Microeconomics Test 2
(V/F) Input-Gasoline Output-Trucking services
V
(V/F) Input-Tires Output-Automobiles
V
(V/F) Input-meat Output-hamburgers
V
Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. The firm's total fixed costs are: A. $5000 B. $500 C. $.50 D. $50
A
When total product is increasing at an increasing rate, marginal product is: A. Positive and increasing B. Positive and decreasing C. Constant D. Negative
A
Which of the following is most likely to be a variable cost? A. Fuel and power payments B. Interest rates on business loans C. Rental payments on IBM equipment D. Real estate taxes
A
An explicit cost is: A. Omitted when accounting profits are calculated B. A money payment made for resources not owned by the firm itself C. An implicit cost to the resource owner who receives payment D. Always in excess of a resource's opportunity cost
B
If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then: A.The average variable cost of 10 units is $10 B.The average variable cost of 9 units is $10 C.The marginal cost of the tenth unit is $90 D.The firm is operating in the range of increasing marginal returns
B
In the short run it is impossible to decrease the following cost by decreasing the output: A. Average total cost B. Average fixed cost C. Marginal cost D. Average variable cost
B
The basic characteristic of the short run is that: A. Barriers t entry prevent new firms from entering the industry B.The firm does not have sufficient time to change the size of its plant C.The firm does not have sufficient time to cut its rate of output to zero
B
The vertical distance between ATC and AVC reflects: A. The law of diminishing returns B. The average fixed cost at each level of output C. Marginal cost at each level of output D. The presence of economies of scale
B
Which of the following curves is not U-shaped? A. MC B. AFC C. AVC D. ATC
B
Which of the following is most likely to be a fixed cost? A. Shipping charges B. Property insurance premiums C. Wages for unskilled labor D. Expenditures for raw materials
B
A consumer makes purchases of an existing product X such that the marginal utility is 10 and the price is $5. The consumer also tries a new product Y and at the current level of consumption it has a marginal utility of 8 and a price of $1. The utility-maximizing rule suggests that this consumer should: a. Increase consumption of product X and decrease consumption of product Y B. Increase consumption of product X and increase consumption of product Y C. Increase consumption of product Y and decrease consumption of product X D. Decrease consumption of product Y and decrease consumption of product X
C
A fixed cost is: A. Associated with any productive resource whose price is fixed B. Any cost which increases proportionately with output C. Any cost which a firm would incur even if output was zero D. Associated with all inputs whose short-run supply is perfectly inelastic
C
If a firm decides to produce no output in the short run, its costs will be: A. Its marginal costs B. Its fixed plus its variable costs C. Its fixed D. Zero
C
Marginal utility can be: A.Positive, but not negative B.Positive or negative, but not zero C.Positive, negative, or zero D.Decreasing, but not negative
C
Which of the following constitutes an implicit cost to the Johnston Manufacturing company? A. Payments of wages to its office workers B. Rent paid for the use of equipment owned by the Schultz Machinery Company C. Depreciation charges on company-owned equipment D. Economic profits resulting from current production
C
Average fixed cost: A. Equals marginal cost when average total cost is at its minimum B. May be found for any output by adding average variable cost and average total cost C. Graphs as a U-shaped curve D. Declines continually as output increases
D
(V/F) Input-Depreciation Output-Aircraft production
F
(V/F) Input-Property tax Output-Textile production
F
(V/F) Input-fire insurance Output-dry cleaning
F
