Microeconomics Homework 3

which of these assumptions is often realistic for a firm in the short run A. the firm can vary the number of workers it employs, but not the size of its factory B. the firm can vary both the size of its factory and the number of workers it employs C. the firm can vary neither the size of its factory nor the number of workers it employs D. the firm can vary the size of its factory, but not the number of workers it employs

A. the firm can vary the number of workers it employs, but not the size of its factory

Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then A. total costs are falling at Q=500 B. average costs are rising at Q=500 C. average variable costs must be falling D. average costs are falling at Q=500

B. average costs are rising at Q=500

total revenue minus explicit and implicit costs is called A. fixed expenses B. economic profit C. accounting profit D. average total cost

B. economic profit

the length of the short run A. is always less than 6 months B. is different for different types of firms C. can never exceed 3 years D. can never exceed 1 year

B. is different for different types of firms

for a large firm that produces and sells automobiles, which of the following costs would be a variable cost A. the rent that the firm pays for office space in a suburb of St. Louis B. the cost of the steel that is used in producing automobiles C. the $20 million payment that the firm pays each year for accounting services D. all of the above are correct

B. the cost of the steel that is used in producing automobiles

Accounting profit is equal to A. marginal revenue minus marginal cost B. total revenue minus the explicit cost of producing goods and services C. total revenue minus the opportunity cost of producing goods and services D. average revenue minus the average cost of producing the last unit of a good or service

B. total revenue minus the explicit cost of producing goods and services

Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons, Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 with of seeds on his farm. he expects that the seeds he planted will yield $300 worth of wheat A. 130 B. 260 C. 170 D. $-80

C. 170

when, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of A. fixed costs greatly exceeding variable costs B. diseconomies of scale C. economies of scale D. coordination problems arising from the large size of the firm

C. economies of scale

when average cost is greater than marginal cost, marginal cost must be A. rising B. falling C. the direction of change in marginal cost cannot be determined from this information D. constant

C. the direction of change in marginal cost cannot be determined from this information

Zach took $400,000 out of the bank and used it to start his new cookie business. the bank account pays 3 percent interest per year. during the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000 A. $12,000 B. $-94,000 C. $-6,000 D. $6,000

D $6,000

For Firm A, when 4 units of labor, the only variable input into the production process, are hired, the firm produces 50 units of output. if the fixed cost of production is $4, the variable cost per unit of labor is $20, and the marginal product of labor for the fifth unit of labor is 2, what is the average total cost of production when labor is 5 units? A. $22.80 B. $20.00 C. $20.80 D. $2.00

D. $2.00

if marginal cost is below average total cost, then average total cost A. may rise or fall depending on the size of fixed costs B. is rising C. is constant D. is falling

D. is falling

for the long run for Firm A, total cost is $105 when output is 3 units and $120 when output is 4 units. does Firm A exhibit economies of or diseconomies of scale A. diseconomies of scale, since the total cost is rising as output rises B. diseconomies of scale, since average total cost is falling as output rises C. economies of scale, since average total cost is falling as output rises D. economies of scale, since total cost is rising as output rises

economies of scale, since average total cost is falling as output rises