Test 3: Microeconomics True/False
A second or third worker may have a higher marginal product than the first worker in certain circumstances.
True
Accountants keep track of the money that flows into and out of firms
True
Accountants often ignore implicit costs
True
As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production
True
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.
True
Average total cost and marginal cost are merely ways to express information that is already contained in a firm's total cost
True
Average variable cost is equal to total variable cost divided by quantity of output
True
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.
True
Diminishing marginal product exists when the production function becomes flatter as inputs increase
True
Fixed costs are incurred even when a firm does not produce anything
True
Implicit costs are costs that do not require an outlay of money by the firm
True
In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.
True
Diseconomies of scale often arise because higher production levels allow specialization among workers
False
Economists normally assume that people start their own businesses to help society maximize its income
False
Fixed costs are those costs that remain fixed no matter how long the time horizon is
False
If the marginal cost curve is rising, so is the average total cost curve
False
In the long run, a factory is usually considered a fixed input.
False
The average total cost curve is unaffected by diminishing marginal product
False
The fact that many decisions are fixed in the short run but variable in the long run has little impact on the firm's cost curves
False
The shape of the total cost curve is unrelated to the shape of the production function
False
Variable costs equal fixed costs when nothing is produced
False
When economists speak of a firm's costs, they are usually excluding the opportunity costs
False; always
Diminishing marginal product exists when the total cost curve becomes flatter as output increases
False; steeper
The average total cost curve reflects the shape of both the average fixed cost and average variable cost curves
True
The cost of producing an additional unit of a good is not the same as the average cost of the good
True
The marginal cost curve intersects the average total cost curve at the minimum point of the average total cost curve
True
The shape of the marginal cost curve tells a producer something about the marginal product of her workers
True
The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.
True
Variable costs usually change as the firm alters the quantity of output produced
True
When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.
True
When trying to understand the decision making process of different firms, economists assume that people think at the margin
True
Average total cost reveals how much total cost will change as the firm alters its level of production
False