Economics

The average total cost curve has a U shape because the __________ effect is dominant at low levels of output, and the __________ effect is dominant at high levels of output

Spreading; Diminishing; Absolute Advantage

The larger the output, the more output over which fixed cost is distributed. Called the __________ effect, this leads to a _______ average ________ cost.

Spreading; lower; fixed

You own a small deli that sells sandwiches, salads, and soup. Which of the following is an implicit cost of the business?

THe job offer you did not accept at a local catering service

You own a deli. Which of the following is most likely a fixed input at your deli?

The dining room

If the accounting profit for a firm is negative

The economic profit must be negative

Jacquelyn is a student at a major state university. Which of the following is NOT an explicit cost of her attending college?

The salary that she could have earned working full-time

The marginal product of labor is

The slop of the total product of labor curve

In the long run:

All factors are variable

The long-run average total cost curve is tangent to an infinite number of short-run _________ cost curve

Average Total

The ______ cost curve is NOT affected by diminishing returns

Average fixed

If marginal cost is greater than average total cost:

Average total cost is increaseing

Suppose a local floral shop has explicit costs of $200,000 per year and implicit costs of $50,000 per year. If the store earned an economic profit of $50,000 last year, the store's accounting profit equaled:

$100,000

Austin's total fixed cost is $3,600 a month at his cupcake bakery. Austin employs 20 workers and pays each worker $600 a month. If labor is his only variable cost, what is Austin's total cost?

$15,600

Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in Orlando. Sarah's husband, an economist, claims Sarah lost $43,002 running her pottery studio. This means her husband is claiming that she incurred __________ in _______ costs.

$86,004; implicit

The term diminishing returns/product refers to:

A decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant

A fixed cost:

Can be positive, even if the firm doesn't produce any output in the short run

The total cost curve gets steeper as output increases because of:

Decreasing returns to the variable input

The larger the output, the more variable input required to produce additional units. Called the _______ effect, this leads to a _______ average _________.

Diminishing returns; higher; variable

Buffalo Aircraft doubles the amount of all of the inputs is uses--the factory doubles in size and twice as many workers are hired. After this expansion, the number of aircraft s produced triples. If the price of inputs is unchanged, this means that Buffalo Aircraft is operating with:

Economic Scale

A firm that is able to use its inputs more efficiently as it increases production in the long run best demonstrates

Economics of scale

When marginal cost is below average variable cost, average variable cost must be:

Falling

For most restaurants, the average total cost curve _________ at ________ levels of output, then _________ at ___________ levels

Falls; Low; Rises; High

An input whose quantity CANNOT be changed in the short run is

Fixed

Once diminishing returns have set in, as output increases, the total cost curve:

Gets steeper

The marginal cost curve intersects the average variable cost curve at:

It's lowest point

Economic profit is:

Less than accounting profit if implicit costs exist

When a fine caterer produced 30 catered meals, its marginal cost and average variable cost each equal $10. Therefore, assuming normally shaped cost curves, at 29 meals its marginal cost is _______ $10 and its average variable cost is _________ $10

Less than; more than

The _________ is the increase in output that is produced when a firm hires an additional worker.

Marginal product

The change in total output resulting from a one-unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is:

Marginal product

Which of the following statements about opportunity cost is false?

Opportunity cost is synonymous with explicit cost

The sum of fixed and variable cost is _________ cost

Total

Profit is the difference between _________ and __________.

Total revenue; total cost

The total cost curve for a snowmobile dealership shows how ___________ cost depends on the quantity of __________

Total; output

An input whose quantity can be changed in the short run is a _________ input

Variable

In the long run, all costs are:

Variable

Diminishing returns/product to an input occur:

When some inputs are fixed and some are variable

Which of the following statements is FALSE?

When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping

The total product curve (or production function)

Will become flatter as output increases if there are diminishing returns to the variable input

You own a deli. Which of the following is a decision most likely to be made in the LONG run at your deli?

You renovated the second floor of your building to increase the size of the dining room