ECON 2302 CHAPTER 9 REVIEW - Assignment Essays %

question

The marginal-product curve is a mirror image of the ______ curve.

answer

marginal cost

question

------ costs are the monetary payments a firm makes to purchase resources from others.

answer

Explicit

question

The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use.

answer

Economic

question

If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?

answer

$24,000

question

True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.

answer

True

question

Which best describes economic costs?

answer

Payments that must be made to obtain a resource.

question

What is the definition of total product (TP)?

answer

the total quantity, or total output, of a particular good or service produced

question

Which of the following explains the concept of explicit costs?

answer

A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments made for the use of resources owned by others.

question

The law of ______ returns states that as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.

answer

Diminishing

question

Your company's total sales revenue for the month is $150,000; the costs to produce your products are $12,000 for rent, $6,000 for utilities, and $42,000 for employee wages. What is your accounting profit?

answer

$90,000

question

What happens to marginal product when total product is increasing but at a decreasing rate?

answer

marginal product is positive but falling.

question

What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?

answer

$120,000

question

Which costs do not vary with changes in output?

answer

FIXED

question

Which of the following resources can a firm easily and quickly adjust?

answer

Fuel, Raw materials, & hourly labor.

question

What characterizes variable costs?

answer

costs that change with the level of output.

question

Assuming technology and production techniques are fixed and cannot change, if beyond some point of production a firm experiences declining units of additional output with each additional unit of labor input, then the firm is experiencing the effects of the law of ______.

answer

diminishing returns

question

What happens to marginal product when total product is increasing at an increasing rate?

answer

marginal product is rising

question

Which of the following is true of average fixed cost when output increases?

answer

average fixed cost declines as output increases.

question

Suppose the total fixed cost of a firm is $500, the total variable cost is $200, and the output produced is 5 units. The average fixed cost of the firm is ______.

answer

$100

question

If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?

answer

$10

question

What is meant by the phrase "spreading the overhead"?

answer

As production increases, average fixed cost declines.

question

What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?

answer

$100

question

A firm's decision about what output level to produce is typically a ______ decision.

answer

marginal

question

What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

The average-fixed-cost curve remains the same.

question

In the ------- run, firms are able to adjust all resources.

answer

LONG

question

What is the term for the extra cost of producing one more unit of output?

answer

marginal cost

question

If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?

answer

$400

question

What does the long-run average-total-cost curve show?

answer

the lowest average total cost at which any chosen output level can be produced after the firm has had time to make adjustments in plant size.

question

The U-shape of the long-run average-total-cost curve results from which of the following?

answer

Economies of scale
Diseconomies of scale

question

An increase in the price of labor has no effect on which cost curve?

answer

average-fixed cost

question

Which of the following is an example of labor specialization?

answer

Hiring more workers in order to subdivide tasks.
Assigning each worker one task instead of five or six.

question

Greater labor specialization has which of the following effects?

answer

It eliminates the loss of time that occurs whenever a worker shifts from one task to another.

question

A planning curve is another term for which of the following?

answer

Long run average-total-cost-curve

question

Learning by doing contributes to a firm's ______.

answer

economies of scale

question

Why does the law of diminishing returns not account for the U-shape of the long-run average-total-cost curve?

answer

In the long run all resources & inputs are variable.

question

Which of the following sections of a long-run average total cost curve depicts constant returns to scale?

answer

The flat section

question

Economies of scale explain the downward-sloping part of the ______ curve.

answer

long-run average-total-cost

question

True or false: Important determinants of an industry's structure are economies of scale and revenue.

answer

False

question

Increased labor ______ becomes more achievable as a plant increases in size

answer

specialization

question

Start-up firms achieve----- of scale from learning by doing and through increased specialization of labor, management, and equipment.

answer

economies

question

How does labor specialization allow a worker to become more proficient?

answer

it allows a worker to focus on fewer tasks & become more skilled in performing those tasks.

question

A firm grows from one to three plants. As a result, the firm's sales increase, leading to greater marketing expertise. This is an example of which of the following?

answer

LEARNING BY DOING

question

Which of the following illustrates constant returns to scale?

answer

A firm's 10% increase in given inputs, causing a proportionate 10% increase in output

question

The lowest level of output at which a firm can minimize long-run average costs is called ______.

answer

MINIMUM EFFICIENT SCALE

question

By using economies of scale, successful start-up firms are able to shift their short-run cost curves in which directions?

answer

Downward & to the right

question

Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

answer

average fixed costs to increase

question

The amount of calendar time associated with the long run:

answer

varies from industry to industry

question

When a firm is experiencing diseconomies of scale,

answer

its average total cost will decline if it reduces its scale of operations.

question

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

answer

more worker will decrease the average amount of output per worker.

question

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

answer

a switch in production to a redesigned & retooled facility.

question

Which of the following statements is false?

answer

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

question

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?

answer

All are opportunity costs

question

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

answer

average total cost curve to fall

question

Average fixed costs for a given level of output can be determined graphically by

answer

the vertical distance between ATC & AVC

question

An explicit cost is:

answer

a money payment made for resources not owned by the firm itself.

question

What are the components of plant capacity?

answer

Amount of machinery and equipment

Size of the factory building

question

Which of the following are types of resources that require more time for a firm to adjust, given a change in demand?

answer

Size of the factory

Amount of machinery

question

Which of the following resources can a firm easily and quickly adjust?

answer

Raw materials

Fuel

Hourly labor

question

Accounting profit is what remains after a firm has paid its _______ costs.

answer

explicit

question

What is the definition of total product (TP)?

answer

The total quantity, or total output, of a particular good or service produced

question

The size of the factory, the amount of machinery and equipment, and other capital resources define _ _ _ _ _

answer

Blank 1: plant, operational, or operation

Blank 2: capacity or size

question

Which industry requires the most time for its firms to alter plant capacity?

answer

Aircraft manufacturing

question

What is the term for the total quantity of a specific good produced?

answer

Total product

question

When total product is at its maximum, marginal product is ______.

answer

zero

question

What happens to average product when marginal product exceeds it?

answer

Average product continues to rise.

question

Which resource requires the most time for a firm to adjust, given a change in demand?

answer

Plant capacity

question

Which of the following resources can a firm easily and quickly adjust?

answer

Hourly labor

Fuel

Raw materials

question

Which of the following are examples of fixed costs?

answer

Rental payments

Interest on a firm's debts

question

When total product declines, marginal product ______.

answer

is negative

question

What happens to fixed costs when the level of production output reaches zero?

answer

They remain unchanged.

question

____costs are part of the simple existence of a firm's plant and must be paid even when output is zero.

answer

Fixed

question

Which group of costs is the most accurate example of variable cost?

answer

Payments for materials, fuel, power, and transportation services

question

Which of the following are examples of variable costs?

answer

Transportation services payments

Fuel costs

Materials costs

question

How is average fixed cost determined?

answer

Total fixed cost divided by output

question

Average variable cost equals total variable cost divided by total ______.

answer

output

question

_____ cost is the sum of fixed cost and variable cost at each level of output.

answer

total

question

Which curve first falls and then rises?

answer

Average variable cost curve

question

What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?

answer

question

One explanation for the U-shaped average variable cost curve is that greater ______ yields more efficiency and variable cost per unit of output declines

answer

specialization

question

What is the average fixed cost if the average total cost is $100 and the average variable cost is $75?

answer

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?

answer

Average total cost

question

What is the definition of average variable cost?

answer

Total variable cost divided by output (Q)

question

How is marginal cost (MC) calculated?

answer

By dividing the change in total cost by the change in output

question

Which of the following best describes the average variable cost curve?

answer

It is U-shaped.

question

Which of the following statements explain why the average variable cost curve is U-shaped?

answer

-As output rises from the initial very low levels, greater specialization occurs, and average variable cost declines.

-At low levels of output, production is relatively inefficient and costly.

question

Suppose at an output level of 150 units a firm's average fixed cost is $25 and average variable cost is $50. Then the average total cost of the firm is ______.

answer

...

question

What type of cost can be saved by not producing the last unit?

answer

marginal

question

Average total cost (ATC) for any output level Q is found by:

answer

...

question

If all workers are hired at the same price, the marginal cost of producing each extra unit of output falls provided the ______ of each additional worker is rising.

answer

marginal product

question

Marginal cost includes which of the following?

answer

All the cost associated with producing the last unit of output
The cost savings resulting from not producing the last unit of output

question

Which of the following are effects of an increase in the price of labor on the cost curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

The average-fixed-cost curve remains the same.

question

Identify a correct statement about an industry and its individual firms.

answer

Firms can undertake all desired resource adjustments in the long run.

question

Which of the following is true of a firm?

answer

Its decisions regarding what output level to produce are typically marginal decisions.

question

The marginal cost curve's shape is a consequence of the law of ___ returns

answer

diminishing

question

When is marginal cost at its minimum?

answer

When marginal product is at its maximum

question

In the____, run, firms are able to adjust all resources.

answer

Long

question

A marketing supervisor works in a small plant where she performs a range of duties. As the company grows and hires additional supervisors, she is able to spend the bulk of her time in her area of expertise. In this example, the company has increased its ______.

answer

managerial specialization

question

What is another term for economies of scale?

answer

Economies of mass production

question

By expanding the size of its operations, a growing firm is able to experience economies of scale to do which of the following?

answer

Lower its average total costs

question

Increased labor ______ becomes more achievable as a plant increases in size.

answer

The increase in average total costs as a firm expands the size of its plant in the long run

question

Which of the following result from managerial specialization?

answer

Greater efficiency

Lower unit costs

question

True or false: In an industry with an extended range of constant returns to scale, firms of varying sizes can coexist and be equally profitable.

answer

True

question

With economies of scale, a 10% increase in all resources that causes a 20% increase in output results in which of the following?

answer

A decline in average total cost (ATC)

question

A ______ is a relatively rare market situation in which average total cost is minimized when only one firm produces the good.

answer

natural monopoly

question

What is the primary cause of diseconomies of scale?

answer

The difficulty of efficiently controlling and coordinating a firm's operations as it becomes a large-scale producer

question

The figure illustrates that in an industry with an extended range of ____returns to scale, firms of varying sizes can coexist and be equally profitable.

answer

Blank 1: constant

question

In heavy industries, small firms are unlikely to realize ______ and will be unable to compete with large-scale producers.

answer

minimum efficient scale

question

Start-up firms achieve ____ of scale from learning by doing and through increased specialization of labor, management, and equipment.

answer

Blank 1: economies

question

...

answer

...

1 of 109

question

The marginal-product curve is a mirror image of the ______ curve.

answer

marginal cost

question

------ costs are the monetary payments a firm makes to purchase resources from others.

answer

Explicit

question

The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use.

answer

Economic

question

If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?

answer

$24,000

question

True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.

answer

True

question

Which best describes economic costs?

answer

Payments that must be made to obtain a resource.

question

What is the definition of total product (TP)?

answer

the total quantity, or total output, of a particular good or service produced

question

Which of the following explains the concept of explicit costs?

answer

A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments made for the use of resources owned by others.

question

The law of ______ returns states that as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.

answer

Diminishing

question

answer

$90,000

question

What happens to marginal product when total product is increasing but at a decreasing rate?

answer

marginal product is positive but falling.

question

What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?

answer

$120,000

question

Which costs do not vary with changes in output?

answer

FIXED

question

Which of the following resources can a firm easily and quickly adjust?

answer

Fuel, Raw materials, & hourly labor.

question

What characterizes variable costs?

answer

costs that change with the level of output.

question

answer

diminishing returns

question

What happens to marginal product when total product is increasing at an increasing rate?

answer

marginal product is rising

question

Which of the following is true of average fixed cost when output increases?

answer

average fixed cost declines as output increases.

question

Suppose the total fixed cost of a firm is $500, the total variable cost is $200, and the output produced is 5 units. The average fixed cost of the firm is ______.

answer

$100

question

If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?

answer

$10

question

What is meant by the phrase "spreading the overhead"?

answer

As production increases, average fixed cost declines.

question

What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?

answer

$100

question

A firm's decision about what output level to produce is typically a ______ decision.

answer

marginal

question

What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

The average-fixed-cost curve remains the same.

question

In the ------- run, firms are able to adjust all resources.

answer

LONG

question

What is the term for the extra cost of producing one more unit of output?

answer

marginal cost

question

If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?

answer

$400

question

What does the long-run average-total-cost curve show?

answer

the lowest average total cost at which any chosen output level can be produced after the firm has had time to make adjustments in plant size.

question

The U-shape of the long-run average-total-cost curve results from which of the following?

answer

Economies of scale
Diseconomies of scale

question

An increase in the price of labor has no effect on which cost curve?

answer

average-fixed cost

question

Which of the following is an example of labor specialization?

answer

Hiring more workers in order to subdivide tasks.
Assigning each worker one task instead of five or six.

question

Greater labor specialization has which of the following effects?

answer

It eliminates the loss of time that occurs whenever a worker shifts from one task to another.

question

A planning curve is another term for which of the following?

answer

Long run average-total-cost-curve

question

Learning by doing contributes to a firm's ______.

answer

economies of scale

question

Why does the law of diminishing returns not account for the U-shape of the long-run average-total-cost curve?

answer

In the long run all resources & inputs are variable.

question

Which of the following sections of a long-run average total cost curve depicts constant returns to scale?

answer

The flat section

question

Economies of scale explain the downward-sloping part of the ______ curve.

answer

long-run average-total-cost

question

True or false: Important determinants of an industry's structure are economies of scale and revenue.

answer

False

question

Increased labor ______ becomes more achievable as a plant increases in size

answer

specialization

question

Start-up firms achieve----- of scale from learning by doing and through increased specialization of labor, management, and equipment.

answer

economies

question

How does labor specialization allow a worker to become more proficient?

answer

it allows a worker to focus on fewer tasks & become more skilled in performing those tasks.

question

A firm grows from one to three plants. As a result, the firm's sales increase, leading to greater marketing expertise. This is an example of which of the following?

answer

LEARNING BY DOING

question

Which of the following illustrates constant returns to scale?

answer

A firm's 10% increase in given inputs, causing a proportionate 10% increase in output

question

The lowest level of output at which a firm can minimize long-run average costs is called ______.

answer

MINIMUM EFFICIENT SCALE

question

By using economies of scale, successful start-up firms are able to shift their short-run cost curves in which directions?

answer

Downward & to the right

question

Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

answer

average fixed costs to increase

question

The amount of calendar time associated with the long run:

answer

varies from industry to industry

question

When a firm is experiencing diseconomies of scale,

answer

its average total cost will decline if it reduces its scale of operations.

question

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

answer

more worker will decrease the average amount of output per worker.

question

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

answer

a switch in production to a redesigned & retooled facility.

question

Which of the following statements is false?

answer

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

question

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?

answer

All are opportunity costs

question

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

answer

average total cost curve to fall

question

Average fixed costs for a given level of output can be determined graphically by

answer

the vertical distance between ATC & AVC

question

An explicit cost is:

answer

a money payment made for resources not owned by the firm itself.

question

What are the components of plant capacity?

answer

Amount of machinery and equipment

Size of the factory building

question

Which of the following are types of resources that require more time for a firm to adjust, given a change in demand?

answer

Size of the factory

Amount of machinery

question

Which of the following resources can a firm easily and quickly adjust?

answer

Raw materials

Fuel

Hourly labor

question

Accounting profit is what remains after a firm has paid its _______ costs.

answer

explicit

question

What is the definition of total product (TP)?

answer

The total quantity, or total output, of a particular good or service produced

question

The size of the factory, the amount of machinery and equipment, and other capital resources define _ _ _ _ _

answer

Blank 1: plant, operational, or operation

Blank 2: capacity or size

question

Which industry requires the most time for its firms to alter plant capacity?

answer

Aircraft manufacturing

question

What is the term for the total quantity of a specific good produced?

answer

Total product

question

When total product is at its maximum, marginal product is ______.

answer

zero

question

What happens to average product when marginal product exceeds it?

answer

Average product continues to rise.

question

Which resource requires the most time for a firm to adjust, given a change in demand?

answer

Plant capacity

question

Which of the following resources can a firm easily and quickly adjust?

answer

Hourly labor

Fuel

Raw materials

question

Which of the following are examples of fixed costs?

answer

Rental payments

Interest on a firm's debts

question

When total product declines, marginal product ______.

answer

is negative

question

What happens to fixed costs when the level of production output reaches zero?

answer

They remain unchanged.

question

____costs are part of the simple existence of a firm's plant and must be paid even when output is zero.

answer

Fixed

question

Which group of costs is the most accurate example of variable cost?

answer

Payments for materials, fuel, power, and transportation services

question

Which of the following are examples of variable costs?

answer

Transportation services payments

Fuel costs

Materials costs

question

How is average fixed cost determined?

answer

Total fixed cost divided by output

question

Average variable cost equals total variable cost divided by total ______.

answer

output

question

_____ cost is the sum of fixed cost and variable cost at each level of output.

answer

total

question

Which curve first falls and then rises?

answer

Average variable cost curve

question

What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?

answer

question

One explanation for the U-shaped average variable cost curve is that greater ______ yields more efficiency and variable cost per unit of output declines

answer

specialization

question

What is the average fixed cost if the average total cost is $100 and the average variable cost is $75?

answer

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?

answer

Average total cost

question

What is the definition of average variable cost?

answer

Total variable cost divided by output (Q)

question

How is marginal cost (MC) calculated?

answer

By dividing the change in total cost by the change in output

question

Which of the following best describes the average variable cost curve?

answer

It is U-shaped.

question

Which of the following statements explain why the average variable cost curve is U-shaped?

answer

-As output rises from the initial very low levels, greater specialization occurs, and average variable cost declines.

-At low levels of output, production is relatively inefficient and costly.

question

Suppose at an output level of 150 units a firm's average fixed cost is $25 and average variable cost is $50. Then the average total cost of the firm is ______.

answer

...

question

What type of cost can be saved by not producing the last unit?

answer

marginal

question

Average total cost (ATC) for any output level Q is found by:

answer

...

question

If all workers are hired at the same price, the marginal cost of producing each extra unit of output falls provided the ______ of each additional worker is rising.

answer

marginal product

question

Marginal cost includes which of the following?

answer

All the cost associated with producing the last unit of output
The cost savings resulting from not producing the last unit of output

question

Which of the following are effects of an increase in the price of labor on the cost curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.

The average-fixed-cost curve remains the same.

question

Identify a correct statement about an industry and its individual firms.

answer

Firms can undertake all desired resource adjustments in the long run.

question

Which of the following is true of a firm?

answer

Its decisions regarding what output level to produce are typically marginal decisions.

question

The marginal cost curve's shape is a consequence of the law of ___ returns

answer

diminishing

question

When is marginal cost at its minimum?

answer

When marginal product is at its maximum

question

In the____, run, firms are able to adjust all resources.

answer

Long

question

answer

managerial specialization

question

What is another term for economies of scale?

answer

Economies of mass production

question

By expanding the size of its operations, a growing firm is able to experience economies of scale to do which of the following?

answer

Lower its average total costs

question

Increased labor ______ becomes more achievable as a plant increases in size.

answer

The increase in average total costs as a firm expands the size of its plant in the long run

question

Which of the following result from managerial specialization?

answer

Greater efficiency

Lower unit costs

question

True or false: In an industry with an extended range of constant returns to scale, firms of varying sizes can coexist and be equally profitable.

answer

True

question

With economies of scale, a 10% increase in all resources that causes a 20% increase in output results in which of the following?

answer

A decline in average total cost (ATC)

question

A ______ is a relatively rare market situation in which average total cost is minimized when only one firm produces the good.

answer

natural monopoly

question

What is the primary cause of diseconomies of scale?

answer

The difficulty of efficiently controlling and coordinating a firm's operations as it becomes a large-scale producer

question

The figure illustrates that in an industry with an extended range of ____returns to scale, firms of varying sizes can coexist and be equally profitable.

answer

Blank 1: constant

question

In heavy industries, small firms are unlikely to realize ______ and will be unable to compete with large-scale producers.

answer

minimum efficient scale

question

Start-up firms achieve ____ of scale from learning by doing and through increased specialization of labor, management, and equipment.

answer

Blank 1: economies

question

...

answer

...

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