Microeconomics Chapter 22

At the end of the​ year, a firm produced 25,000 laptop computers. Its total costs were ​$5 ​million, and its fixed costs were ​$2 million. What are the average variable costs ​(to the nearest dollar​) of this​ firm?

$120

In economics, how long is the long run? -Whatever time it takes a firm to vary all inputs -24 months or longer -More than 12 months -5 years or more

-Whatever time it takes a firm to vary all inputs

Marginal cost equals: -TC/Q. -change in total cost/change in output. -TVC/Q. -TFC/Q.

-change in total cost/change in output.

In economics, a fixed cost is a cost that: -is present only in the short run. -does not vary with the level of output. -goes down as the level of output goes up. -goes up as the level of output goes up.

-does not vary with the level of output.

For a hotdog vendor, the hotdog stand represents his -variable input. -diseconomies of scale. -fixed input. -none of the above.

-fixed input.

The production function: -allows us to compute the difference between accounting and economic profits. -gives the maximum amount of output for a given level of inputs. -gives the implicit costs for all inputs. -gives the amount of time necessary to reach the long run.

-gives the maximum amount of output for a given level of inputs.

If the firm can vary all factors of production, it is operating -at a zero economic profit. -at a profit. -in the short run. -in the long run.

-in the long run.

The law of diminishing marginal product states that : -a doubling all inputs will double output. -output will continue to increase indefinitely if more variable factors of production are added to an existing stock of fixed factors. -variable costs tend to decrease with output. -successive equal-sized increases in labor, when added to fixed factors of production, will result in smaller increases of output.

-successive equal-sized increases in labor, when added to fixed factors of production, will result in smaller increases of output.

Economists generally define the short run as being: -any period of time less than one year. -that period of time in which at least one of the firm's inputs, usually plant size, is fixed. -any period of time less than six months. -that period of time in which all inputs are variable

-that period of time in which at least one of the firm's inputs, usually plant size, is fixed.

MC = AVC and MC = ATC at points at which : -the AVC and ATC curves are at their respective minimums. -the distance between the ATC and AVC curves is at its minimum. -the AVC and ATC curves are at their respective maximums. -the distance between the ATC and AVC curves is at its maximum.

-the AVC and ATC curves are at their respective minimums.

Average variable costs equal: -total variable costs divided by output. -the change in marginal costs from producing another unit of output. -output divided by the change in total costs. -total variable costs divided by marginal costs.

-total variable costs divided by output.

Why does the marginal product of labor eventually decline as more labor is used with another fixed​ input? A. The labor will​ have, on​ average, fewer units of the other inputs to combine with and the increases to total output obtained from more labor will decrease. B. The labor will​ have, on​ average, more units of the other inputs to combine with and the increases to total output obtained from more labor will decrease. C. The labor will​ have, on​ average, more units of the other inputs to combine with and the increases to total output obtained from more labor will decrease. D. The labor will​ have, on​ average, fewer units of the other inputs to combine with and the increases to total output obtained from more labor will increase.

A. The labor will​ have, on​ average, fewer units of the other inputs to combine with and the increases to total output obtained from more labor will decrease.

The shape of the​ short-run cost curves are the result of A. the law of diminishing returns. B. diseconomies of scale. C. economies of scale. D. falling profits.

A. the law of diminishing returns

In the long run there A. are both fixed and variable inputs. B. are only variable inputs. C. are only fixed inputs. D. is only one level of capacity at which the firm can operate.

B. are only variable inputs.

If total product is increasing at a decreasing​ rate, then marginal product is A. increasing at a decreasing rate. B. decreasing. C. constant. D. increasing at an increasing rate.

B. decreasing.

The law of diminishing marginal returns shows the relationship between A. inputs and outputs for a firm in the long run. B. inputs and outputs for a firm in the short run. C. short run and long run outputs for a firm. D. accounting and economic profits.

B. inputs and outputs for a firm in the short run.

From the perspective of the​ firm, what is the difference between the short run and the long​ run? A. The short run is a period of less than a year while the long run is a period of one year or more. B. In the long​ run, at least one input is​ fixed, while in the​ short-run all inputs are variable. C. In the short​ run, at least one input is​ fixed, while in the long run all inputs are variable. D. There is no difference between the short run and the​ long-run from the perspective of the firm.

C. In the short​ run, at least one input is​ fixed, while in the long run all inputs are variable.

In the long run A. some factors are fixed and some are variable. B. economic profits are always positive. C. all factors of production are variable. D. all factors of production are fixed.

C. all factors of production are variable.

The law of diminishing marginal returns shows the relationship between A. accounting and economic profits. B. inputs and outputs for a firm in the long run. C. inputs and outputs for a firm in the short run. D. short run inputs and long run outputs for a firm

C. inputs and outputs for a firm in the short run.

The law of diminishing marginal returns is caused by A. some workers performing poorly on the job. B. insufficient amounts of the variable input. C. the existence of a fixed input that must be combined with increasing amounts of the variable input. D. poor quality fixed inputs.

C. the existence of a fixed input that must be combined with increasing amounts of the variable input.

When the total product function begins to increase at a decreasing​ rate, A. marginal product is falling. B. the law of diminishing returns has set in. C. marginal cost is rising. D. All of the above.

D. All of the above.

The wage rate divided by marginal product equals A. average total cost. B. average product. C. average variable cost. D. marginal cost.

D. marginal cost.

If a firm hires an additional worker and discovers that its total output has​ fallen, then it must be true that A. average total cost is negative. B. marginal cost is negative. C. marginal product is minimized and marginal cost is maximized. D. marginal product is negative.

D. marginal product is negative.

When marginal cost is falling A. marginal product is at a maximum. B. marginal product must be falling. C. marginal product is at a minimum. D. marginal product must be rising.

D. marginal product must be rising.

The short run is defined as A. the period of time in which all factors of production are variable. B. the period of time it takes the firm to make its first economic profit. C. a period of time of five years or less. D. the period of time in which at least one factor of production is fixed.

D. the period of time in which at least one factor of production is fixed.