Microeconomics Test 3 Grodner T/F

Average total cost reveals how much total cost will change as the firm alters its level of production

F

Diminishing marginal product exists when the total cost curve becomes flatter as outputs increase.

F

Economists normally assume that people start their own businesses to help society maximize its income

F

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

F

If the marginal cost curve is rising, so is the average total cost curve

F

The average total cost curve is unaffected by diminishing marginal product.

F

The shape of the total cost curve is unrelated to the shape of the production function.

F

When economists speak of a firm's costs, they are usually excluding the opportunity costs

F

Accountants often ignore implicit costs

T

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

T

Assume Jack received all A's in his classes last semester. If Jack gets all C's in his classes this semester, his GPA may or may not fall.

T

Average total cost and marginal cost are merely ways to express information that is already contained in a firm's total cost.

T

When trying to understand the decision making process of different firms, economists assume that people think at the margin.

T

Average variable cost is equal to total variable cost divided by quantity of output.

T

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve

T

Fixed costs are incurred even when a firm does not produce anything.

T

Implicit costs are costs that do not require an outlay of money by the firm.

T

The cost of producing an additional unit of a good is not the same as the average cost of the good

T

The marginal cost curve intersects the average total cost curve at the minimum point of the average total cost curve.

T

The shape of the marginal cost curve tells a producer something about the marginal product of her workers

T

Variable costs usually change as the firm alters the quantity of output produced.

T

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.

T