Ch 9 Connect

Implicit costs are:

"payments" for self-employed resources

Refer to the above table. The total fixed cost of production is:

$10

Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm earns an accounting profit of:

$500,000 and an economic profit of $200,000

Refer to the above table. The total variable cost of producing 5 units is:

$63

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Refer to the above table. What is the long-run average cost of producing 30 units of output?

$7

Refer to the above table. The average variable cost of producing 3 units of output is:

$9.33

The question is based on the following table that provides information on the production of a product that requires one variable input. Refer to the above table. With the addition of the second unit of input, the marginal product is:

15 and the average product is 10

With fixed costs of $400, a firm has average total costs of $3 and average variable costs of $2.50. Its output quantity must be:

800 units

Fixed costs of production in the short run:

Cannot be reduced by producing less output

Marginal cost can be defined as the:

Change in total cost resulting from one more unit of production

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of:

Diminishing marginal returns

If all resources used in the production of a product are increased by 10 percent and output increases by less than 5 percent, then the firm is experiencing:

Diseconomies of scale

Economic profits are:

Equal to the difference between accounting profits and implicit costs

Cash expenditures a firm makes to pay for resources are called:

Explicit costs

A firm encountering economies of scale over some range of output will have a:

Falling long-run average cost curve

Marginal product of labor refers to the:

Increase in output resulting from employing one more unit of labor

The main difference between the short run and the long run is that:

In the short run, some inputs are fixed and some are variable

Round Things, Inc.'s production process exhibits economies of scale. Currently their long-run average cost is $1/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be:

Less than $1/unit

If the price of labor or some other variable resource decreased, the:

MC curve would shift downward

Which would be an implicit cost for a firm? The cost:

Of wages foregone by the owner of the firm

According to the law of diminishing marginal returns:

The additional output generated by additional units of an input will diminish

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

The firm may earn positive accounting profits, but will face economic losses

Refer to the above graph. If the firm is producing at Q1, the area 0ADQ1 represents:

Total costs

Refer to the above graph. If the firm is producing at Q1, the area BADE represents:

Total fixed costs

Refer to the above graph. If the firm is producing at Q1, the area 0BEQ1 represents:

Total variable costs