Micro

Which of the following is an example of an explicit cost? A) salaries paid to owners who work for the firm B) Interest on money borrowed to finance equipment purchases C) foregone rent on office space owned and used by the firm D) cash payments for raw materials

C) foregone rent on office space owned and used by the firm

Which of the following statements is correct? a) Assuming that implicit costs are positive, accounting profit is greater than economic profit b) Assuming that explicit costs are positive, economic profit is greater than accounting profit c) Assuming that explicit costs are positive, accounting profit is equal to economic profit d) Assuming that implicit costs are positive, economic profit is positive

a) Assuming that implicit costs are positive, accounting profit is greater than economic profit

If the marginal product is positive and increasing: a) output is increasing at an increasing rate b) output is decreasing c) output is increasing at a decreasing rate d) the law of diminishing returns has set in.

a) output is increasing at an increasing rate

A sunk cost could best be described as: a) An expenditure a business is considering for expansion. b) An advertisement placed in the Yellow pages of a phone book. c) An insurance policy that can be cancelled when no longer desired. d) A home you are thinking of purchasing

b) An advertisement placed in the Yellow pages of a phone book.

Total revenue minus both explicit and implicit costs is called a) accounting profit b) economic profit c) total cost d) average revenue

b) economic profit

If output is at a maximum: a) marginal product is decreasing b) marginal product is 0 c) average product is at a maximum

b) marginal product is 0

Molly decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Molly's economic profit from running her own business? a) $-55,000 b) $10,000 c) $5,000 d) $35,000

c) $5,000

If Average product is declining you know: a) Marginal product is above the average b) marginal product is the average c) marginal product is below the average d) nothing about the marginal product

c) marginal product is below the average

If output is increasing at a decreasing rate a) marginal product is positive and increasing b) marginal product is at a maxium c) marginal product is positive but decreasing d) marginal product is negative

c) marginal product is positive but decreasing

A short run production function would best be described as the relation a) of fixed input(s) to output b) of how output varies adding units of a fixed input c) of how output varies adding units of a variable input d) of how output varies adding units of fixed and variable inputs

c) of how output varies adding units of a variable input

The law of diminishing marginal returns starts: a) immediately b) with the addition of the 1st unit of labor c) with the addition of the second unit of labor d) with the addition of the 6th unit of labor

c) with the addition of the second unit of labor

The long run as it pertains to production is the period of time a) When output responds to changes in variable inputs. b) When it is possible to recover sunk costs. c) When a start-up business reaches breakeven. d) When no input is considered fixed.

d) When no input is considered fixed.

The Law of diminishing marginal returns a) exists when all inputs can be varied b) starts when marginal product is negative c) begins after the addition of the first unit of a variable input d) doesn't occur if marginal product is constant. e) none of the above

d) doesn't occur if marginal product is constant.

If marginal product is negative a) output is at a maximum b) Output is increasing but at a decreasing rate c) output is negative d) output is decreasing

d) output is decreasing

If the average product is at a maximum we know: a) total output is a maximum b) marginal product is at a minimum c) the law of diminishing returned started with the previous unit of input d) the average product equals the marginal product e) c and d

d) the average product equals the marginal product