Microeconomics (WIP) -- Chapter 11: Practice Questions -- By Laken_2020

Which costs are affected by the level of output​ produced? A. sunk costs B. variable costs C. all costs D. fixed costs

B. variable costs

An example of technological change is A. a firm rearranging the factory floor to increase production. B. a firm installing faster or more reliable machinery or equipment C. a firm hiring less - skilled workers. D. both a and b E. all of the above.

E. all of the above.

(a) What is the difference between the short run and the long​ run? A. In the short​ run, at least one of a​ firm's inputs is​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology. B. In the short​ run, a firm can vary all inputs but technology is​ fixed, while in the long​ run, a firm can adopt new technology but all inputs are fixed. C. In the short​ run, all of a​ firm's inputs are​ fixed, while in the long​ run, a firm is able to vary at least one input and adopt new technology. D. In the short​ run, all of a​ firm's inputs are​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology. E. In the short​ run, a firm can vary all inputs but technology is​ fixed, while in the long​ run, a firm can vary all inputs and adopt new technology. (b) Is the amount of time that separates the short run from the long run the same for every​ firm? ____________

(a) A. In the short​ run, at least one of a​ firm's inputs is​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology. (b) No

Small business owner Jay Goltz described several decisions he made to reduce the fixed costs of his​ businesses, including replacing halogen lamps with LED lamps. Goltz​ noted, "...I'm guessing that many business owners could save a lot more than pennies on their fixed​ costs, and those savings...fall right to the bottom​ line." (a) The cost of electricity used to power the lights used in Mr.​ Goltz' businesses are fixed costs because these costs A. are paid to one provider. B. cannot be negotiated. C. must be paid regardless of the volume of output. D. are unpredictable. (b) Goltz wrote that reducing fixed costs results in savings that​ "fall right to the bottom​ line" because A. the bottom line equals fixed costs plus variable​ costs, so a reduction in fixed costs reduces the bottom line. B. ​profit, the bottom​ line, is revenue minus variable​ costs, and since variable costs include fixed​ costs, a reduction in fixed costs increases profit. C. ​profit, the bottom​ line, is revenue minus fixed costs minus variable​ costs, so a reduction in fixed costs increases profit. D. ​revenue, the bottom​ line, is made up of fixed and variable​ costs, so a reduction in fixed costs increases revenue.

(a) C. must be paid regardless of the volume of output. (b) C. ​profit, the bottom​ line, is revenue minus fixed costs minus variable​ costs, so a reduction in fixed costs increases profit.

Refer to the table below. (a) Which of the following costs are implicit​ costs? * Paper=​$20,000 * Wages=​48,000 * Lease payment for copy machines=10,000 * Electricity=​6,000 * Lease payment for store=24,000 * Foregone salary=​30,000 * Foregone interest=​3,000 **Total=​141,000 A. the payments for​ paper, wages, and electricity B. the lease payments C. the forgone salary and interest D. All of the above. (b) Which of the following are sometimes called accounting​ costs? A. explicit costs B. total variable costs C. economic costs D. implicit costs

(a) C. the forgone salary and interest (b) A. explicit costs

UPS has reorganized the routes its drivers take to deliver packages to homes. According to an article in the Wall Street Journal, "The company can save​ $50 million a year by reducing by one mile the average aggregated daily travel of its​ drivers." (a) This cost saving is: A. artificial, because it is not based on real costs. B. only a one time saving and cannot be continued. C. saving that results from the use of lower priced inputs. D. an example of positive technological change. b. Suppose that UPS saves​ $50 million per year because of lower gasoline prices. Would that cost saving be due to technological change at the​ firm? Briefly explain. If UPS saved​ $50 million annually due to a decrease in gasoline​ prices, this would be A. ​artificial, because it not based on real costs. B. an example of positive technological change. C. saving that results from the use of lower priced inputs. D. only a one time saving and cannot be continued.

(a) D. an example of positive technological change. (b) C. saving that results from the use of lower priced inputs.

Xylo Corporation is a large manufacturer of solar panels in the town of Southville. It is not only a major employer of the​ town's population, but also attracts a large number of workers from the neighboring county of Canning which has very few job opportunities. Based on industry reports that indicated a substantial increase in installed solar power capacity in the last two​ years, Xylo introduced new production technology to increase efficiency and lower costs at its Southville plant. The senior management decided that they would increase production of solar panels by 20 percent in the coming year to meet the higher demand. They also felt that lower​ costs, along with high expected​ demand, would help them to improve profit margins.​ However, Wilma​ Myers, the​ firm's operations​ head, is not so optimistic about the demand conditions. She feels that the sales in the coming year may not be as high as the senior management is anticipating. Which of the​ following, if​ true, would weaken the​ management's view that the new technology and higher demand would increase profit​ margins? A. Solar energy accounts for 10 percent of the​ country's total power generation capacity. B. Due to improving employment conditions in Canning​ County, many workers in Southville moved back to their hometowns. C. The high​ start-up cost in this industry acts as an entry barrier to new firms. D. ​Xylo's order intake for this year increased. E. In a recent press​ meeting, Xylo announced its intention of opening a new manufacturing unit abroad.

B. Due to improving employment conditions in Canning​ County, many workers in Southville moved back to their hometowns.

When a positive technological change​ occurs, A. more output can be produced from the same inputs. B. the same output can be produced with fewer inputs. C. Either (a) or (b). D. None of the above.

C. Either (a) or (b).

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the A. consumption function. B. utility curve. C. production function. D. budget constraint.

C. production function.

What is the difference between technology and technological​ change? A. Technology is the development of new​ products, while technological change is when a firm is able to produce more output with the same inputs. B. Technology is when a firm is able to produce more output using the same inputs, while technological change is the process of using inputs to make output. C. Technology is the development of new​ products, while technological change is when a firm is able to produce the same output with fewer inputs. D. Technology is the process of using inputs to make​ output, while technological change is when a firm is able to produce the same output using fewer inputs. E. Technology is the process of using inputs to make​ output, while technological change is when a firm is able to produce more output using more inputs.

D. Technology is the process of using inputs to make​ output, while technological change is when a firm is able to produce the same output using fewer inputs.

Briefly explain whether you agree with the following​ observation: ​"Technological change refers only to the introduction of new​ products, so it is not relevant to the operations of most​ firms." A. The statement is incorrect. Technology includes firm operations such as the training of its workers. B. The statement is incorrect. Technology includes firm operations such as the efficiency of its equipment. C. The statement is incorrect. Technology does not refer to the introduction of new products. D. The statement is correct. E. Both a and b.

E. Both a and b.