Microeconomics exam 2

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls. A. diminishing marginal returns B. marginal cost output C. economies of scale D. diseconomies of scale

Economies of scale

In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity. A. either total cost or average cost B. increasing marginal returns C. either total cost or variable cost D. decreasing marginal returns

Either total cost or variable cost

The term "constant returns to scale" describes a situation where A. expanding all inputs does not change the average cost of production. B. a larger-scale firm can produce at a lower cost than a smaller-scale firm. C. expanding all inputs changes the average cost of production. D. the quantity of output rises and the average cost of production falls.

Expanding all inputs does not change the average cost of production

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production. A. fixed costs; do not change, B. variable costs; are constantly changing, C. fixed costs; are consistently changing, D. variable costs; do not change,

Fixed costs; do not change

In microeconomics, the term _____________________ is synonymous with economies of scale. A. diminishing marginal returns B. increasing returns to scale C. decreasing returns to scale D. constant returns to scale

Increasing returns to scale

The term _____________ is used to describe the additional cost of producing one more unit. A. average cost B. fixed cost C. variable cost D. marginal cost

Marginal cost

In economics, a firm that faces no competitors is referred to as _________________. A. an oligopoly B. a monopoly C. a perfect competitor D. an oligopolizor

Monopoly

I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was A. $1.50 B. $1.23 C. $2.25 D. $2.43

$2.43

In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output. A. acquire energy efficient production technologies B. increase the returns to scale C. maintain constant returns to scale D. create perfect competition between firms

Acquire energy efficient production technologies

In order to determine ____________, the firm's total costs must be divided by the quantity of its output. A. diminishing marginal returns B. fixed costs C. variable cost D. average cost

Average cost

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation. A. marginal cost; total costs B. marginal cost; fixed costs C. average variable cost; fixed costs D. average variable cost; total costs

Average variable cost; fixed costs

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises. A. decreasing returns to scale B. consent returns to scale C. economies of scale D. increasing returns to scale

Decreasing returns to scale

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added. A. Diminishing variable returns B. Diminishing average returns C. Diminishing marginal returns D. Diminishing marginal costs

Diminishing marginal returns

If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point? A. divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be B. divide the total costs of production by the quantity of output C. divide the variable costs of production by the quantity of output D. divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it? A. physical space for the gallery B. costs of purchasing art work to sell in the gallery C. wages paid to three part-time employees D. accountant's fees for preparing tax returns

Physical space for the gallery

Why would labor be treated as a variable cost? A. they are costs incurred in the act of producing that will decrease with quantity produced B. they are made before production starts and vary according to the specific line of business C. labor costs are an input cost that firms are unable to change in the short run D. producing larger quantities of a good or service generally requires more workers

Producing larger quantities of a good or service generally requires more workers

Fixed costs are important because, at least in the ___________, the firm _______________. A. long run; cannot alter them B. short run; cannot alter them C. long run; can alter them D. short run; can alter them

Short run; cannot alter them

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms. A. Total profits B. Total revenues C. Total costs D. Total profit margins

Total costs

Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit. A. marginal costs B. average costs C. total revenue D. variable costs

Total revenue

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price. A. Total revenue B. Total profits C. Average profit margin D. Total cost

Total revenue

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________. A. downward-sloping; more costly to produce B. upward-sloping; more costly to produce C. downward-sloping; less costly to produce D. upward-sloping; less costly to produce

Upward sloping; more costly to produce

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero? A. variable costs B. fixed costs C. opportunity costs D. total cost

Variable costs

______________ include all of the costs of production that increase with the quantity produced. A. Fixed costs B. Variable costs C. Average costs D. Average variable costs

Variable costs