ECON 5

Economic and accounting costs will differ: Whenever there is more than one factor of production. Whenever the firm fails to maximize its profits. Whenever any factor of production is not paid an explicit factor payment equal to its market value. In every case.

Whenever any factor of production is not paid an explicit factor payment equal to its market value.

The long run refers to: A time period longer than one year. A time period less than one year. A period of time long enough for all inputs to be varied. The time period required for a firm to cycle its inventory.

A period of time long enough for all inputs to be varied.

Rising marginal costs result from: Rising marginal physical product. Falling prices of variable inputs. Falling marginal physical product. Rising prices of fixed inputs.

Falling marginal physical product.

Costs of production that do not change with the rate of output are: Nonexistent. Variable costs. Fixed costs. Marginal costs.

Fixed costs

The main difference to an economist between "short-run" and "long-run" is that: Variable costs are short-run investment decisions where as fixed costs are long-run production decisions. In the short-run all resources are fixed where as in the long-run all resources are variable. In the long-run all resources are variable where as in the short-run at least one resource is fixed. Fixed costs are more important then variable costs in the short-run.

In the long-run all resources are variable where as in the short-run at least one resource is fixed.

Which of the following is most likely a variable cost in the short run? Labor Property taxes Rent A business license

Labor

The factors of production include: Money. Profit. Land, labor, capital, and entrepreneurship. Output in a production function.

Land, labor, capital, and entrepreneurship

Marginal cost will increase with greater output if: Marginal physical product is declining. Marginal physical product is increasing. Total variable cost is decreasing. Total fixed cost is increasing.

Marginal physical product is declining.

The change in total output that results from one additional unit of input is the:

Marginal physical product.

In the short run, a manufacturer should produce the next unit of output as long as: Marginal cost is greater than price. Price is greater than total cost. Price is greater than marginal cost. Price equals total cost.

Price is greater than marginal cost.

Which of the following is true about the short run? Some inputs are fixed. It is less than one year. It is one to two years. All inputs are variable.

Some inputs are fixed.

Marginal cost is equal to: Total cost divided by output. The change in total cost divided by the change in output. The change in total cost divided by the change in price. Total cost divided by total revenue.

The change in total cost divided by the change in output.

Explicit costs:

Are the sum of actual monetary payments made for resources used to produce a good.

In the long run, a company will stay in business as long as price is: Greater than or equal to marginal costs. Equal to variable costs. Equal to marginal physical product. Greater than or equal to average total costs

Greater than or equal to average total costs

As more labor is hired in the short run, diminishing returns are observed because: The new workers are lazy. The new workers have less capital and land to work with. All the workers begin to socialize more and work less. The new workers are less skilled.

The new workers have less capital and land to work with.

The law of diminishing returns means that:

The total product production function will eventually increase at a decreasing rate.

The average total cost curve is: Always upward sloping. U-shaped. Flat. Always downward sloping.

U-shaped.

Costs of production that change with the rate of output are: Sunk costs. Fixed costs. Opportunity costs. Variable costs.

Variable costs