MICRO - CHAPTER 9 - Assignment Essays

question

Economic cost can best be defined as:

answer

the payment that must be made to obtain and retain the services of a resource

question

which of the following constitutes an implicit cost to the Johnston Manufacturing Company

answer

use of savings to pay operating expenses instead of generating interest income

question

To the economist, total cost includes:

answer

explicit and implicit costs

question

accounting profits are typically

answer

greater than economic profits because the former do not take implicit costs into account.

question

economic profits are calculated by subtracting

answer

explicit and implicit costs from total revenue.

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

To economists, the main difference between the short run and the long run is that:

answer

in the long run all resources are variable, while in the short run at least one resource is fixed

question

the basic difference between the short run and the long run is that

answer

at least one resource is fixed in the short run while all resources are variable in the long run

question

the short run is characterized by

answer

fixed plant capacity

question

the long run is characterized by

answer

the ability of the firm to change its plant size

question

marginal product is

answer

the change in total output attributable to the employment of one more worker

question

law of diminishing returns indicates that

answer

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

question

which of the following best expresses the law of diminishing returns

answer

as successeive 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

question

marginal product

answer

may initially increase, then diminish, and ultimately become negative.

question

the first, second, and third workers employed by a firm add 24, 18, and 9 units to total product. therefore, we can conclude that

answer

marginal product of the third worker is 9

question

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes:

answer

the law of diminishing returns

question

law of diminishing returns results in

answer

a total product curve that eventually increases at a decreasing rate.

question

the average product when two units of labor are hired is

answer

question

diminishing returns begin to occur with the hiring of the __ unit of labor

answer

third

question

marginal product becomes negative with the hiring of the __ unit of labor

answer

seventh

question

fixed cost isw

answer

any cost that does not change when the firm changes its output

question

If you operated a small bakery, which of the following would be a variable cost in the short run?

answer

baking supplies

question

average fixed cost

answer

declines continually as output increases

question

marginal cost

answer

equals both average variable cost and average total cost at their respective minimums

question

other things equal, if the fixed costs of a firm were to increase by 100,000 per year, which of the following would happen

answer

average fixed costs and average total costs would rise

question

in comparing the changes in TVC and TC associated with an additional unit of output, we find that

answer

the changes in TC and TVC are equal

question

average fixed cost is

answer

TFC
over
Q

question

average total costis

answer

TFC + TVC / Q

question

marginal cost is

answer

change in TVC / change in Q

question

refer to diagram. where variable inputs of labor are being added to a constant amount of property resources. the total output of this firm will cease to expand

answer

if a labor force in excess of Q3 is employed

question

refer to diagram, where variable inputs of labor are being added to a constant amount of property resources. marginal cost will be at a minimum for this firm when it is hiring

answer

q1 workers

question

refer to diagram, where a variable inputs of labor are being added to a constant amount of property resources. average variable cost will be at a minimum when the firm is hiring

answer

q2 workers

question

Total Fixed Cost (TFC)

answer

does not change as total output increases or decreases.

question

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

answer

the vertical distance between ATC and AVC

question

the vertical distance between the total cost and the total variable cost curves differs by an amount that

answer

is constant as output changes

question

as output increases, total variable cost

answer

increases at a decreasing rate and then at an increasing rate

question

Because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased:
A. total cost at first increases at a decreasing rate and then increases at an increasing rate.
B. total variable cost at first increases at an increasing rate and then increases at a decreasing rate.
C. average total cost at first increases and then diminishes.
D. average fixed cost will rise beyond the point of diminishing returns.

answer

total cost at first increases at a decreasing rate and then increases at an increaseing rate

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

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

answer

average total cost curve to fall

question

if marginal cost is

answer

rising, then average total cost could be either falling or rising

question

the short run average total cost curve is u-shaped because

answer

of increasing and diminishing return

question

refer to the diagram. this firm's average fixed costs

answer

are the vertical distance between AVC and ATC

question

refer to diagram. if labor is the only variable input, the marginal product of labor is at a

answer

maximum at point a

question

refer to diagram. if labor is only variable input the average product of labor is at a

answer

maximum at point b

question

Refer to the diagram. At the profit-maximizing level of output for this firm

answer

cannot be determined

question

economies and diseconomies of scale explain

answer

why the firm's long-run average total cost curve is U-shaped.

question

in the long run,

answer

all costs are variable costs

question

the diagram shows the short run average total cost curves for five different plant sizes of a firm. the shape of each individual curve reflects

answer

economies of scale, followed by diseconomies of scale

question

As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:

answer

economies of scale

question

As the firm in the diagram expands from plant size #3 to plant size #5, it experiences:

answer

diseconomies of scale

question

When diseconomies of scale occur:

answer

the long-run average total cost curve rises.

question

economies of scale are indicated by

answer

the declining segment of the long-run average total cost curve.

question

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that:

answer

economies of scale are being realized

question

the minimum efficient scale of a firm

answer

is the smallest level of output at which long-run average total cost is minimized.

question

If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that:

answer

both relatively small and relatively large firms can be viable in the industry

question

a natural monopoly exists when

answer

unit costs are minimized by having one firm produce an industry's entire output.

question

long-run average total cost curve

answer

indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size.

question

if a firm increases all of its inputs by 10 percent and its output increases by 15 percent then

answer

it is encountering economies of scale

question

if a firm increases all of its inputs by 10 percent and its output increases by 10 percent then

answer

it is encountering constant returns to scale

1 of 59

question

Economic cost can best be defined as:

answer

the payment that must be made to obtain and retain the services of a resource

question

which of the following constitutes an implicit cost to the Johnston Manufacturing Company

answer

use of savings to pay operating expenses instead of generating interest income

question

To the economist, total cost includes:

answer

explicit and implicit costs

question

accounting profits are typically

answer

greater than economic profits because the former do not take implicit costs into account.

question

economic profits are calculated by subtracting

answer

explicit and implicit costs from total revenue.

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

To economists, the main difference between the short run and the long run is that:

answer

in the long run all resources are variable, while in the short run at least one resource is fixed

question

the basic difference between the short run and the long run is that

answer

at least one resource is fixed in the short run while all resources are variable in the long run

question

the short run is characterized by

answer

fixed plant capacity

question

the long run is characterized by

answer

the ability of the firm to change its plant size

question

marginal product is

answer

the change in total output attributable to the employment of one more worker

question

law of diminishing returns indicates that

answer

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

question

which of the following best expresses the law of diminishing returns

answer

as successeive 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

question

marginal product

answer

may initially increase, then diminish, and ultimately become negative.

question

the first, second, and third workers employed by a firm add 24, 18, and 9 units to total product. therefore, we can conclude that

answer

marginal product of the third worker is 9

question

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes:

answer

the law of diminishing returns

question

law of diminishing returns results in

answer

a total product curve that eventually increases at a decreasing rate.

question

the average product when two units of labor are hired is

answer

question

diminishing returns begin to occur with the hiring of the __ unit of labor

answer

third

question

marginal product becomes negative with the hiring of the __ unit of labor

answer

seventh

question

fixed cost isw

answer

any cost that does not change when the firm changes its output

question

If you operated a small bakery, which of the following would be a variable cost in the short run?

answer

baking supplies

question

average fixed cost

answer

declines continually as output increases

question

marginal cost

answer

equals both average variable cost and average total cost at their respective minimums

question

other things equal, if the fixed costs of a firm were to increase by 100,000 per year, which of the following would happen

answer

average fixed costs and average total costs would rise

question

in comparing the changes in TVC and TC associated with an additional unit of output, we find that

answer

the changes in TC and TVC are equal

question

average fixed cost is

answer

TFC
over
Q

question

average total costis

answer

TFC + TVC / Q

question

marginal cost is

answer

change in TVC / change in Q

question

refer to diagram. where variable inputs of labor are being added to a constant amount of property resources. the total output of this firm will cease to expand

answer

if a labor force in excess of Q3 is employed

question

refer to diagram, where variable inputs of labor are being added to a constant amount of property resources. marginal cost will be at a minimum for this firm when it is hiring

answer

q1 workers

question

refer to diagram, where a variable inputs of labor are being added to a constant amount of property resources. average variable cost will be at a minimum when the firm is hiring

answer

q2 workers

question

Total Fixed Cost (TFC)

answer

does not change as total output increases or decreases.

question

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

answer

the vertical distance between ATC and AVC

question

the vertical distance between the total cost and the total variable cost curves differs by an amount that

answer

is constant as output changes

question

as output increases, total variable cost

answer

increases at a decreasing rate and then at an increasing rate

question

answer

total cost at first increases at a decreasing rate and then increases at an increaseing rate

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

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

answer

average total cost curve to fall

question

if marginal cost is

answer

rising, then average total cost could be either falling or rising

question

the short run average total cost curve is u-shaped because

answer

of increasing and diminishing return

question

refer to the diagram. this firm's average fixed costs

answer

are the vertical distance between AVC and ATC

question

refer to diagram. if labor is the only variable input, the marginal product of labor is at a

answer

maximum at point a

question

refer to diagram. if labor is only variable input the average product of labor is at a

answer

maximum at point b

question

Refer to the diagram. At the profit-maximizing level of output for this firm

answer

cannot be determined

question

economies and diseconomies of scale explain

answer

why the firm's long-run average total cost curve is U-shaped.

question

in the long run,

answer

all costs are variable costs

question

the diagram shows the short run average total cost curves for five different plant sizes of a firm. the shape of each individual curve reflects

answer

economies of scale, followed by diseconomies of scale

question

As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:

answer

economies of scale

question

As the firm in the diagram expands from plant size #3 to plant size #5, it experiences:

answer

diseconomies of scale

question

When diseconomies of scale occur:

answer

the long-run average total cost curve rises.

question

economies of scale are indicated by

answer

the declining segment of the long-run average total cost curve.

question

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that:

answer

economies of scale are being realized

question

the minimum efficient scale of a firm

answer

is the smallest level of output at which long-run average total cost is minimized.

question

If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that:

answer

both relatively small and relatively large firms can be viable in the industry

question

a natural monopoly exists when

answer

unit costs are minimized by having one firm produce an industry's entire output.

question

long-run average total cost curve

answer

indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size.

question

if a firm increases all of its inputs by 10 percent and its output increases by 15 percent then

answer

it is encountering economies of scale

question

if a firm increases all of its inputs by 10 percent and its output increases by 10 percent then

answer

it is encountering constant returns to scale

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MICRO — CHAPTER 9

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