Test 2: Chapter 9 - Assignment Essays

question

Which would be an implicit cost for a firm?

answer

The cost of wages foregone by the owner of the firm

question

Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.

Refer to the above information. The economic profits of Harvey's firm in the first year were:

answer

$160,000

question

If a firm's revenues just cover all its opportunity costs, then:

answer

Economic profit is zero

question

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

answer

The firm may earn positive accounting profits but will face economic losses

question

Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm earns an accounting profit of:

answer

$500,000 and an economic profit of $200,000

question

Marginal product of labor refers to the:

answer

Increase in output resulting from employing one more unit of labor

question

Which of the following statements is true?

answer

...

question

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

answer

More worker will decrease the average amount of output per worker

question

Which statement best illustrates the law of diminishing returns?

answer

The marginal product of the last unit of a resource used is less than the marginal product of the preceding unit of resource

question

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the:

answer

Average product of labor

question

Over the range of positive, but diminishing, marginal returns for an input, the total product curve:

answer

rises at a decreasing rate

question

At what point does marginal product equal average product?

answer

where marginal product is equal to its minimum value

question

Refer to the above graph showing the marginal product (MPL) and the average product of labor (APL). At which quantity of labor employed does diminishing marginal returns set in?

answer

at point B

question

Refer to the above graph. It shows the total product (TP) curve. At which point is marginal product smallest?

answer

Point D the last point

question

Refer to the above table. With diminishing marginal returns, if the firm hires seven units of labor, which of the following numbers would most probably be the total product?

answer

question

Refer to the above table. The total variable cost of producing 5 units is:

answer

question

At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are:

answer

$8,000

question

Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured by:

answer

question

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of:

answer

diminishing marginal return

question

When marginal cost is increasing:

answer

...

question

The range over which average variable cost is increasing is the same as the range over which:

answer

Average product is decreasing

question

The fixed cost of the firm is $500. The firm's total variable cost is indicated in the table.

answer

$400

question

If the short-run average variable cost of production for a firm is decreasing, then it follows that:

answer

Marginal cost must be below average variable cost

question

Refer to the above table. When output increases from 28 to 35 units, the marginal cost of the product is:

answer

...

question

What is the firm's average variable cost at an output of 5 units?

answer

$60

question

Refer to the above graph. At which point does marginal product (MP) equal average product (AP) at a level of output?

answer

point B

question

Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units of output, then:

answer

MC > AVC

question

If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?

answer

...

question

If a more efficient technology was discovered by a firm, there would be:

answer

A downward shift in the MC curve

question

The phrase "don't cry over spilt milk" could be rephrased in economic terms by saying:

answer

"Sunk costs are irrelevant to a decision."

question

If long-run average total cost decreases as output increases, this is due to:

answer

Economies of scale

question

Which would contribute most to a firm experiencing "economies of scale"?

answer

Specialization of production within a firm

question

If all resources used in the production of a product are increased by 10 percent and output increases by less than 5 percent, then the firm is experiencing:

answer

...

question

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is correct?

answer

The long-run average total cost curve is flat

question

Diseconomies of scale occur mainly because:

answer

Of the inherent difficulties involved in managing and coordinating a large business enterprise

question

Which statement is not correct?

answer

The law of diminishing returns accounts for the fact that the long-run average total cost curve is U-shaped.

question

If the minimum efficient scale (MES) in an industry is 20 percent of the total consumption of a product, how many MES plants could be supported profitably in that industry?

answer

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

...

question

Which of the following is a typical example of a fixed cost of production in a business firm?

answer

Depreciation of capital

question

When the price of gasoline increases significantly, the delivery companies like UPS, FedEx, and the USPS all find:

answer

Their TVC curves shifting up

question

The mass affordability of the iPhone is the results of the following, except:

answer

The law of diminishing returns in manufacturing

1 of 41

question

Which would be an implicit cost for a firm?

answer

The cost of wages foregone by the owner of the firm

question

answer

$160,000

question

If a firm's revenues just cover all its opportunity costs, then:

answer

Economic profit is zero

question

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

answer

The firm may earn positive accounting profits but will face economic losses

question

answer

$500,000 and an economic profit of $200,000

question

Marginal product of labor refers to the:

answer

Increase in output resulting from employing one more unit of labor

question

Which of the following statements is true?

answer

...

question

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

answer

More worker will decrease the average amount of output per worker

question

Which statement best illustrates the law of diminishing returns?

answer

The marginal product of the last unit of a resource used is less than the marginal product of the preceding unit of resource

question

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the:

answer

Average product of labor

question

Over the range of positive, but diminishing, marginal returns for an input, the total product curve:

answer

rises at a decreasing rate

question

At what point does marginal product equal average product?

answer

where marginal product is equal to its minimum value

question

Refer to the above graph showing the marginal product (MPL) and the average product of labor (APL). At which quantity of labor employed does diminishing marginal returns set in?

answer

at point B

question

Refer to the above graph. It shows the total product (TP) curve. At which point is marginal product smallest?

answer

Point D the last point

question

Refer to the above table. With diminishing marginal returns, if the firm hires seven units of labor, which of the following numbers would most probably be the total product?

answer

question

Refer to the above table. The total variable cost of producing 5 units is:

answer

question

At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are:

answer

$8,000

question

Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured by:

answer

question

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of:

answer

diminishing marginal return

question

When marginal cost is increasing:

answer

...

question

The range over which average variable cost is increasing is the same as the range over which:

answer

Average product is decreasing

question

The fixed cost of the firm is $500. The firm's total variable cost is indicated in the table.

answer

$400

question

If the short-run average variable cost of production for a firm is decreasing, then it follows that:

answer

Marginal cost must be below average variable cost

question

Refer to the above table. When output increases from 28 to 35 units, the marginal cost of the product is:

answer

...

question

What is the firm's average variable cost at an output of 5 units?

answer

$60

question

Refer to the above graph. At which point does marginal product (MP) equal average product (AP) at a level of output?

answer

point B

question

Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units of output, then:

answer

MC > AVC

question

If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?

answer

...

question

If a more efficient technology was discovered by a firm, there would be:

answer

A downward shift in the MC curve

question

The phrase "don't cry over spilt milk" could be rephrased in economic terms by saying:

answer

"Sunk costs are irrelevant to a decision."

question

If long-run average total cost decreases as output increases, this is due to:

answer

Economies of scale

question

Which would contribute most to a firm experiencing "economies of scale"?

answer

Specialization of production within a firm

question

If all resources used in the production of a product are increased by 10 percent and output increases by less than 5 percent, then the firm is experiencing:

answer

...

question

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is correct?

answer

The long-run average total cost curve is flat

question

Diseconomies of scale occur mainly because:

answer

Of the inherent difficulties involved in managing and coordinating a large business enterprise

question

Which statement is not correct?

answer

The law of diminishing returns accounts for the fact that the long-run average total cost curve is U-shaped.

question

If the minimum efficient scale (MES) in an industry is 20 percent of the total consumption of a product, how many MES plants could be supported profitably in that industry?

answer

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

...

question

Which of the following is a typical example of a fixed cost of production in a business firm?

answer

Depreciation of capital

question

When the price of gasoline increases significantly, the delivery companies like UPS, FedEx, and the USPS all find:

answer

Their TVC curves shifting up

question

The mass affordability of the iPhone is the results of the following, except:

answer

The law of diminishing returns in manufacturing

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