Chapter 9 Quiz

Refer to the diagram. At output level Q, total cost is - 0BEQ. - BCDE. - 0BEQ + BCDE. - 0AFQ + BCDE.

0BEQ + BCDE

If the price of a variable resource increased for the typical firm, there would be - a downward shift in the AVC curve. - an upward shift in the AFC curve. - a downward shift in the AFC curve. - an upward shift in the MC curve.

an upward shift in the MC curve

True or False: The short run is a period of time during which all costs are fixed costs.

false

If a firm decides to produce no output in the short run, its costs will be... - its marginal costs. - its variable costs. - its fixed costs. - zero.

its fixed costs

A firm encountering economies of scale over some range of output will have a - rising long-run average cost curve. - falling long-run average cost curve. - flat long-run average cost curve. - rising, then falling, then rising long-run average cost curve.

rising long-run average cost curve

If marginal cost is - falling, then average total cost must also be falling. - rising, then average total cost must also be rising. - rising, then average total cost could be either falling or rising. - falling, then average total cost could be either falling or rising.

rising, then average total cost must also be rising.

Marginal product is... - the change in total output attributable to the employment of one more worker. - the change in total revenue attributable to the employment of one more worker. - the change in total cost attributable to the employment of one more worker. - total product divided by the number of workers employed.

the change in total output attributable to the employment of one more worker.

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes... - economies and diseconomies of scale. - X-inefficiency - the law of diminishing returns. - the law of diminishing marginal utility.

the law of diminishing returns

Which of the following is a short-run adjustment? - A local bakery hires two additional bakers. - Six new firms enter the plastics industry. - The number of farms in the United States declines by 5 percent. - BMW constructs a new assembly plant in South Carolina.

A local bakery hires two additional bakers.

Fixed cost is... - the cost of producing one more unit of capital, for example, machinery. - any cost that does not change when the firm changes its output. - average cost multiplied by the firm's output.usually zero in the short run.

any cost that does not change when the firm changes its output.

Marginal cost is the - rate of change in total fixed cost that results from producing one more unit of output. - change in total cost that results from producing one more unit of output. - change in average variable cost that results from producing one more unit of output. - change in average total cost that results from producing one more unit of output.

change in total cost that results from producing one more unit of output.

To the economist, total cost includes.. - explicit and implicit costs - neither implicit nor explicit costs - implicit, but not explicit, costs - explicit, but not implicit, costs.

explicit and implicit costs

To economists, the main difference between the short run and the long run is that... - the law of diminishing returns applies in the long run, but not in the short run. - in the long run all resources are variable, while in the short run at least one resource is fixed. - fixed costs are more important to decision making in the long run than they are in the short run. - in the short run all resources are fixed, while in the long run all resources are variable.

in the long run all resources are variable, while in the short run at least one resource is fixed.

In the diagram, curves 1, 2, and 3 represent the - average, marginal, and total product curves respectively. - marginal, average, and total product curves respectively. - total, average, and marginal product curves respectively - .total, marginal, and average product curves respectively.

marginal, average, and total product curves respectively.

True or False: Marginal product is highest where marginal cost is lowest.

true

True or False: The short-run marginal-cost curve is upward-sloping because of the law of diminishing marginal returns.

true