Chapter 7 Microeconomics - Assignment Essays

question

In order to determine ____________, the firm's total costs must be divided by the quantity of its output.

answer

Average cost

question

Refer to the above graph. There are constant returns to scale:

answer

From Q2 to Q4

question

A firm's accounting profit is the result of total revenue minus ______ costs.

answer

Explicit

question

If a paper mill shuts down its operations for three months so that it produces nothing, its _________________ will be reduced to zero?

answer

Variable costs

question

__________ represent the opportunity cost of using resources that the firm already owns.

answer

Implicit costs

question

Accounting costs represent

answer

explicit costs paid by the firm

question

From a short-run perspective, a firm's total costs can be divided into _____ costs, which a firm must incur before producing any output, and ________ costs, which the firm incurs in the act
of producing.

answer

fixed, variable

question

The ______________ of all firms can be broken down into some common underlying patterns.

answer

Cost structure

question

The term _____________ is used to describe the additional cost of producing one more unit.

answer

Marginal cost

question

Accounting profit can be calculated as

answer

total revenue - explicit costs

question

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

answer

Physical space for the gallery

question

Refer to the table below. At an output of 3 units, the average variable cost is

answer

$14

question

I'MaGadgetCo. produces and sells widgets. Last year, it produced 9,000 widgets and sold each one for $8. To produce the 9,000 widgets, the company incurred variable costs of $27,000 and a total cost of $36,000. I'MaGadgetCo's total profit or loss to produce 9,000 widgets was:

answer

$36,000 profit

question

Which of the following should typically be ignored because spending has already been made and cannot be changed?

answer

Sunk costs

question

In microeconomics, the term _____________________ is synonymous with economies of scale.

answer

Increasing returns to scale

question

The economies-of-scale curve is a long-run average cost curve, because

answer

it allows all factors of production to change

question

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

answer

Economies of scale

question

Economic profit is always

answer

less than accounting profit

question

Fixed costs are important because, at least in the ___________, the firm _____________.

answer

short run; cannot alter them

question

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

answer

Total revenue

question

A firm's ________ consist of expenditures that must be made before production starts that ________ over the short run regardless of the level of production.

answer

fixed costs, do not change

question

Why would labor be treated as a variable cost?

answer

producing larger quantities of a good or service generally requires more workers

question

If a paper mill shuts down its operations for three months so that it produces nothing, its__________________ will be reduced to zero?

answer

Variable costs

question

The marginal cost curve is generally __________, because diminishing marginal returns implies that additional units are ____________.

answer

upward-sloping; more costly to produce

question

The table below sets out cost information for the production of volleyballs. Some values are missing.

answer

question

In the long run, firms can choose their production technology, and so all costs become ______ costs.

answer

Variable

question

A situation known as ______________ occurs when all production inputs are
allowed to expand, but that expansion does not result in much of a change in the average cost of production.

answer

Constant returns to scale

question

Which always increase(s) as output increases?

answer

total cost and variable cost

question

_ tells a firm whether it can earn profits given the price in the market.

answer

Average cost

question

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

answer

Diseconomies of scale

question

A firm's accounting profit is the result of total revenue minus ______ costs.

answer

Explicit

question

Cash expenditures a firm makes to pay for resources are called:

answer

Explicit costs

question

In order to determine the average variable cost, the firm's variable costs are divided by____________.

answer

the quantity of output

question

Which of the following is correct?

answer

TC = TFC + TVC

question

Economic profits are equal to

answer

total revenues minus the implicit and explicit costs of all inputs used

question

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

answer

Decreasing returns to scale

question

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?

answer

25 cookies

question

Refer to the above graph. There are diseconomies of scale:

answer

After Q4

question

I''MABigCorp. produces and sells kitchenware. Last year, it produced 7,000 can openers
and sold each one for $6. To produce the 7,000 can openers, the company incurred variable
costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average total cost to produce the
7,000 can openers was:

answer

$6.43

question

In the table below, when the firm employs 2 workers, the marginal product of the second worker is

answer

38 smart phones

question

The economies-of-scale curve is a long-run average cost curve, because

answer

it allows all factors of production to change.

question

The table below sets out cost information for the production of volleyballs. Some values are
missing.

answer

question

occur when the marginal gain in output diminishes as each
additional unit of input is added.

answer

Diminishing marginal returns

question

I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom,
sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas,
the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's
average variable cost to produce 8,000 specialty pizzas was:

answer

$3.00

question

I''MABigCorp. produces and sells kitchenware. Last year, it produced 7,000 can openers
and sold each one for $6. To produce the 7,000 can openers, the company incurred variable
costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s total profit or loss to produce the
7,000 can openers was:

answer

$3,000 Loss

1 of 45

question

In order to determine ____________, the firm's total costs must be divided by the quantity of its output.

answer

Average cost

question

Refer to the above graph. There are constant returns to scale:

answer

From Q2 to Q4

question

A firm's accounting profit is the result of total revenue minus ______ costs.

answer

Explicit

question

If a paper mill shuts down its operations for three months so that it produces nothing, its _________________ will be reduced to zero?

answer

Variable costs

question

__________ represent the opportunity cost of using resources that the firm already owns.

answer

Implicit costs

question

Accounting costs represent

answer

explicit costs paid by the firm

question

answer

fixed, variable

question

The ______________ of all firms can be broken down into some common underlying patterns.

answer

Cost structure

question

The term _____________ is used to describe the additional cost of producing one more unit.

answer

Marginal cost

question

Accounting profit can be calculated as

answer

total revenue - explicit costs

question

answer

Physical space for the gallery

question

Refer to the table below. At an output of 3 units, the average variable cost is

answer

$14

question

answer

$36,000 profit

question

Which of the following should typically be ignored because spending has already been made and cannot be changed?

answer

Sunk costs

question

In microeconomics, the term _____________________ is synonymous with economies of scale.

answer

Increasing returns to scale

question

The economies-of-scale curve is a long-run average cost curve, because

answer

it allows all factors of production to change

question

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

answer

Economies of scale

question

Economic profit is always

answer

less than accounting profit

question

Fixed costs are important because, at least in the ___________, the firm _____________.

answer

short run; cannot alter them

question

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

answer

Total revenue

question

A firm's ________ consist of expenditures that must be made before production starts that ________ over the short run regardless of the level of production.

answer

fixed costs, do not change

question

Why would labor be treated as a variable cost?

answer

producing larger quantities of a good or service generally requires more workers

question

If a paper mill shuts down its operations for three months so that it produces nothing, its__________________ will be reduced to zero?

answer

Variable costs

question

The marginal cost curve is generally __________, because diminishing marginal returns implies that additional units are ____________.

answer

upward-sloping; more costly to produce

question

The table below sets out cost information for the production of volleyballs. Some values are missing.

answer

question

In the long run, firms can choose their production technology, and so all costs become ______ costs.

answer

Variable

question

A situation known as ______________ occurs when all production inputs are
allowed to expand, but that expansion does not result in much of a change in the average cost of production.

answer

Constant returns to scale

question

Which always increase(s) as output increases?

answer

total cost and variable cost

question

_ tells a firm whether it can earn profits given the price in the market.

answer

Average cost

question

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

answer

Diseconomies of scale

question

A firm's accounting profit is the result of total revenue minus ______ costs.

answer

Explicit

question

Cash expenditures a firm makes to pay for resources are called:

answer

Explicit costs

question

In order to determine the average variable cost, the firm's variable costs are divided by____________.

answer

the quantity of output

question

Which of the following is correct?

answer

TC = TFC + TVC

question

Economic profits are equal to

answer

total revenues minus the implicit and explicit costs of all inputs used

question

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

answer

Decreasing returns to scale

question

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?

answer

25 cookies

question

Refer to the above graph. There are diseconomies of scale:

answer

After Q4

question

answer

$6.43

question

In the table below, when the firm employs 2 workers, the marginal product of the second worker is

answer

38 smart phones

question

The economies-of-scale curve is a long-run average cost curve, because

answer

it allows all factors of production to change.

question

The table below sets out cost information for the production of volleyballs. Some values are
missing.

answer

question

occur when the marginal gain in output diminishes as each
additional unit of input is added.

answer

Diminishing marginal returns

question

answer

$3.00

question

I''MABigCorp. produces and sells kitchenware. Last year, it produced 7,000 can openers
and sold each one for $6. To produce the 7,000 can openers, the company incurred variable
costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s total profit or loss to produce the
7,000 can openers was:

answer

$3,000 Loss

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