question
Implicit costs are ________.
Cost requiring actual money payment.
The monetary value of all the inputs used for an activity.
A foregone opportunity to do something else with your resources
Cost requiring actual money payment.
The monetary value of all the inputs used for an activity.
A foregone opportunity to do something else with your resources
answer
a foregone opportunity to do something else with your resources
question
Diego wants to expand his business and use the 5 acre property he owns and rents to a local cattle rancher for $5000/year, to build a warehouse and office building for $2 million. Diego's explicit costs are
The foregone rent from the cattle rancher.
The foregone rent and the cost of the warehouse and office building.
Cost of the warehouse and office building.
The foregone rent from the cattle rancher.
The foregone rent and the cost of the warehouse and office building.
Cost of the warehouse and office building.
answer
cost of the warehouse and office building.
question
A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. What was the firm's accounting profit?
$100,000
$150,000
$50,000
$100,000
$150,000
$50,000
answer
$50,000
question
A web designer quits a project where she was paid $50,000 on completion of the project. She joins a new company with sales revenues of $550,000 last year, while spending $250,000 on compensation for employees (excluding the owner), $70,000 on capital, and $30,000 on materials. What was the firm's economic profit?
$25,000
$100,000
$150,000
$25,000
$100,000
$150,000
answer
$150,000
question
As production increases,
Average fixed cost will increase.
Average fixed cost will stay constant.
Average fixed cost will fall.
Average fixed cost will increase.
Average fixed cost will stay constant.
Average fixed cost will fall.
answer
average fixed cost will fall.
question
If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?
Divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be.
Divide the total costs of production by the quantity of output.
Divide the variable costs of production by the quantity of output.
Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be.
Divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be.
Divide the total costs of production by the quantity of output.
Divide the variable costs of production by the quantity of output.
Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be.
answer
Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be.
question
Graphically, the marginal cost curve and the average total cost curve intersect where ________.
marginal cost is minimizedaverage total cost is maximizedfixed cost is minimizedaverage total cost is minimized
marginal cost is minimizedaverage total cost is maximizedfixed cost is minimizedaverage total cost is minimized
answer
average total cost is minimized
question
Sunk costs ________.
Have a significant effect on output decisions
A moderate effect on output decisions Should have no effect on output decisions
Have a significant effect on output decisions
A moderate effect on output decisions Should have no effect on output decisions
answer
should have no effect on output decisions
question
Which of the following is an example of a long-run fixed cost?
Mortgage payment.
shourly wage costs.
payments for production inputs.
none of these are examples; there are no fixed costs in the long run.
Mortgage payment.
shourly wage costs.
payments for production inputs.
none of these are examples; there are no fixed costs in the long run.
answer
none of these are examples; there are no fixed costs in the long run
question
To reduce the effects of diminishing returns, in the long run firms can
cut cost.
reduce fixed cos
t.invest in more capital.
cut cost.
reduce fixed cos
t.invest in more capital.
answer
invest in more capital.
question
In order to maximize profit, firms will choose to
Use the lowest cost resources only to minimize cost.
Use the lowest amount of resources to minimize cost.
Use the combination of available resources and technology that will minimize cost.
Use the lowest cost resources only to minimize cost.
Use the lowest amount of resources to minimize cost.
Use the combination of available resources and technology that will minimize cost.
answer
use the combination of available resources and technology that will minimize cost.
question
The term ________ describes a situation where as the quantity of output rises, the average cost of production falls.
Diminishing marginal returns.
Marginal cost output.
Diseconomies of scale.
economies of scale.
Diminishing marginal returns.
Marginal cost output.
Diseconomies of scale.
economies of scale.
answer
economies of scale
question
When and why do diseconomies of scale take place?
Because of the law of diminishing marginal returns.
In the short run.
Because of growing returns.
In the long run.
Because of the law of diminishing marginal returns.
In the short run.
Because of growing returns.
In the long run.
answer
In the long run.
question
If there are substantial economies of scale in a market,
A large firm will have higher average cost than a smaller one.
a large firm will have lower total cost than a smaller one.
a large firm will have lower average cost than a smaller one.
A large firm will have higher average cost than a smaller one.
a large firm will have lower total cost than a smaller one.
a large firm will have lower average cost than a smaller one.
answer
a large firm will have lower average cost than a smaller one.
question
If Jimmy's Dairy, cheese producer, keeps hiring more workers for their production lines, the total production will
Keep rising at an increasing rate.
Keep rising at a decreasing rate.
Eventually peak then decrease.
Keep rising at an increasing rate.
Keep rising at a decreasing rate.
Eventually peak then decrease.
answer
>eventually peak then decrease.
question
As the Corner Coffee Shop becomes more popular and sells more coffee, which of the following cost is more likely to increase?
Fixed cost
Average fixed cost
Variable cost
Fixed cost
Average fixed cost
Variable cost
answer
variable cost
question
The term "technology," when used in economics, means
Equipment used to produce a product.
Labor used to produce a product.
Specific processes used to produce a product.
Equipment used to produce a product.
Labor used to produce a product.
Specific processes used to produce a product.
answer
specific processes used to produce a product.
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