ECON 2010 McGraw Hill Chapter 7

question

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

answer

Explicit costs

question

Which would be an implicit cost for a firm? The cost:

answer

Of wages foregone by the owner of the firm

question

Economic profits are:

answer

Equal to the difference between accounting profits and implicit costs

question

An industry is expected to expand if firms in the industry are earning positive:

answer

Economic profits

question

Economic profits are equal to:

answer

Total revenues minus the opportunity costs of all inputs

question

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

answer

The firm may earn positive accounting profits, but will face economic losses

question

Which of the following statements is false?

answer

The short run refers to a period of less than one year

question

In the short run:

answer

Output is raised or reduced by changing the levels of variable inputs

question

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly line basis?

answer

A change in production to a redesigned and retooled facility

question

Marginal product of labor refers to the:

answer

Increase in output resulting from employing one more labor

question

According to the law of diminishing marginal returns:

answer

The additional output generated by additional units of an input will diminish

question

Diminishing marginal returns occurs as a firm adds more variable inputs to at least one fixed input because:

answer

As more variable inputs are hired, the amount of the fixed input per variable input decreases

question

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one:

answer

More worker will decrease the average amount of output per worker

question

The total product curve graphically shows the:

answer

Maximum level of output that can be produced by a quantity of a variable resource holding constant the quantity of other resources

question

The marginal product of labor curve graphically shows the change in total product resulting from a:

answer

One-unit increase in the quantity of a particular resource used, holding constant other resources

question

When the total product curve is falling, the:

answer

Marginal product of labor is negative

question

The range of diminishing marginal productivity begins when:

answer

Marginal product reaches its maximum

question

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that:

answer

The marginal product of labor is constant

question

With fixed costs of $400, a firm has average total costs of $3 and average variable costs of $2.50. Its output quantity must be:

answer

800 units

question

At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are:

answer

$8,000

question

In the long run, a firm can increase its output quantity, but it will be limited by the size of its existing production plant.

answer

False

question

The law of diminishing marginal returns is another name for the law of diminishing marginal utility.

answer

False

question

Marginal product is highest where marginal cost is lowest.

answer

True

question

When a firm increases its output, its average fixed costs will stay constant.

answer

False

question

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

answer

False

1 of 25

question

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

answer

Explicit costs

question

Which would be an implicit cost for a firm? The cost:

answer

Of wages foregone by the owner of the firm

question

Economic profits are:

answer

Equal to the difference between accounting profits and implicit costs

question

An industry is expected to expand if firms in the industry are earning positive:

answer

Economic profits

question

Economic profits are equal to:

answer

Total revenues minus the opportunity costs of all inputs

question

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

answer

The firm may earn positive accounting profits, but will face economic losses

question

Which of the following statements is false?

answer

The short run refers to a period of less than one year

question

In the short run:

answer

Output is raised or reduced by changing the levels of variable inputs

question

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly line basis?

answer

A change in production to a redesigned and retooled facility

question

Marginal product of labor refers to the:

answer

Increase in output resulting from employing one more labor

question

According to the law of diminishing marginal returns:

answer

The additional output generated by additional units of an input will diminish

question

Diminishing marginal returns occurs as a firm adds more variable inputs to at least one fixed input because:

answer

As more variable inputs are hired, the amount of the fixed input per variable input decreases

question

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one:

answer

More worker will decrease the average amount of output per worker

question

The total product curve graphically shows the:

answer

Maximum level of output that can be produced by a quantity of a variable resource holding constant the quantity of other resources

question

The marginal product of labor curve graphically shows the change in total product resulting from a:

answer

One-unit increase in the quantity of a particular resource used, holding constant other resources

question

When the total product curve is falling, the:

answer

Marginal product of labor is negative

question

The range of diminishing marginal productivity begins when:

answer

Marginal product reaches its maximum

question

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that:

answer

The marginal product of labor is constant

question

With fixed costs of $400, a firm has average total costs of $3 and average variable costs of $2.50. Its output quantity must be:

answer

800 units

question

At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are:

answer

$8,000

question

In the long run, a firm can increase its output quantity, but it will be limited by the size of its existing production plant.

answer

False

question

The law of diminishing marginal returns is another name for the law of diminishing marginal utility.

answer

False

question

Marginal product is highest where marginal cost is lowest.

answer

True

question

When a firm increases its output, its average fixed costs will stay constant.

answer

False

question

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

answer

False

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