microeconomics chapter 9

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 $150 $2,000

$5

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 $90,000 $132,000 $108,000

$90,000

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

10

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

10

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. $250 $140 $495 $100

100

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

As production increases, average fixed cost declines.

Which statement best illustrates the law of diminishing returns from studying? Multiple Choice As hours of studying decrease, the student's GPA will also diminish. As study hours increase, the amount of learning will increase at a diminishing rate. Students with higher GPAs tend to study fewer hours on the night before a big exam. Students who cram the night before a big exam do not show much improvement in their learning.

As study hours increase, the amount of learning will increase at a diminishing rate.

Which of the following is true of average fixed cost when output increases? Multiple choice question. Average fixed cost declines as output increases. Average fixed cost stays the same as output increases. 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 declines as output increases. Reason: Average fixed costs decline as output increases, because fixed costs are spread over more units of output.

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

Costs that change with the level of output

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

Economies of mass production

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

Economies of scale Diseconomies of scale

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

False Important determinants of an industry's structure are economies and diseconomies of scale.

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

Fixed

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

Fixed

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

Hourly labor Raw materials Fuel

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

Rental payments Interest on a firm's debts

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

explicit

A firm's insurance premiums are generally considered costs

fixed

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

fixed

In the _______ run, firms are able to adjust all resources.

long

Diseconomies of scale occur mainly because Multiple Choice of the law of diminishing returns. firms in an industry must be relatively large in order to use the most efficient production techniques. of the inherent difficulties involved in managing and coordinating a large business enterprise. the short-run average total cost curve rises when marginal product is greater than average total cost.

of the inherent difficulties involved in managing and coordinating a large business enterprise.

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

output

Variable costs change with the level of _______

production

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

specialization

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

true

What methods can be used to calculate average total cost? Multiple select question. Total fixed cost divided by output (Q) Average fixed cost plus average variable cost Total variable cost divided by output (Q) Total cost divided by output (Q)

Average fixed cost plus average variable cost Total cost divided by output (Q)

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

Average total cost

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

Average-fixed-cost

Over what period of time can an industry and firms in that industry adjust all resource inputs used? Multiple choice question. Neither the long run nor the short run. The short run Both the long run and the short run The long run

The long run

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

long-run average-total-cost

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

minimum efficient scale

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

Marginal 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. $3 $0.01 $900 $100

100

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

120,000

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

24,000

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

400

If average variable cost is $74 and total fixed cost is $100 at 5 units of output, then average total cost at this output level is Multiple Choice $91. $94. $97. $100.

94

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

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

Which of the following explain the concept of explicit costs? (Check all that apply.) Multiple select question. 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 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 made for the use of resources owned by others.

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4,000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $3,000 per year. Total annual revenue from pottery sales is $72,000. calculate accounting and economic profit

Accounting profit = $ 35000 Economic profit = $ 13000

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

If marginal cost exceeds average total cost in the short run, then which is likely to be true? Multiple Choice Average total cost is increasing. Average variable cost is decreasing. Average total cost is less than average variable cost. Marginal cost is less than average variable cost.

Average total cost is increasing.

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

By adding total fixed cost and total variable cost

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

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

Which of the following is an example of labor specialization? Multiple select question. Assigning each worker five or six unique tasks Hiring more workers in order to subdivide 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

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

In the long run all resources and inputs are variable.

How does labor specialization allow a worker to become more proficient? Multiple choice question. It refers to the process developed by unions to protect both businesses and workers from inefficient production technology. 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. It increases the number of unskilled tasks a worker is able to perform.

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

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.

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? Efficient capital Learning by doing Labor specialization 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-variable-cost curve Long run average-total-cost curve

Long run average-total-cost curve

If the price of labor or some other variable resource decreased, the Multiple Choice AVC curve would shift upward. AFC curve would shift downward. AFC curve would shift upward. MC curve would shift downward.

MC curve would shift downward.

A firm's decision whether to produce a few more or a few less units of output is a decision based on which of the following? Multiple choice question. Total-cost data Fixed-cost data Marginal data Average-cost data

Marginal data

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

Payments that must be made to obtain a resource

What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves? Multiple select question. The average-variable-cost, average-total-cost, and marginal-cost curves shift upward. The average-variable-cost and average-total-cost curves shift upward, and the marginal-cost curve shifts downward. The average-fixed-cost curve remains the same. 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.

Suppose a firm sells its product at a price lower than the per-unit implicit costs of producing it. Which of the following statements is definitely true? Multiple Choice The firm will earn positive accounting and economic profits. The firm will face accounting and economic losses. The firm will face an accounting loss but earn positive economic profits. The firm may earn positive accounting profits but will face economic losses.

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

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

The flat section

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

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

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

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

How is average fixed cost determined? Multiple choice question. Total fixed cost divided by output 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

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

Total product

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. quantity of labor amount of output marginal product of labor total costs

amount of output

Variable costs are Multiple Choice costs that remain to be paid even if the firm shuts down temporarily. costs that change every day or every month. costs that change with the level of production. changes in total cost due to the production of an additional unit of output.

costs that change with the level of production.

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. marginal variable diminishing fixed

diminishing

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. diminishing marginal costs diminishing returns marginal utility supply and demand

diminishing returns

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

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 explicit accounting absolute

economic

If a firm's revenues just cover all its implicit costs, then Multiple Choice normal profit is zero. economic profit is zero. total revenues equal its explicit costs. total revenues equal its implicit costs.

economic profit is zero.

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

economies of scale

The ability of Intel to spread product development and other "start-up" costs over a larger number of units of output results in Multiple Choice economies of scale. diseconomies of scale. minimum efficient scale. constant returns to scale.

economies of scale.

Economic profits are Multiple Choice always larger than accounting profits. the sum of accounting profits and implicit costs. equal to the difference between total revenues and implicit costs. equal to the difference between accounting profits and implicit costs.

equal to the difference between accounting profits and implicit costs.

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

explicit

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

marginal