Econ Final

When the wage rate is $7 per hour and the MPP of a worker is 35 units per hour, the unit labor cost is:

$0.20 per unit

Profit per unit of output equals:

(TR - TC) ÷ Q.

Rising marginal costs are the result of:

all other choices

In terms of the production-possibilities curve, inefficiency is represented by:

all points inside curve

When an economy is producing efficiently it is:

Getting the most goods and services from the available resources.

If an additional unit of labor costs $15 and has a MPP of 50 units of output, the marginal cost is:

0.30

The production-possibilities curve shifts outward in response to:

Better technology or more resources or both.

In economics, the long run is considered to be

A variable time depending on the nature of business.

Which would not increase the productivity of labor?

An increase in the size of the labor force

Implicit costs:

Are the costs to produce a good for which not direct payment is made

If MC exceeds price, then a competitive firm:

Can increase its profit by decreasing output.

The economic profit is equal to

Economic Profit = Revenue - (Explicit Costs + Implicit Costs).

In defining economic costs, economists recognize:

Explicit and implicit costs while accountants recognize only explicit costs

Why do firms tend to experience decreasing returns to scale at high levels of output?

Firms face more problems with coordinating tasks and communications among managers and workers at very high levels of output.

Greater labor productivity means:

Higher output per worker.

The production-possibilities curve illustrates that:

If society is efficient, it can produce more of one good only if it reduces output of another good.

The production-possibilities curve bows outward because:

In order to get more of a particular good, increasing quantities of other goods must be given up.

Which of the following statements is true?

In the short run, changes in output can only be brought about by a change in the quantity of variable inputs.

The short run is the time period:

In which some costs are fixed.

Which of the following is true about a firm in the long run?

It can choose whatever scale of operations it wishes.

When the production function shifts downward the:

MC shifts upward

Profit is maximized when the firm produces the output where:

MC=MR

Which of the following represents the change in total cost that results from a 1-unit increase in production?

Marginal cost

The law of diminishing returns occurs with each additional unit of a variable input when:

Marginal physical product begins to decline.

For a perfectly competitive firm, the profit reaches the maximum when

Marginal revenue is equal to marginal cost.

The most desirable rate of output for a firm is the output that:

Maximizes total profit.

Efficiency can be defined as the:

Maximum output of a good produced from the available resources

A production function matches a given combination of factor inputs with the:

Maximum output that can be technologically produced from the inputs.

If an economy is producing on its production-possibilities curve, then producing:

More of one good implies producing less of another good.

The law of diminishing returns indicates that marginal physical product of a factor declines as:

More of the factor is used, holding other inputs constant.

Profit per unit of output is equal to:

Price minus average total cost.

The profit-maximization rule is as follows:

Produce the quantity of output at which marginal revenue equals marginal cost.

Long-run economic growth would best be represented by a:

Shift outward of the production-possibilities curve

Long-run economic growth would best be represented by a:

Shift outward of the production-possibilities curve.

Which of the following statements is false?

Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run.

Which of the following would most likely be a fixed cost?

The cost of property insurance.

A decrease in available resources would cause:

The production-possibilities curve to shift inward.

The law of increasing opportunity costs explains:

The shape of the production-possibilities curve.

Which of the following is an assumption under which the production-possibilities curve is drawn?

The supply of factors of production is fixed.

Perfect competition is a situation in which:

There are many firms and no buyer or seller has market power.

A monopoly occurs when:

There is only one producer of a good or service.

Which of the following is an output-level decision?

What output the firm should produce in the short run

Which of the following events would cause the production-possibilities curve to shift inward?

a decrease in supply of labor

Which of the following is not a characteristic of perfect competition?

a heterogeneous product

A technological advance would best be represented by:

a shift outward of the production-possibilities curve

What do most of the real world PPF curves look like?

bowed outward

Boeing Corporation and Airbus Industries are the only two producers of long-range commercial aircraft. This market is not perfectly competitive because:

each company can significantly affect prices.

If input prices are constant, a firm with increasing returns to scale can expect

costs to go up less than double as output doubles

In a production process, all inputs are increased by 10%; but output increases less than 10%. This means that the firm experiences

decreasing returns to scale

Every point on the production-possibilities curve is considered to be:

efficient

The key assumption underlying the theory of the firm is that:

firms are assumed to maximize profits.

In the short run, when a firm produces zero output, total cost equals:

fixed costs

The perfectly competitive firm's marginal revenue curve is

horizontal

As long as there are __________ costs, __________ profit will be greater than __________ profit.

implicit; accounting; economic

An isoquant

is a curve that shows all the combinations of inputs that yield the same total output.

If both factors always have positive marginal products, the

isoquants must be downward sloping.

An essential characteristic of a perfectly competitive firm is that:

its a price taker

Increasing returns to scale in production means

less than twice as much of all inputs are required to double output.

A production function in which the inputs are perfectly substitutable would have isoquants that are

linear

Incremental cost is the same concept as ________ cost.

marginal

The behavior expected in a competitive market includes:

marginal cost pricing

Economists normally assume that the goal of a firm is to

maximize its profit.

For a perfectly competitive firm,

mr=p

Some economists conduct empirical research on the theory of the firm by measuring the degree of technical efficiency achieved by actual firms. What type of research contributions are provided by these studies?

positive

Marginal revenue, graphically, is

the slope of the total revenue curve at a given point.

Which of the following production functions exhibits constant returns to scale?

q = K + L

A production function is a relationship between inputs and

quantity of output

A production function assumes a given

technology.

When labor usage is at 12 units, output is 36 units. From this we may infer that

the average product of labor is 3.

The marginal physical product (MPP) of a variable input is

the change in total output that results from changing the variable input by one unit.

If MR > MC, then

the firm can increase its profits or minimize its losses by increasing output.