Chapter 13

a local chip company plans to operate out of its current factory, which is estimated to last 25 years. All cost decisions it makes during the 25 year period a. are short run decisions b. involve only maintenance of the factory c. are long run decisions d. are zero because the cost decisions were made at the beginning of business

a. are short run decisions

average total cost is increasing whenever a. marginal cost is greater than average total cost b. marginal cost is less than average total cost c. marginal cost is increasing d. total cost is increasing

a. marginal cost is greater than average total cost

for a firm, the production function represents the relationship between a. quantity of inputs and quantity of output b. quantity of output and total cost c. quantity of inputs and total cost d. implicit costs and explicit costs

a. quantity of inputs and quantity of output

the fundamental reason that marginal cost eventually rises as output increases is because of a. rising average fixed cost b. diminishing marginal product c. diseconomies of scale d. economies of scale

b. diminishing marginal product

suppose that a doggie daycare firm uses only 2 inputs, hourly workers (labor) and a building (capital) In the short run, the firm most likely considers a. both labor and capital to be variable b. capital to be variable and labor to be fixed c. labor to be variable and capital to be fixed d. both labor and capital to be fixed

c. labor to be variable and capital to be fixed

which of the following costs do not vary with the amount of output a firm produces? a. fixed costs and average fixed costs b. marginal costs and average fixed costs c. average fixed costs d. fixed costs

d. fixed costs

economists normally assume that the goal of a firm is to i. sell as much of its product as possible ii. set the price of the product as high as possible iii. maximize profit a. ii and iii only b. i and ii only c. i, ii, and iii d. iii only

d. iii only