question
A rising marginal cost curve is a reflection of a
answer
a. rising marginal physical product curve.
b. falling marginal physical product curve. (Correct)
c. falling average fixed cost curve.
d. rising average variable cost curve.
b. falling marginal physical product curve. (Correct)
c. falling average fixed cost curve.
d. rising average variable cost curve.
question
An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) __________ cost.
answer
a. sunk (Correct)
b. explicit
c. implicit
d. variable
b. explicit
c. implicit
d. variable
question
As the marginal physical product of a variable input __________, the marginal cost __________.
answer
a. increases; increases
b. increases; decreases
c. decreases; increases
d. b and c (Correct)
b. increases; decreases
c. decreases; increases
d. b and c (Correct)
question
Costs that do not change with output are called __________ costs.
answer
a. marginal
b. average
c. fixed (Correct)
d. variable
b. average
c. fixed (Correct)
d. variable
question
Economic profit is the difference between total revenue and
answer
a. explicit costs.
b. implicit costs.
c. sunk costs.
d. the sum of explicit and implicit costs. (Correct)
b. implicit costs.
c. sunk costs.
d. the sum of explicit and implicit costs. (Correct)
question
Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?
answer
a. Wilson paid $120 for an outside laundry service to clean the towels used at the club.
b. Wilson paid $100 for the pest control exterminator to spray the health club.
c. Wilson previously worked as an accountant, earning $3,000 a month. (Correct)
d. Wilson usually eats four hamburgers a day, priced at $3 each.
b. Wilson paid $100 for the pest control exterminator to spray the health club.
c. Wilson previously worked as an accountant, earning $3,000 a month. (Correct)
d. Wilson usually eats four hamburgers a day, priced at $3 each.
question
If a firm earns normal profit, then it has generated revenues
answer
a. equal to the sum of implicit and explicit costs. (Correct)
b. greater than total opportunity costs.
c. sufficient to cover explicit costs, but not implicit costs.
d. sufficient to cover implicit costs, but not explicit costs.
b. greater than total opportunity costs.
c. sufficient to cover explicit costs, but not implicit costs.
d. sufficient to cover implicit costs, but not explicit costs.
question
If inputs are increased by 10 percent and output increases by 10 percent, then __________ are said to exist.
answer
a. economies of scale
b. constant returns to scale (Correct)
c. diseconomies of scale
d. diminishing marginal returns
b. constant returns to scale (Correct)
c. diseconomies of scale
d. diminishing marginal returns
question
If inputs are increased by 10 percent and output increases by 20 percent, then __________ are said to exist.
answer
a. economies of scale (Correct)
b. constant returns to scale
c. diseconomies of scale
d. diminishing marginal returns
b. constant returns to scale
c. diseconomies of scale
d. diminishing marginal returns
question
The change in total cost that results from a change in output is __________ cost.
answer
a. average fixed
b. average variable
c. average total
d. marginal (Correct)
b. average variable
c. average total
d. marginal (Correct)
question
2 sides of a firm
answer
1) Revenue & Cost
2) Goal to maximize profit
2) Goal to maximize profit
question
Accounting profit vs. Economic profit
answer
A.C.= The difference between total revenue and explicit costs.
E.C.= The difference between total revenue and total cost, including both explicit and implicit costs.
E.C.= The difference between total revenue and total cost, including both explicit and implicit costs.
question
Short run vs. Long run
answer
S.R.= some period, amount of time, where at least 1 input is fixed, no specific amount of time
L.R.= period where all inputs are variable, no specific amount of time
L.R.= period where all inputs are variable, no specific amount of time
question
Diminishing Marginal Product of Labor
answer
the change in output that results from changing labor by 1 unit
question
Type of Costs
answer
Total, Average, total variable, average variable, total fixed, average fixed, and marginal
question
Link between MC and MPL
answer
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question
Relationship between MC cure and AVC and ATC curves
answer
...
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Link between MPL and AVC and ATC
answer
...
question
Constructing the Long Run ATC (LRATC) curve from the SRATC curves
answer
...
question
Economics of scale
answer
...
question
Constant returns to scale
answer
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question
Diseconomics of scale
answer
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question
Shifting cost curves
answer
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question
Does a buyer actually pay the taxes on cigarettes? would we expect it to make people healthier?
answer
...
question
"Everything in moderation" is my mother an economist?
answer
...
question
Two minds are better than one, but are 100 better than 10?
answer
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