ECON FINAL 3

Which of the following statements about cost is correct?

As the quantity of output increases, marginal cost eventually rises

Economists normally assume that people start their own business to help society maximize its income

False

Fixed costs are those costs that remain fixed no matter how long the time horizon is

False

If the marginal cost curve is rising, so is the average total cost curve

False

The average total cost curve is unaffected by diminishing marginal product

False

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

False

The shape of the total cost curve is unrelated to the shape of the production function

False

Variable cost equal fixed costs when nothing is produced

False

When economist speak of a firm's cost, they are usually excluding the opportunity cost

False

Accountants keep track of the money that flows into and out of firms

True

Accountants often ignore implicit costs

True

As a fim moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production

True

Average total cost and marginal cost are merely way to express information that is already contained in a firm's total cost

True

Average variable cost is equal to total variable cost divided by quantity of output

True

Because of the greater flexibility that firms have in the long run, all short-run cost curve lie on or above the long-run curve

True

Fixed costs are incurred even when a firm does not produce anything

True

The cost of producing an additional unit of a good is not the same as the average cost of the good

True

The marginal cost curve intersects the average total cost curve at the minimum point of the average total cost curve

True

The shape of the marginal cost curve tells a producer something about the marginal product of her workers

True

Variable costs usually change as the firm alters the quantity of output produced

True

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale

True

When trying to understand the decision making process of different firms, economists assume that people that at the margin

True

The long-run average total cost curve is always..

flatter than the short-run average total cost curve, but not necessarily horizontal

The length of the short run...

is different for different types of firms

When a factory is operating in the short run,

it cannot adjust the quantity of fixed inputs

Economies of scale occur when..

long-run average total cost fall as output increases

Economist normally assume that the goal of a firm is to..

maximize profit

Variable cost divided by quantity produced is

non of the above are correct

The marginal product of an input in the production process is the increase in..

quantity of output obtained from an additional unit of that input

A total-cost curve shows the relationship between the..

quantity of output produced and the total cost of production

An example of an implicit cost of production would be

the income an entrepreneur could have earned working for someone else

One of the most important properties of cost curve is that..

the marginal cost curve eventually rises with the quantity of output

Economic profit is equal to

total revenue- (explicit cost+implicit costs) and total revenue- opportunity cost

If a firm produces nothing, which of the color cost will be zero?

variable cost

Average total cost reveals how much total cost will change as the firm alters its level of production

False

Diminishing marginal product exists when the total cost curve becomes flatter as outputs increases

False

Diseconomies of scale often arise because higher production levels allow specialization among workers

False

Marginal cost tells us the...

amount by which total cost rises when output is increase by one unit

The firm's efficient scale is the quantity of output that minimizes

average total cost

Average total cost tells us the

cost of a typical unit of output, if total cost is divided evenly over all the units produced

Specialization among workers occurs when..

each worker is allowed to perfect one particular task

some cost do not vary with the quantity of output produced. Those cost are called...

fixed cost

Total cost can be divided into two types. Those two types are

fixed cost and variable cost