Chapter 9 Businesses & Costs of Production

question

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is correct?

answer

The long-run average total cost curve is flat.

question

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This firm's

answer

total cost is $270.

question

The basic characteristic of the short run is that

answer

the firm does not have sufficient time to change the size of its plant.

question

The total product curve graphically shows how much

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output the firm can produce with various quantities of its variable input.

question

Which of the following represents a long-run adjustment?

answer

Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants.(wrong)

question

The following is cost information for the Creamy Crisp Donut Company.
Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000
Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp

answer

is earning an economic profit

question

Implicit and explicit costs are different in that

answer

the former refer to nonexpenditure costs and the latter to out-of-pocket costs

question

Marginal product of labor refers to the

answer

Increase in output resulting from employing one more labor

question

answer

$94,000

question

answer

$230,000

question

If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?

answer

10 percent

question

answer

$150,000

question

answer

$136,000.

question

Ouput Total Cost
0 $10
1 20
2 28
3 38
4 53
5 73
6 98
Refer to the provided table. The marginal cost of producing the sixth unit of output is

answer

$25

question

The range over which average variable cost is increasing is the same as the range over which

answer

Average product is decreasing

question

answer

$286,000

question

Which of the following is not a source of economies of scale?

answer

inelastic resource supply

question

If a technological advance increases a firm's labor productivity, we would expect its

answer

average total cost curve to fall, total cost curve to fall, variable cost curve to fall.

question

Refer to the diagram. For output level Q, per unit costs of C are

answer

attainable but imply the inefficient use of resources

question

Which of the following best expresses the law of diminishing returns?

answer

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline. (wrong)

1 of 20

question

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is correct?

answer

The long-run average total cost curve is flat.

question

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This firm's

answer

total cost is $270.

question

The basic characteristic of the short run is that

answer

the firm does not have sufficient time to change the size of its plant.

question

The total product curve graphically shows how much

answer

output the firm can produce with various quantities of its variable input.

question

Which of the following represents a long-run adjustment?

answer

Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants.(wrong)

question

answer

is earning an economic profit

question

Implicit and explicit costs are different in that

answer

the former refer to nonexpenditure costs and the latter to out-of-pocket costs

question

Marginal product of labor refers to the

answer

Increase in output resulting from employing one more labor

question

answer

$94,000

question

answer

$230,000

question

answer

10 percent

question

answer

$150,000

question

answer

$136,000.

question

Ouput Total Cost
0 $10
1 20
2 28
3 38
4 53
5 73
6 98
Refer to the provided table. The marginal cost of producing the sixth unit of output is

answer

$25

question

The range over which average variable cost is increasing is the same as the range over which

answer

Average product is decreasing

question

answer

$286,000

question

Which of the following is not a source of economies of scale?

answer

inelastic resource supply

question

If a technological advance increases a firm's labor productivity, we would expect its

answer

average total cost curve to fall, total cost curve to fall, variable cost curve to fall.

question

Refer to the diagram. For output level Q, per unit costs of C are

answer

attainable but imply the inefficient use of resources

question

Which of the following best expresses the law of diminishing returns?

answer

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline. (wrong)

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