micro chpt 9

If economic cost is $96,000 and total revenue is $120,000, what is the economic profit? Multiple choice question. $120,000 $24,000 $216,000 $96,000

Economic profit equals total revenue minus economic cost $24,000

If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost? Multiple choice question. $10 $1,000 $20 $200

AVC = TVC/output. 10

costs are the monetary payments a firm makes to purchase resources from others.

Explicit

costs are the monetary payments a firm makes to purchase resources from others. Listen to the complete question

Explicit

Which of the following are examples of fixed costs? Multiple select question. Transportation Interest on a firm's debts Rental payments Labor

Interest on a firm's debts Rental payments

How does labor specialization allow a worker to become more proficient? Multiple choice question. It allows a worker to focus on fewer tasks and become more skilled in performing those tasks. It refers to the process developed by unions to protect both businesses and workers from inefficient production technology. It increases the number of unskilled tasks a worker is able to perform. It allows a worker to focus on more tasks to become a jack-of-all-trades.

It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.

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. Multiple choice question. diminishing variable marginal fixed

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 absolute explicit accounting

economic

costs are part of the simple existence of a firm's plant and must be paid even when output is zero.

fixed

A firm's insurance premiums are generally considered ____ costs.

fixed

How is total cost calculated? Multiple choice question. By dividing total fixed cost into total variable cost By multiplying total fixed cost and total variable cost By adding total fixed cost and total variable cost By subtracting total fixed cost from total variable cost

By adding total fixed cost and total variable cost

What is another term for economies of scale? Multiple choice question. Diseconomies of mass production Economies of output Economies of mass production Diseconomies of scale

Economies of mass production

True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust. True false question. True False

true

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? Multiple choice question. $102,000 $108,000 $132,000 $90,000

$150,000 - $60,000 (explicit costs) = $90,000.

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 ______. Multiple choice question. $495 $140 $250 $100

AFC = TFC/output $100

What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20? Multiple choice question. $80 $5 $2,000 $150

AFC = TFC/output. 5

What is average variable cost if total variable cost is $500, total fixed cost is $100, and output is 50? Multiple choice question. $450 $10 $10.20 $600

AVC = TVC/output. 10

What is meant by the phrase "spreading the overhead"? Multiple choice question. As production increases, average fixed cost declines. As production increases, average fixed cost increases. As production increases, average fixed cost declines and then increases. As production increases, average variable cost always increases.

As production increases, average fixed cost declines.

An increase in the price of labor has no effect on which cost curve? Multiple choice question. Average-fixed-cost Average-total-cost Marginal-cost Average-variable-cost

Average-fixed-cost

True or false: Important determinants of an industry's structure are economies of scale and revenue. True false question. True False

False

Identify a correct statement about an industry and its individual firms. Multiple choice question. New firms cannot enter the industry in the long run. Firms can always exit the industry when they face losses in the short run. Firms can undertake all desired resource adjustments in the long run. Firms can choose to expand even in the short run.

Firms can undertake all desired resource adjustments in the long run.

Which costs do not vary with changes in output? Multiple choice question. Variable Fixed Labor Marginal

Fixed

Which of the following is an example of labor specialization? Multiple select question. Hiring more workers in order to subdivide tasks Assigning each worker five or six unique tasks Hiring fewer workers and creating fewer job classifications Assigning each worker one task instead of five or six

Hiring more workers in order to subdivide tasks Assigning each worker one task instead of five or six

What is the term for the extra cost of producing one more unit of output? Multiple choice question. Total cost Variable cost Marginal cost Fixed cost

Marginal cost

Which best describes economic costs? Multiple choice question. Payments that must be made to obtain a resource The lowest value attributed to a resource Explicit plus accounting costs Implicit costs

Payments that must be made to obtain a resource

What does the long-run average-total-cost curve show? Multiple choice question. The sum total of all of the short-run average-total-cost curves The maximum level of output possible in the short run at all plant sizes The lowest minimum short-run average-total-cost curve at which a firm must produce to make a profit 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

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

Average total cost (ATC) for any output level Q is found by: Multiple select question. dividing total fixed cost by output (Q) at that output. dividing total variable cost by output (Q) at that output. dividing total cost (TC) by that output (Q). adding average fixed cost (AFC) and average variable cost (AVC) at that output.

dividing total cost (TC) by that output (Q). adding average fixed cost (AFC) and average variable cost (AVC) at that output.

Learning by doing contributes to a firm's ______. Multiple choice question. constant returns to scale diseconomies of scale fixed costs economies of scale

economies of scale

The lowest level of output at which a firm can minimize long-run average costs is called ______. Multiple choice question. maximum efficient scale diseconomies of scale economies of scale minimum efficient scale

minimum efficient scale

Which of the following is true of average fixed cost when output increases? Multiple choice question. Average fixed cost increases initially, reaches a maximum, and then decreases. Average fixed cost declines initially, reaches a minimum, and then increases. Average fixed cost stays the same as output increases. Average fixed cost declines as output increases.

Average fixed cost declines as output increases.

How is marginal cost (MC) calculated? Multiple choice question. By dividing the change in total fixed cost by the total output By dividing the change in total fixed cost by the change in output By dividing the change in output by the change in total cost By dividing the change in total cost by the change in output

By dividing the change in total cost by the change in output

Which of the following resources can a firm easily and quickly adjust? Multiple select question. Hourly labor Raw materials Fuel Production-line machinery Size of the factory

Hourly labor Raw materials Fuel

Which of the following are effects of an increase in the price of labor on the cost curves? Multiple select question. The average-fixed-cost curve remains the same. The average-variable-cost and average-total-cost curves shift upward, and the marginal-cost curve shifts downward. The average-variable-cost, average-total-cost, and marginal-cost curves shift downward. The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

The average-fixed-cost curve remains the same. The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

What is the definition of total product (TP)? Multiple choice question. The total output per unit of labor The total additional output or added product associated with adding a unit of a variable resource to the production process The total quantity, or total output, of a particular good or service produced The total output of a particular good less total production costs

The total quantity, or total output, of a particular good or service produced

Which best characterizes variable costs? Multiple choice question. Costs that change with the level of output Costs that increase when output declines and decrease when output increases Costs that consider the average cost over a period of time Costs that do not change with the level of output

Costs that change with the level of output

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 short run all resources and inputs are fixed. In the long run all resources and inputs are variable. In the short run all resources and inputs are variable. In the long run all resources and inputs are fixed.

In the long run all resources and inputs are variable.

What is the term for the extra cost of producing one more unit of output? Multiple choice question. Marginal cost Variable cost Fixed cost Total cost

marginal cost

Variable costs change with the level of

output

What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000? Multiple choice question. $36,000 $72,000 $4,000 $120,000

$120,000

Which of the following explain the concept of explicit costs? (Check all that apply.) Multiple select question. A firm's monetary payments made for the use of resources owned by others. A firm's monetary payments that self-employed resources could have earned in their best alternative use. A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services. A firm's monetary payments received for the use of resources owned by the firm.

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.

Economies of scale explain the downward-sloping part of the ______ curve. Multiple choice question. long-run average-fixed-cost short-run average-variable-cost long-run average-total-cost short-run average-total-cost

long-run average-total-cost

What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500? Multiple choice question. $0.01 $100 $3 $900

Marginal cost equals change in total cost divided by change in output. 100

If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost? Multiple choice question. $400 $700 $40 $1,000

Marginal cost equals change in total cost divided by change in output. 400

Which of the following sections of a long-run average total cost curve depicts constant returns to scale? Multiple choice question. The downward-sloping section The beginning high point of the curve The upward-sloping section The flat section

The flat section

How is average fixed cost determined? Multiple choice question. Total fixed cost divided by opportunity cost Total fixed cost divided by total variable cost Total fixed cost divided by marginal output Total fixed cost divided by output

Total fixed cost divided by output

What is the term for the total quantity of a specific good produced? Multiple choice question. Normal product Marginal product Total product Average product

Total product

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 ______. Multiple choice question. supply and demand diminishing marginal costs marginal utility diminishing returns

diminishing returns

Accounting profit is what remains after a firm has paid its _______ costs. Multiple choice question. opportunity explicit and implicit implicit explicit

explicit

in the ___run, firms are able to adjust all resources.

long

Average variable cost equals total variable cost divided by total ______. Multiple choice question. costs revenue output price

output

Average variable cost equals total variable cost divided by total ______. Multiple choice question. revenue price output costs

output

Increased labor ______ becomes more achievable as a plant increases in size. Multiple choice question. specialization generalization demand supply

specialization

Which of the following illustrates constant returns to scale? Multiple choice question. A firm's 10% increase in given inputs, causing a 30% increase in output A firm's 10% increase in given inputs, causing a 5% increase in output A firm's 10% increase in given inputs, causing a 20% increase in output A firm's 10% increase in given inputs, causing a proportionate 10% increase in output

A firm's 10% increase in given inputs, causing a proportionate 10% increase in output

The U-shape of the long-run average-total-cost curve results from which of the following? Multiple select question. Rising resource prices Economies of scale Fixed labor costs Diseconomies of scale

Economies of scale Diseconomies of scale

Greater labor specialization has which of the following effects? Multiple choice question. It eliminates the loss of time that occurs whenever a worker shifts from one task to another. It allows workers to focus on more tasks rather than fewer. It increases production costs. It permits workers to specialize in more varied areas, so they do not get bored.

It eliminates the loss of time that occurs whenever a worker shifts from one task to another.

Which of the following is true of a firm? Multiple choice question. It should avoid taking into account opportunity costs when making business decisions. Its decisions regarding what output level to produce are typically based on total revenue and total cost data. It should consider sunk costs when making business decisions. Its decisions regarding what output level to produce are typically marginal decisions

Its decisions regarding what output level to produce are typically marginal decisions.

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? Multiple choice question. Learning by doing Labor specialization Efficient capital Slow decision making

Learning by doing

A planning curve is another term for which of the following? Multiple choice question. Long run average-marginal-cost curve Long run average-fixed-cost curve Long run average-total-cost curve Long run average-variable-cost curve

Long run average-total-cost curve

What is the definition of average variable cost? Multiple choice question. Total variable cost divided by output (Q) Total variable cost divided by marginal cost (MC) Total variable cost divided by total fixed cost (TFC) Total variable cost divided by change in output (Q)

Total variable cost divided by output (Q)

Average fixed cost equals total fixed cost divided by the ______. Multiple choice question. amount of output marginal product of labor total costs quantity of labor

amount of output

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following? Multiple choice question. Average marginal cost Average fixed cost Average total cost Average variable cost

average total cost

A firm's decision about what output level to produce is typically a ______ decision. Multiple choice question. sequential marginal coordinated production

marginal

____cost is the sum of fixed cost and variable cost at each level of output.

total