ECON Practice 9

12. Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are:

A. $5,000.

10. In the diagram above, at output level Q total variable cost is:

A. 0BEQ.

28. (Consider This) Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost?

A. The $20 ticket to the match.

1. Economic cost can best be defined as:

A. a payment that must be made to obtain and retain the services of a resource

16. In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:

B. are $1,250.

9. Marginal cost is the:

B. change in total cost that results from producing one more unit of output.

24. In the diagram above, economies of scale:

B. develop over the oQ1 range of output.

22. As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:

B. economies of scale.

5. To economists, the main difference between the short run and the long run is that:

B. in the long run all resources are variable, while in the short run at least one resource is fixed.

25. In the diagram above, minimum efficient scale:

B. is achieved at Q1.

4. Refer to the data above. If, other things equal, Creamy Crisp's revenue fell to $286,000:

B. it would earn a normal profit but not an economic profit.

21. Economies and diseconomies of scale explain:

B. why the firm's long-run average total cost curve is U-shaped.

13. In the data above, the total variable cost of producing 5 units is:

C. $37.

19. In the data above, the marginal cost of the fifth unit of output is:

C. $80.

11. In the diagram above, at output level Q total cost is:

C. 0BEQ + BCDE.

8. In the data above, assume that the amounts of all nonlabor resources are fixed. The marginal product of the sixth worker is:

C. 15 units of output.

6. Which of the following best expresses the law of diminishing returns?

C. As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline.

Which of the following definitions is correct?

C. Economic profit = accounting profit + implicit costs.

26. In the diagram above, diseconomies of scale:

C. begin at output Q3.

7. In the data above, assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the:

C. third worker.

14. In the data above, the average total cost of producing 3 units of output is:

D. $16

17. In the data above, total fixed cost is:

D. $50.00.

15. In the data above, the marginal cost of producing the sixth unit of output is:

D. $8.

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 3. Refer to the data above. Creamy Crisp's economic profit is:

D. $94,000

23. Which of the following is not a source of economies of scale?

D. Inelastic resource supply curves.

27. (Last Word) The development of additive manufacturing technology (3-D printers) is expected to lower prices by doing which of the following?

D. Reducing both large fixed set-up costs and transportation costs.

20. In the diagram above, the profit-maximizing level of output for this firm:

D. cannot be determined from the information given.