econ 1101 chpt 6
The table below shows how total cost varies with output in a factory producing watches. Based on the table, if the total fixed cost is $20, the average variable cost of producing 5 units of output is _____.
$15
Lintell Inc. earned a total revenue of $9.3 million and incurred an explicit cost of $3.6 million for the financial year 2013-14. The owner of the company could earn an annual salary of $0.5 million if he joined another firm. Lintell Inc.'s economic profit for 2013-14 was:
$5.2 million.
The table below shows how a factory's output varies with the number of workers employed each week. Based on the table, the marginal product of the fifth worker hired is:
18 units of output.
The table below shows the amount of output produced and the costs incurred by a firm. Based on the table, the average total cost incurred by the firm for 4 units of output is _____.
30
A firm produces 200 units of output at a total cost of $1,000. The firm's total fixed cost equals $200.The firm's per-unit average variable cost is _____.
4
The table below shows the number of T-shirts manufactured by different units of labor. Based on the table, diminishing marginal product is first evident with the addition of the _____ worker.
6th
Which of the following is a short run adjustment?
A bakery hiring two additional bakers
Which of the following observations is true?
Sunk costs are irrelevant for any future action.
Which of the following is not an explicit cost to the owner of a local pizza parlor?
The cost of using his garage as the parlor
When economies of scale exist, an increase in the level of output will lead to:
a decrease in cost per unit.
A difference between the long run and the short run is that:
a firm is unable to vary some of its factors of production in the short run, while all the factors of production are variable in the long run.
Total variable costs:
are costs that increase as production increases.
Scarlett recently began running her husband's lumber mill. Last month, the mill made a revenue of $5,000 and paid $3,400 in out-of-pocket costs. The lumber mill made an economic profit of $1,600 last month.
false
The minimum efficient scale is the level of output at which the long-run average total costs are maximized.
false
Total cost equals total variable cost plus marginal cost.
false
When long-run average total cost does not change as output varies, firms experience constant returns to scale.
false
If a firm's average total cost falls in the long run over a certain range of output, then:
it is subject to economies of scale over that range of output.
The figure below shows the various cost curves. Based on the figure, C represents _____
the average total cost curve
The figure below shows the cost curves faced by an industry. Based on the figure, B represents _____.
the average variable cost curve
When a firm makes zero economic profit, it means that:
the firm is covering the total opportunity costs of its resources.
An example of an implicit cost of production is:
the income an entrepreneur could have earned working for someone else.
The figure below shows the long-run average cost curve for a firm. Based on the figure, the region x shows _____.
the level of output at which the firm attains economies of scale
The figure below shows the long-run average cost curve for a firm. Based on the figure, Point A shows _____.
the level of output at which the firm attains its minimum efficient scale
The figure below shows the long-run average cost curve for a firm. Based on the figure, the region z shows _____.
the range of output over which the firm attains diseconomies of scale
The figure below shows how the quantity of bicycles produced per week varies with the number of workers employed per week. Based on the figure, marginal product diminishes when the _____ is hired.
third worker
The figure below shows the various cost curves. Based on the figure, the area BEQO at OQ output level represents _____. Figure 6-4
total variable cost
An economic profit of zero indicates a satisfactory situation for a firm.
true
In the long run, the firm gets to choose which short-run curve it wants to use.
true
Marginal cost refers to the change in total cost for a one-unit change in output and also to the change in total variable cost for a one-unit change in output.
true
The long-run average total cost curve is less U-shaped than the short-run average total cost curve.
true
Brad worked as a contractor for a year, earned revenues of $120,000, and incurred an explicit cost of $70,000. If he could have earned $80,000 working for a computer company, his economic profit as a contractor would be_____.
−$30,000
When economic profits in an industry are zero and implicit costs are positive, _____.
accounting profits will be greater than zero
Economic profits are calculated after taking into account:
both implicit and explicit costs.
Economic profits differ from accounting profits because:
implicit costs are included in economic profit but not in accounting profit.
The marginal product of capital:
is equal to the increase in output obtained from a one-unit increase in capital, holding other factors constant.