer to pay for college tuition for their employees are investing in ________ capital.

D) human

16) Which statement is NOT true? Variable costs

D) remain constant as output goes up.

5) Perfectly competitive firms must make all of the following decisions EXCEPT

D) what price to charge for its output.

66) Which of the following would constitute an act of investment by a household, as economists use the term?

A) Building a new construction vacation home

46) Economic profit is

A) TR -TC.

49) Salaries of NFL quarterbacks, like Tom Brady, are

B) related to the additional revenues team owners expect to enjoy as a result of having them on the team roster.

54) A decrease in the wage rate will change

B) the amount of labor employed, and it may also change the amount of other inputs employed.

3) Refer to Figure 7.1. This corn producer earns a total revenue of $900. Each bushel of corn is sold for $5. This corn producer must be selling ________ bushels of corn.

A) 180