question
Some costs do not vary with the quantity of output produced. Those costs are called
answer
fixed costs
question
Economists normally assume that the goal of a firm is to
(i) sell as much of its product as possible.
(ii) set the price of the product as high as possible.
(iii) maximize profit
(i) sell as much of its product as possible.
(ii) set the price of the product as high as possible.
(iii) maximize profit
answer
D. (iii)
question
A firm's total profit equals its marginal revenue minus its marginal cost.
answer
False
question
A production function describes
answer
how a firm turns inputs into output.
question
Economic profit is greater than or equal to accounting profit.
answer
False
question
Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of
answer
lemons and sugar.
question
Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?
answer
15 bouquets
question
Economies of scale occur when a firm's
answer
long-run average total costs are decreasing as output increases.
question
Diminishing marginal product exists when the production function becomes flatter as inputs increase.
answer
True
question
Average total cost is equal to
answer
total cost/output.
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