Econ-Chapter 13

41. Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will be better next semester if he (i) performs better than he did last semester. (ii) performs better than his cumulative GPA. (iii) gives an average performance. a. (ii) only b. (iii) only c. (i) and (ii) d. (ii) and (iii)

A

The length of the short run is different for different types of firms. can never exceed 3 years. can never exceed 1 year. is always less than 6 months.

A

When a firm experiences constant returns to scale, long-run average total cost is unchanged, even when output increases. long-run marginal cost is greater than long-run average total cost. long-run marginal cost is less than long-run average total cost. the firm is likely to experience coordination problems.

A

Diminishing marginal product suggests that a. additional units of output become less costly as more output is produced. b. marginal cost is upward sloping. c. the firm is at full capacity. d. adding additional workers will lower total cost.

B

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost? the $20 million payment that the firm pays each year for accounting services the cost of the steel that is used in producing automobiles the rent that the firm pays for office space in a suburb of St. Louis All of the above are correct.

B

The nature of a firm's cost (fixed or variable) depends on the a. firm's revenues. b. time horizon under consideration. c. price the firm charges for output. d. explicit but not implicit costs.

B

40. Marginal cost tells us the a. value of all resources used in a production process. b. marginal increment to profitability when price is constant. c. amount by which total cost rises when output is increased by one unit. d. amount by which output rises when labor is increased by one unit.

C

Marginal cost equals total cost divided by quantity of output produced. total output divided by the change in total cost. the slope of the total cost curve. the slope of the line drawn from the origin to the total cost curve.

C

Which of the following statements is not correct? Fixed costs are constant. Variable costs change as output changes. Average fixed costs are constant. Average total costs are typically U-shaped.

C

30. Which of the following costs of publishing a book is a fixed cost? a. author royalties of 5% per book b. the costs of paper and binding c. shipping and postage expenses d. composition, typesetting, and jacket design for the book

D

At low levels of production, the firm benefits from increased size because it can take advantage of greater specialization. has the potential for economies of scale. is unlikely to experiences acute problems with coordination. All of the above are correct.

D

In the short run, a firm incurs fixed costs only if it incurs variable costs. only if it produces no output. only if it produces a positive quantity of output. whether it produces output or not.

D

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

F

The average-total-cost curve is unaffected by diminishing marginal product.

F

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

F

The graph of the production function plots total cost versus quantity of output.

F

Average total cost and marginal cost express information that is already contained in a firm's total cost.

T

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

T