ECON 3
If economic cost is $96,000 and total revenue is $120,000, what is the economic profit? Multiple choice question.
$24,000
Your company's total sales revenue for the month is $150,000; the costs to produce your products are $12,000 for rent, $6,000 for utilities, and $42,000 for employee wages. What is your accounting profit?
$90,000
If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?
10
What is average variable cost if total variable cost is $500, total fixed cost is $100, and output is 50?
10 because 500/100=10
What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?
100
Suppose the total fixed cost of a firm is $500, the total variable cost is $200, and the output produced is 5 units. The average fixed cost of the firm is ______.
100 because 500/5=100
What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000? Multiple choice question.
120,000. because 24000+96000=120,000
If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?
400
What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?
5
Which of the following illustrates constant returns to scale?
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
Which of the following explains the concept of explicit costs?
A firm's monetary payments made for the use of resources owned by others. A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
An increase in the price of labor has no effect on which cost curve?
AFC
Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?
ATC
What is meant by the phrase "spreading the overhead"? Multiple choice question.
As production increases, average fixed cost declines.
Which of the following statements explain why the average variable cost curve is U-shaped?
At low levels of output, production is relatively inefficient and costly. As output rises from the initial very low levels, greater specialization occurs, and average variable cost declines.
Which of the following is true of average fixed cost when output increases?
Average fixed cost declines as output increases.
What methods can be used to calculate average total cost?
Average fixed cost plus average variable cost Total cost divided by output (Q)
Total fixed cost divided by output plus total variable cost divided by the output yields which of the following? Multiple choice question.
Average total cost
Which best characterizes variable costs?
Costs that change with the level of output
The U-shape of the long-run average-total-cost curve results from which of the following?
Diseconomies of scale Economies of scale
What is another term for economies of scale?
Economies of mass production
Which of the following resources can a firm easily and quickly adjust?
Fuel Raw materials Hourly labor
Which of the following are examples of labor specialization?
Hiring more workers in order to subdivide tasks Assigning each worker one task instead of five or six
Why does the law of diminishing returns not account for the U-shape of the long-run average-total-cost curve? Multiple choice question.
In the long run all resources and inputs are variable.
How does labor specialization allow a worker to become more proficient?
It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.
Greater labor specialization has which of the following effects?
It eliminates the loss of time that occurs whenever a worker shifts from one task to another.
Which of the following result from managerial specialization?
Lower unit costs Greater efficiency
What happens to marginal product when total product is increasing at an increasing rate?
Marginal product is rising.
Which of the following are examples of variable costs?
Materials costs Transportation services payments Fuel costs
Which group of costs is the most accurate example of variable cost? Multiple choice question.
Payments for materials, fuel, power, and transportation services
Which best describes economic costs?
Payments that must be made to obtain a resource
Which of the following are examples of fixed costs?
Rental payments Interest on a firm's debts
What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves?
The average-variable-cost, average-total-cost, and marginal-cost curves shift upward. The average-fixed-cost curve remains the same.
Marginal cost includes which of the following? Multiple select question.
The cost savings resulting from not producing the last unit of output All the cost associated with producing the last unit of output
What does the long-run average-total-cost curve show? Multiple choice question.
The lowest average total cost at which any chosen output level can be produced after the firm has had time to make adjustments in plant size
What is the definition of total product (TP)?
The total quantity, or total output, of a particular good or service produced
How is average fixed cost determined?
Total fixed cost divided by output
What is the definition of average variable cost?
Total variable cost divided by output (Q)
Average fixed cost equals total fixed cost divided by the ______.
amount of output
Which curve first falls and then rises?
average variable cost curve
The law of ______ returns states that as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.
diminishing
The marginal cost curve's shape is a consequence of the law of _____ , returns.
diminishing
The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use. Multiple choice question.
economic
Learning by doing contributes to a firm's ______
economies of scale
Learning by doing contributes to a firm's ______.
economies of scale
Accounting profit is what remains after a firm has paid its _______ costs.
explicit
____costs are the monetary payments a firm makes to purchase resources from others..
explicit
True or false: Important determinants of an industry's structure are economies of scale and revenue. True false question.
false
Which costs do not vary with changes in output?
fixed costs
a company's insurance premiums are usually considered
fixed costs
How is total cost calculated?
fixed costs + variable costs
Over what period of time can an industry and firms in that industry adjust all resource inputs used?
in the long run
Which of the following best describes the average variable cost curve?
its U shaped
Assuming technology and production techniques are fixed and cannot change, if beyond some point of production a firm experiences declining units of additional output with each additional unit of labor input, then the firm is experiencing the effects of the law of ______.
law of diminishing returns
A firm grows from one to three plants. As a result, the firm's sales increase, leading to greater marketing expertise. This is an example of which of the following?
learning by doing
A time period during which a firm can adjust the quantities of all the resources that it employs, including plant capacity, is known as which of the following?
long run
A planning curve is another term for which of the following?
long run total cost curve
Economies of scale explain the downward-sloping part of the ______ curve
long-run average-total-cost
By expanding the size of its operations, a growing firm is able to experience economies of scale to do which of the following?
lower average total cost
A marketing supervisor works in a small plant where she performs a range of duties. As the company grows and hires additional supervisors, she is able to spend the bulk of her time in her area of expertise. In this example, the company has increased its ______.
managerial specialization
A firm's decision about what output level to produce is typically a ______ decision
marginal
What is the term for the extra cost of producing one more unit of output?
marginal
What type of cost can be saved by not producing the last unit?
marginal cost
If all workers are hired at the same price, the marginal cost of producing each extra unit of output falls provided the ______ of each additional worker is rising.
marginal product
In heavy industries, small firms are unlikely to realize ______ and will be unable to compete with large-scale producers.
minimum efficient scale
The lowest level of output at which a firm can minimize long-run average costs is called ____
minimum efficient scale
A ______ is a relatively rare market situation in which average total cost is minimized when only one firm produces the good.
natural monopoly
Average variable cost equals total variable cost divided by total _____
output
Variable costs change with the level of
output
What happens to marginal product when total product is increasing but at a decreasing rate?
positive but falling
A firm cannot avoid paying fixed costs in the___ run
short
Increased labor ______ becomes more achievable as a plant increases in size.
specialization
One explanation for the U-shaped average variable cost curve is that greater ______ yields more efficiency and variable cost per unit of output declines
specialization
Which of the following sections of a long-run average total cost curve depicts constant returns to scale?
the flat section
What happens to fixed costs when the level of production output reaches zero?
they remain unchanged
_______cost is the sum of fixed cost and variable cost at each level of output.
total
What is the term for the total quantity of a specific good produced?
total product
Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust
true
In microeconomics, the long run is also known as which of the following?
variable plant period
When total product is at its maximum, marginal product is ____
zero