Quiz 6 Principles of Economics

in the long run: a. all inputs are variable. b. inputs are neither variable nor fixed. c. all inputs are fixed. d. at least one input is variable and one input is fixed.

a. all inputs are variable.

The term diminishing returns refers to: a. a decrease in total output due to the firm hiring uneducated workers. b. 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. c. a reduction in profits caused by increasing output beyond the optimal point. d. a falling interest rate that can be expected as one's investment in a single asset increases.

b. 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.

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

b. total cost divided by quantity.

Marginal cost is the change in _____ cost resulting from a one-unit change in _____. a. average; output b. total; output c. total; a variable input d. total; average cost

b. total; output

Diminishing returns to an input occur: a. only when there are no fixed inputs. b. when some inputs are fixed and some are variable. c. when all inputs are fixed. d. when all inputs are variable.

b. when some inputs are fixed and some are variable.

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

c. fixed.

The _____ of capital is the increase in output that is produced when a firm uses one more unit of capital. a. total product b. average product c. marginal product d. marginal cost

c. marginal product

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

c. the change in output divided by the change in the quantity of labor.

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

c. the lowest point on the average variable cost curve.

In economics, the short run is defined as: a. less than 1 year. b. the period in which all inputs are fixed. c. the period in which some inputs are considered to be fixed in quantity. d. less than 6 months.

c. the period in which some inputs are considered to be fixed in quantity.

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

d. average total cost.