micro ch 8

Which of the following about costs is always true? When marginal costs are less than average total costs, average total costs will be decreasing. When average fixed costs are falling, marginal costs must be less than average fixed costs. When average fixed costs are rising, marginal costs must be greater than average total costs. When marginal costs are greater than average total costs, average total costs will be decreasing.

When marginal costs are less than average total costs, average total costs will be decreasing.

When an economist says a firm is earning zero economic profit, this implies that the firm will be forced out of business in the near future unless market conditions change. is earning a zero rate of return on its assets. is earning as high a rate of return now as could be earned in other industries. has an accounting profit of zero.

is earning as high a rate of return now as could be earned in other industries

Where marginal cost is less than average total cost, opportunity cost must have been excluded from the calculation of marginal cost. marginal cost must be falling. marginal cost must be rising. marginal cost may be rising, falling, or constant.

marginal cost may be rising, falling, or constant.

The law of diminishing marginal returns explains the general shape of the firm's long-run cost curves. short-run cost curves. both short-run and long-run cost curves. The law of diminishing returns has nothing to do with cost curves.

short-run cost curves.

If General Electric finds that when it doubles both its plant size and the amount of associated inputs, its output level does not double, then the law of diminishing returns is in effect. long-run average costs must be decreasing. the firm is experiencing diseconomies of scale. the firm should increase production. the firm is experiencing constant returns to scale.

the firm is experiencing diseconomies of scale.

The minimum points of the average variable cost and average total cost curves occur where the marginal cost curve lies below the average variable cost and average total cost curves. the marginal cost curve intersects those curves. the average variable cost and average total cost curves intersect. the slope of total cost is the smallest.

the marginal cost curve intersects those curves.

Average fixed costs will remain unchanged as output expands. are defined as the change in total costs divided by the change in output. will always increase as output increases. will always decrease as output expands.

will always decrease as output expands.

Which of the following reflects diseconomies of scale? Marginal product decreases as output increases. Short-run marginal cost increases as output increases. Long-run marginal cost increases as output increases. Short-run average cost increases as output increases. As output doubles, long-run total cost more than doubles.

As output doubles, long-run total cost more than doubles.

Which of the following about costs is true? The difference between the ATC and AVC curves will decline as output expands. The AFC will remain constant as output increases. If ATC is increasing, then AVC must be greater than ATC. Implicit costs and fixed costs are always the same.

The difference between the ATC and AVC curves will decline as output expands.

When the marginal product of labor diminishes, average fixed cost rises. average variable cost is constant. marginal cost rises. average total cost must rise. total cost rises at a diminishing rate.

marginal cost rises

A local doughnut shop produces about 600 dozen doughnuts daily. If flour prices increase 20 percent only marginal cost will shift up. only marginal cost and average total cost will shift up. marginal cost, average variable cost, and average total cost will shift up. marginal cost, average total cost, and average fixed cost will shift up.

marginal cost, average variable cost, and average total cost will shift up.