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.
Multiple choice question.
economic
absolute
explicit
accounting
Multiple choice question.
economic
absolute
explicit
accounting
answer
economic
question
costs are the monetary payments a firm makes to purchase resources from others.
Listen to the complete question
Listen to the complete question
answer
Explicit
question
Accounting profit is what remains after a firm has paid its _______ costs.
Multiple choice question.
opportunity
explicit and implicit
implicit
explicit
Multiple choice question.
opportunity
explicit and implicit
implicit
explicit
answer
explicit
question
What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?
Multiple choice question.
$36,000
$72,000
$4,000
$120,000
Multiple choice question.
$36,000
$72,000
$4,000
$120,000
answer
$120,000
question
True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.
True false question.
True
False
True false question.
True
False
answer
true
question
Which best describes economic costs?
Multiple choice question.
Payments that must be made to obtain a resource
The lowest value attributed to a resource
Explicit plus accounting costs
Implicit costs
Multiple choice question.
Payments that must be made to obtain a resource
The lowest value attributed to a resource
Explicit plus accounting costs
Implicit costs
answer
Payments that must be made to obtain a resource
question
What is the term for the total quantity of a specific good produced?
Multiple choice question.
Normal product
Marginal product
Total product
Average product
Multiple choice question.
Normal product
Marginal product
Total product
Average product
answer
Total product
question
Which of the following explain the concept of explicit costs? (Check all that apply.)
Multiple select question.
A firm's monetary payments made for the use of resources owned by others.
A firm's monetary payments that self-employed resources could have earned in their best alternative use.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments received for the use of resources owned by the firm.
Multiple select question.
A firm's monetary payments made for the use of resources owned by others.
A firm's monetary payments that self-employed resources could have earned in their best alternative use.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments received for the use of resources owned by the firm.
answer
A firm's monetary payments made for the use of resources owned by others.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
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?
Multiple choice question.
$102,000
$108,000
$132,000
$90,000
Multiple choice question.
$102,000
$108,000
$132,000
$90,000
answer
$150,000 - $60,000 (explicit costs) = $90,000.
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.
Multiple choice question.
diminishing
variable
marginal
fixed
Multiple choice question.
diminishing
variable
marginal
fixed
answer
diminishing
question
If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?
Multiple choice question.
$120,000
$24,000
$216,000
$96,000
Multiple choice question.
$120,000
$24,000
$216,000
$96,000
answer
Economic profit equals total revenue minus economic cost
$24,000
$24,000
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 of the following resources can a firm easily and quickly adjust?
Multiple select question.
Hourly labor
Raw materials
Fuel
Production-line machinery
Size of the factory
Multiple select question.
Hourly labor
Raw materials
Fuel
Production-line machinery
Size of the factory
answer
Hourly labor
Raw materials
Fuel
Raw materials
Fuel
question
A firm's insurance premiums are generally considered
____ costs.
____ costs.
answer
fixed
question
What is the definition of total product (TP)?
Multiple choice question.
The total output per unit of labor
The total additional output or added product associated with adding a unit of a variable resource to the production process
The total quantity, or total output, of a particular good or service produced
The total output of a particular good less total production costs
Multiple choice question.
The total output per unit of labor
The total additional output or added product associated with adding a unit of a variable resource to the production process
The total quantity, or total output, of a particular good or service produced
The total output of a particular good less total production costs
answer
The total quantity, or total output, of a particular good or service produced
question
Variable costs change with the level of
answer
output
question
costs are the monetary payments a firm makes to purchase resources from others.
answer
Explicit
question
____cost is the sum of fixed cost and variable cost at each level of output.
answer
total
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 ______.
Multiple choice question.
supply and demand
diminishing marginal costs
marginal utility
diminishing returns
Multiple choice question.
supply and demand
diminishing marginal costs
marginal utility
diminishing returns
answer
diminishing returns
question
Which of the following is true of average fixed cost when output increases?
Multiple choice question.
Average fixed cost increases initially, reaches a maximum, and then decreases.
Average fixed cost declines initially, reaches a minimum, and then increases.
Average fixed cost stays the same as output increases.
Average fixed cost declines as output increases.
Multiple choice question.
Average fixed cost increases initially, reaches a maximum, and then decreases.
Average fixed cost declines initially, reaches a minimum, and then increases.
Average fixed cost stays the same as output increases.
Average fixed cost declines as output increases.
answer
Average fixed cost declines as output increases.
question
Which costs do not vary with changes in output?
Multiple choice question.
Variable
Fixed
Labor
Marginal
Multiple choice question.
Variable
Fixed
Labor
Marginal
answer
Fixed
question
Average fixed cost equals total fixed cost divided by the ______.
Multiple choice question.
amount of output
marginal product of labor
total costs
quantity of labor
Multiple choice question.
amount of output
marginal product of labor
total costs
quantity of labor
answer
amount of output
question
Which of the following are examples of fixed costs?
Multiple select question.
Transportation
Interest on a firm's debts
Rental payments
Labor
Multiple select question.
Transportation
Interest on a firm's debts
Rental payments
Labor
answer
Interest on a firm's debts
Rental payments
Rental payments
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 ______.
Multiple choice question.
$495
$140
$250
$100
Multiple choice question.
$495
$140
$250
$100
answer
AFC = TFC/output
$100
$100
question
Which best characterizes variable costs?
Multiple choice question.
Costs that change with the level of output
Costs that increase when output declines and decrease when output increases
Costs that consider the average cost over a period of time
Costs that do not change with the level of output
Multiple choice question.
Costs that change with the level of output
Costs that increase when output declines and decrease when output increases
Costs that consider the average cost over a period of time
Costs that do not change with the level of output
answer
Costs that change with the level of output
question
What is average variable cost if total variable cost is $500, total fixed cost is $100, and output is 50?
Multiple choice question.
$450
$10
$10.20
$600
Multiple choice question.
$450
$10
$10.20
$600
answer
AVC = TVC/output.
10
10
question
How is total cost calculated?
Multiple choice question.
By dividing total fixed cost into total variable cost
By multiplying total fixed cost and total variable cost
By adding total fixed cost and total variable cost
By subtracting total fixed cost from total variable cost
Multiple choice question.
By dividing total fixed cost into total variable cost
By multiplying total fixed cost and total variable cost
By adding total fixed cost and total variable cost
By subtracting total fixed cost from total variable cost
answer
By adding total fixed cost and total variable cost
question
Average variable cost equals total variable cost divided by total ______.
Multiple choice question.
costs
revenue
output
price
Multiple choice question.
costs
revenue
output
price
answer
output
question
What is meant by the phrase "spreading the overhead"?
Multiple choice question.
As production increases, average fixed cost declines.
As production increases, average fixed cost increases.
As production increases, average fixed cost declines and then increases.
As production increases, average variable cost always increases.
Multiple choice question.
As production increases, average fixed cost declines.
As production increases, average fixed cost increases.
As production increases, average fixed cost declines and then increases.
As production increases, average variable cost always increases.
answer
As production increases, average fixed cost declines.
question
Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?
Multiple choice question.
Average marginal cost
Average fixed cost
Average total cost
Average variable cost
Multiple choice question.
Average marginal cost
Average fixed cost
Average total cost
Average variable cost
answer
average total cost
question
How is average fixed cost determined?
Multiple choice question.
Total fixed cost divided by opportunity cost
Total fixed cost divided by total variable cost
Total fixed cost divided by marginal output
Total fixed cost divided by output
Multiple choice question.
Total fixed cost divided by opportunity cost
Total fixed cost divided by total variable cost
Total fixed cost divided by marginal output
Total fixed cost divided by output
answer
Total fixed cost divided by output
question
What is the term for the extra cost of producing one more unit of output?
Multiple choice question.
Marginal cost
Variable cost
Fixed cost
Total cost
Multiple choice question.
Marginal cost
Variable cost
Fixed cost
Total cost
answer
marginal cost
question
What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?
Multiple choice question.
$80
$5
$2,000
$150
Multiple choice question.
$80
$5
$2,000
$150
answer
AFC = TFC/output.
5
5
question
If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?
Multiple choice question.
$400
$700
$40
$1,000
Multiple choice question.
$400
$700
$40
$1,000
answer
Marginal cost equals change in total cost divided by change in output.
400
400
question
If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?
Multiple choice question.
$10
$1,000
$20
$200
Multiple choice question.
$10
$1,000
$20
$200
answer
AVC = TVC/output.
10
10
question
A firm's decision about what output level to produce is typically a ______ decision.
Multiple choice question.
sequential
marginal
coordinated
production
Multiple choice question.
sequential
marginal
coordinated
production
answer
marginal
question
What is the definition of average variable cost?
Multiple choice question.
Total variable cost divided by output (Q)
Total variable cost divided by marginal cost (MC)
Total variable cost divided by total fixed cost (TFC)
Total variable cost divided by change in output (Q)
Multiple choice question.
Total variable cost divided by output (Q)
Total variable cost divided by marginal cost (MC)
Total variable cost divided by total fixed cost (TFC)
Total variable cost divided by change in output (Q)
answer
Total variable cost divided by output (Q)
question
Average total cost (ATC) for any output level Q is found by:
Multiple select question.
dividing total fixed cost by output (Q) at that output.
dividing total variable cost by output (Q) at that output.
dividing total cost (TC) by that output (Q).
adding average fixed cost (AFC) and average variable cost (AVC) at that output.
Multiple select question.
dividing total fixed cost by output (Q) at that output.
dividing total variable cost by output (Q) at that output.
dividing total cost (TC) by that output (Q).
adding average fixed cost (AFC) and average variable cost (AVC) at that output.
answer
dividing total cost (TC) by that output (Q).
adding average fixed cost (AFC) and average variable cost (AVC) at that output.
adding average fixed cost (AFC) and average variable cost (AVC) at that output.
question
Which of the following are effects of an increase in the price of labor on the cost curves?
Multiple select question.
The average-fixed-cost curve remains the same.
The average-variable-cost and average-total-cost curves shift upward, and the marginal-cost curve shifts downward.
The average-variable-cost, average-total-cost, and marginal-cost curves shift downward.
The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
Multiple select question.
The average-fixed-cost curve remains the same.
The average-variable-cost and average-total-cost curves shift upward, and the marginal-cost curve shifts downward.
The average-variable-cost, average-total-cost, and marginal-cost curves shift downward.
The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
answer
The average-fixed-cost curve remains the same.
The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
question
How is marginal cost (MC) calculated?
Multiple choice question.
By dividing the change in total fixed cost by the total output
By dividing the change in total fixed cost by the change in output
By dividing the change in output by the change in total cost
By dividing the change in total cost by the change in output
Multiple choice question.
By dividing the change in total fixed cost by the total output
By dividing the change in total fixed cost by the change in output
By dividing the change in output by the change in total cost
By dividing the change in total cost by the change in output
answer
By dividing the change in total cost by the change in output
question
What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?
Multiple choice question.
$0.01
$100
$3
$900
Multiple choice question.
$0.01
$100
$3
$900
answer
Marginal cost equals change in total cost divided by change in output.
100
100
question
in the ___run, firms are able to adjust all resources.
answer
long
question
Which of the following is true of a firm?
Multiple choice question.
It should avoid taking into account opportunity costs when making business decisions.
Its decisions regarding what output level to produce are typically based on total revenue and total cost data.
It should consider sunk costs when making business decisions.
Its decisions regarding what output level to produce are typically marginal decisions
Multiple choice question.
It should avoid taking into account opportunity costs when making business decisions.
Its decisions regarding what output level to produce are typically based on total revenue and total cost data.
It should consider sunk costs when making business decisions.
Its decisions regarding what output level to produce are typically marginal decisions
answer
Its decisions regarding what output level to produce are typically marginal decisions.
question
A planning curve is another term for which of the following?
Multiple choice question.
Long run average-marginal-cost curve
Long run average-fixed-cost curve
Long run average-total-cost curve
Long run average-variable-cost curve
Multiple choice question.
Long run average-marginal-cost curve
Long run average-fixed-cost curve
Long run average-total-cost curve
Long run average-variable-cost curve
answer
Long run average-total-cost curve
question
Average variable cost equals total variable cost divided by total ______.
Multiple choice question.
revenue
price
output
costs
Multiple choice question.
revenue
price
output
costs
answer
output
question
The U-shape of the long-run average-total-cost curve results from which of the following?
Multiple select question.
Rising resource prices
Economies of scale
Fixed labor costs
Diseconomies of scale
Multiple select question.
Rising resource prices
Economies of scale
Fixed labor costs
Diseconomies of scale
answer
Economies of scale
Diseconomies of scale
Diseconomies of scale
question
An increase in the price of labor has no effect on which cost curve?
Multiple choice question.
Average-fixed-cost
Average-total-cost
Marginal-cost
Average-variable-cost
Multiple choice question.
Average-fixed-cost
Average-total-cost
Marginal-cost
Average-variable-cost
answer
Average-fixed-cost
question
What is another term for economies of scale?
Multiple choice question.
Diseconomies of mass production
Economies of output
Economies of mass production
Diseconomies of scale
Multiple choice question.
Diseconomies of mass production
Economies of output
Economies of mass production
Diseconomies of scale
answer
Economies of mass production
question
What is the term for the extra cost of producing one more unit of output?
Multiple choice question.
Total cost
Variable cost
Marginal cost
Fixed cost
Multiple choice question.
Total cost
Variable cost
Marginal cost
Fixed cost
answer
Marginal cost
question
Which of the following is an example of labor specialization?
Multiple select question.
Hiring more workers in order to subdivide tasks
Assigning each worker five or six unique tasks
Hiring fewer workers and creating fewer job classifications
Assigning each worker one task instead of five or six
Multiple select question.
Hiring more workers in order to subdivide tasks
Assigning each worker five or six unique tasks
Hiring fewer workers and creating fewer job classifications
Assigning each worker one task instead of five or six
answer
Hiring more workers in order to subdivide tasks
Assigning each worker one task instead of five or six
Assigning each worker one task instead of five or six
question
Identify a correct statement about an industry and its individual firms.
Multiple choice question.
New firms cannot enter the industry in the long run.
Firms can always exit the industry when they face losses in the short run.
Firms can undertake all desired resource adjustments in the long run.
Firms can choose to expand even in the short run.
Multiple choice question.
New firms cannot enter the industry in the long run.
Firms can always exit the industry when they face losses in the short run.
Firms can undertake all desired resource adjustments in the long run.
Firms can choose to expand even in the short run.
answer
Firms can undertake all desired resource adjustments in the long run.
question
What does the long-run average-total-cost curve show?
Multiple choice question.
The sum total of all of the short-run average-total-cost curves
The maximum level of output possible in the short run at all plant sizes
The lowest minimum short-run average-total-cost curve at which a firm must produce to make a profit
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
Multiple choice question.
The sum total of all of the short-run average-total-cost curves
The maximum level of output possible in the short run at all plant sizes
The lowest minimum short-run average-total-cost curve at which a firm must produce to make a profit
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
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
How does labor specialization allow a worker to become more proficient?
Multiple choice question.
It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.
It refers to the process developed by unions to protect both businesses and workers from inefficient production technology.
It increases the number of unskilled tasks a worker is able to perform.
It allows a worker to focus on more tasks to become a jack-of-all-trades.
Multiple choice question.
It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.
It refers to the process developed by unions to protect both businesses and workers from inefficient production technology.
It increases the number of unskilled tasks a worker is able to perform.
It allows a worker to focus on more tasks to become a jack-of-all-trades.
answer
It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.
question
Why does the law of diminishing returns not account for the U-shape of the long-run average-total-cost curve?
Multiple choice question.
In the short run all resources and inputs are fixed.
In the long run all resources and inputs are variable.
In the short run all resources and inputs are variable.
In the long run all resources and inputs are fixed.
Multiple choice question.
In the short run all resources and inputs are fixed.
In the long run all resources and inputs are variable.
In the short run all resources and inputs are variable.
In the long run all resources and inputs are fixed.
answer
In the long run all resources and inputs are variable.
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?
Multiple choice question.
Learning by doing
Labor specialization
Efficient capital
Slow decision making
Multiple choice question.
Learning by doing
Labor specialization
Efficient capital
Slow decision making
answer
Learning by doing
question
Economies of scale explain the downward-sloping part of the ______ curve.
Multiple choice question.
long-run average-fixed-cost
short-run average-variable-cost
long-run average-total-cost
short-run average-total-cost
Multiple choice question.
long-run average-fixed-cost
short-run average-variable-cost
long-run average-total-cost
short-run average-total-cost
answer
long-run average-total-cost
question
Which of the following sections of a long-run average total cost curve depicts constant returns to scale?
Multiple choice question.
The downward-sloping section
The beginning high point of the curve
The upward-sloping section
The flat section
Multiple choice question.
The downward-sloping section
The beginning high point of the curve
The upward-sloping section
The flat section
answer
The flat section
question
Increased labor ______ becomes more achievable as a plant increases in size.
Multiple choice question.
specialization
generalization
demand
supply
Multiple choice question.
specialization
generalization
demand
supply
answer
specialization
question
The lowest level of output at which a firm can minimize long-run average costs is called ______.
Multiple choice question.
maximum efficient scale
diseconomies of scale
economies of scale
minimum efficient scale
Multiple choice question.
maximum efficient scale
diseconomies of scale
economies of scale
minimum efficient scale
answer
minimum efficient scale
question
Greater labor specialization has which of the following effects?
Multiple choice question.
It eliminates the loss of time that occurs whenever a worker shifts from one task to another.
It allows workers to focus on more tasks rather than fewer.
It increases production costs.
It permits workers to specialize in more varied areas, so they do not get bored.
Multiple choice question.
It eliminates the loss of time that occurs whenever a worker shifts from one task to another.
It allows workers to focus on more tasks rather than fewer.
It increases production costs.
It permits workers to specialize in more varied areas, so they do not get bored.
answer
It eliminates the loss of time that occurs whenever a worker shifts from one task to another.
question
Learning by doing contributes to a firm's ______.
Multiple choice question.
constant returns to scale
diseconomies of scale
fixed costs
economies of scale
Multiple choice question.
constant returns to scale
diseconomies of scale
fixed costs
economies of scale
answer
economies of scale
question
Which of the following illustrates constant returns to scale?
Multiple choice question.
A firm's 10% increase in given inputs, causing a 30% increase in output
A firm's 10% increase in given inputs, causing a 5% increase in output
A firm's 10% increase in given inputs, causing a 20% increase in output
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
Multiple choice question.
A firm's 10% increase in given inputs, causing a 30% increase in output
A firm's 10% increase in given inputs, causing a 5% increase in output
A firm's 10% increase in given inputs, causing a 20% increase in output
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
answer
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
question
True or false: Important determinants of an industry's structure are economies of scale and revenue.
True false question.
True
False
True false question.
True
False
answer
False
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