ECON 3

question

Which best describes economic costs?

answer

Payments that must be made to obtain a resource

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?

answer

$90,000

question

If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?
Multiple choice question.

answer

$24,000

question

Which of the following resources can a firm easily and quickly adjust?

answer

Fuel
Raw materials
Hourly labor

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.

answer

economic

question

A time period during which a firm can adjust the quantities of all the resources that it employs, including plant capacity, is known as which of the following?

answer

long run

question

____costs are the monetary payments a firm makes to purchase resources from others..

answer

explicit

question

Accounting profit is what remains after a firm has paid its _______ costs.

answer

explicit

question

What is the term for the total quantity of a specific good produced?

answer

total product

question

What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?
Multiple choice question.

answer

120,000. because 24000+96000=120,000

question

Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust

answer

true

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 ______.

answer

law of diminishing returns

question

In microeconomics, the long run is also known as which of the following?

answer

variable plant period

question

When total product is at its maximum, marginal product is ____

answer

zero

question

Which of the following explains the concept of explicit costs?

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.

question

What happens to marginal product when total product is increasing at an increasing rate?

answer

Marginal product is rising.

question

What is the definition of total product (TP)?

answer

The total quantity, or total output, of a particular good or service produced

question

Which costs do not vary with changes in output?

answer

fixed costs

question

Which of the following are examples of fixed costs?

answer

Rental payments
Interest on a firm's debts

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.

answer

diminishing

question

What happens to marginal product when total product is increasing but at a decreasing rate?

answer

positive but falling

question

What happens to fixed costs when the level of production output reaches zero?

answer

they remain unchanged

question

a company's insurance premiums are usually considered

answer

fixed costs

question

Which group of costs is the most accurate example of variable cost?
Multiple choice question.

answer

Payments for materials, fuel, power, and transportation services

question

Variable costs change with the level of

answer

output

question

_______cost is the sum of fixed cost and variable cost at each level of output.

answer

total

question

A firm cannot avoid paying fixed costs in the___ run

answer

short

question

Which of the following are examples of variable costs?

answer

Materials costs
Transportation services payments
Fuel costs

question

Which of the following is true of average fixed cost when output increases?

answer

Average fixed cost declines as output increases.

question

Which best characterizes variable costs?

answer

Costs that change with the level of output

question

Average fixed cost equals total fixed cost divided by the ______.

answer

amount of output

question

How is total cost calculated?

answer

fixed costs + variable costs

question

What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?

answer

question

If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?

answer

question

What is meant by the phrase "spreading the overhead"?
Multiple choice question.

answer

As production increases, average fixed cost declines.

question

How is average fixed cost determined?

answer

Total fixed cost divided by output

question

Average variable cost equals total variable cost divided by total _____

answer

output

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 ______.

answer

100 because 500/5=100

question

What is average variable cost if total variable cost is $500, total fixed cost is $100, and output is 50?

answer

10 because 500/100=10

question

Which of the following best describes the average variable cost curve?

answer

its U shaped

question

Which of the following statements explain why the average variable cost curve is U-shaped?

answer

At low levels of output, production is relatively inefficient and costly.
As output rises from the initial very low levels, greater specialization occurs, and average variable cost declines.

question

What is the definition of average variable cost?

answer

Total variable cost divided by output (Q)

question

Which curve first falls and then rises?

answer

average variable cost curve

question

One explanation for the U-shaped average variable cost curve is that greater ______ yields more efficiency and variable cost per unit of output declines

answer

specialization

question

What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?

answer

100

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?
Multiple choice question.

answer

Average total cost

question

What is the term for the extra cost of producing one more unit of output?

answer

marginal

question

Marginal cost includes which of the following?
Multiple select question.

answer

The cost savings resulting from not producing the last unit of output
All the cost associated with producing the last unit of output

question

If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?

answer

400

question

What methods can be used to calculate average total cost?

answer

Average fixed cost plus average variable cost
Total cost divided by output (Q)

question

What type of cost can be saved by not producing the last unit?

answer

marginal cost

question

The marginal cost curve's shape is a consequence of the law of _____ , returns.

answer

diminishing

question

An increase in the price of labor has no effect on which cost curve?

answer

AFC

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?

answer

ATC

question

A planning curve is another term for which of the following?

answer

long run total cost curve

question

A firm's decision about what output level to produce is typically a ______ decision

answer

marginal

question

The U-shape of the long-run average-total-cost curve results from which of the following?

answer

Diseconomies of scale
Economies of scale

question

If all workers are hired at the same price, the marginal cost of producing each extra unit of output falls provided the ______ of each additional worker is rising.

answer

marginal product

question

What is another term for economies of scale?

answer

Economies of mass production

question

What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
The average-fixed-cost curve remains the same.

question

Increased labor ______ becomes more achievable as a plant increases in size.

answer

specialization

question

Over what period of time can an industry and firms in that industry adjust all resource inputs used?

answer

in the long run

question

Greater labor specialization has which of the following effects?

answer

It eliminates the loss of time that occurs whenever a worker shifts from one task to another.

question

What does the long-run average-total-cost curve show?
Multiple choice question.

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

Which of the following result from managerial specialization?

answer

Lower unit costs
Greater efficiency

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.

answer

In the long run all resources and inputs are variable.

question

Economies of scale explain the downward-sloping part of the ______ curve

answer

long-run average-total-cost

question

Which of the following are examples of labor specialization?

answer

Hiring more workers in order to subdivide tasks
Assigning each worker one task instead of five or six

question

How does labor specialization allow a worker to become more proficient?

answer

It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.

question

A marketing supervisor works in a small plant where she performs a range of duties. As the company grows and hires additional supervisors, she is able to spend the bulk of her time in her area of expertise. In this example, the company has increased its ______.

answer

managerial specialization

question

Learning by doing contributes to a firm's ______

answer

economies of scale

question

By expanding the size of its operations, a growing firm is able to experience economies of scale to do which of the following?

answer

lower average total cost

question

Which of the following illustrates constant returns to scale?

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.

answer

false

question

In heavy industries, small firms are unlikely to realize ______ and will be unable to compete with large-scale producers.

answer

minimum efficient scale

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?

answer

learning by doing

question

Which of the following sections of a long-run average total cost curve depicts constant returns to scale?

answer

the flat section

question

The lowest level of output at which a firm can minimize long-run average costs is called ____

answer

minimum efficient scale

question

A ______ is a relatively rare market situation in which average total cost is minimized when only one firm produces the good.

answer

natural monopoly

question

Learning by doing contributes to a firm's ______.

answer

economies of scale

1 of 80

question

Which best describes economic costs?

answer

Payments that must be made to obtain a resource

question

answer

$90,000

question

If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?
Multiple choice question.

answer

$24,000

question

Which of the following resources can a firm easily and quickly adjust?

answer

Fuel
Raw materials
Hourly labor

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.

answer

economic

question

A time period during which a firm can adjust the quantities of all the resources that it employs, including plant capacity, is known as which of the following?

answer

long run

question

____costs are the monetary payments a firm makes to purchase resources from others..

answer

explicit

question

Accounting profit is what remains after a firm has paid its _______ costs.

answer

explicit

question

What is the term for the total quantity of a specific good produced?

answer

total product

question

What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?
Multiple choice question.

answer

120,000. because 24000+96000=120,000

question

Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust

answer

true

question

answer

law of diminishing returns

question

In microeconomics, the long run is also known as which of the following?

answer

variable plant period

question

When total product is at its maximum, marginal product is ____

answer

zero

question

Which of the following explains the concept of explicit costs?

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.

question

What happens to marginal product when total product is increasing at an increasing rate?

answer

Marginal product is rising.

question

What is the definition of total product (TP)?

answer

The total quantity, or total output, of a particular good or service produced

question

Which costs do not vary with changes in output?

answer

fixed costs

question

Which of the following are examples of fixed costs?

answer

Rental payments
Interest on a firm's debts

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.

answer

diminishing

question

What happens to marginal product when total product is increasing but at a decreasing rate?

answer

positive but falling

question

What happens to fixed costs when the level of production output reaches zero?

answer

they remain unchanged

question

a company's insurance premiums are usually considered

answer

fixed costs

question

Which group of costs is the most accurate example of variable cost?
Multiple choice question.

answer

Payments for materials, fuel, power, and transportation services

question

Variable costs change with the level of

answer

output

question

_______cost is the sum of fixed cost and variable cost at each level of output.

answer

total

question

A firm cannot avoid paying fixed costs in the___ run

answer

short

question

Which of the following are examples of variable costs?

answer

Materials costs
Transportation services payments
Fuel costs

question

Which of the following is true of average fixed cost when output increases?

answer

Average fixed cost declines as output increases.

question

Which best characterizes variable costs?

answer

Costs that change with the level of output

question

Average fixed cost equals total fixed cost divided by the ______.

answer

amount of output

question

How is total cost calculated?

answer

fixed costs + variable costs

question

What is the average fixed cost if total fixed cost is $100, total variable cost is $50, and output is 20?

answer

question

If total variable cost is $100, total fixed cost is $100, and output is 10, what is average variable cost?

answer

question

What is meant by the phrase "spreading the overhead"?
Multiple choice question.

answer

As production increases, average fixed cost declines.

question

How is average fixed cost determined?

answer

Total fixed cost divided by output

question

Average variable cost equals total variable cost divided by total _____

answer

output

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 ______.

answer

100 because 500/5=100

question

What is average variable cost if total variable cost is $500, total fixed cost is $100, and output is 50?

answer

10 because 500/100=10

question

Which of the following best describes the average variable cost curve?

answer

its U shaped

question

Which of the following statements explain why the average variable cost curve is U-shaped?

answer

At low levels of output, production is relatively inefficient and costly.
As output rises from the initial very low levels, greater specialization occurs, and average variable cost declines.

question

What is the definition of average variable cost?

answer

Total variable cost divided by output (Q)

question

Which curve first falls and then rises?

answer

average variable cost curve

question

One explanation for the U-shaped average variable cost curve is that greater ______ yields more efficiency and variable cost per unit of output declines

answer

specialization

question

What is the marginal cost when output changes from 300 to 301 units and total cost rises from $400 to $500?

answer

100

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?
Multiple choice question.

answer

Average total cost

question

What is the term for the extra cost of producing one more unit of output?

answer

marginal

question

Marginal cost includes which of the following?
Multiple select question.

answer

The cost savings resulting from not producing the last unit of output
All the cost associated with producing the last unit of output

question

If total cost rises from $300 to $700 when one additional unit of output is produced, what is the marginal cost?

answer

400

question

What methods can be used to calculate average total cost?

answer

Average fixed cost plus average variable cost
Total cost divided by output (Q)

question

What type of cost can be saved by not producing the last unit?

answer

marginal cost

question

The marginal cost curve's shape is a consequence of the law of _____ , returns.

answer

diminishing

question

An increase in the price of labor has no effect on which cost curve?

answer

AFC

question

Total fixed cost divided by output plus total variable cost divided by the output yields which of the following?

answer

ATC

question

A planning curve is another term for which of the following?

answer

long run total cost curve

question

A firm's decision about what output level to produce is typically a ______ decision

answer

marginal

question

The U-shape of the long-run average-total-cost curve results from which of the following?

answer

Diseconomies of scale
Economies of scale

question

If all workers are hired at the same price, the marginal cost of producing each extra unit of output falls provided the ______ of each additional worker is rising.

answer

marginal product

question

What is another term for economies of scale?

answer

Economies of mass production

question

What is the effect of an increase in the price of labor on the ATC, AVC, and MC curves?

answer

The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
The average-fixed-cost curve remains the same.

question

Increased labor ______ becomes more achievable as a plant increases in size.

answer

specialization

question

Over what period of time can an industry and firms in that industry adjust all resource inputs used?

answer

in the long run

question

Greater labor specialization has which of the following effects?

answer

It eliminates the loss of time that occurs whenever a worker shifts from one task to another.

question

What does the long-run average-total-cost curve show?
Multiple choice question.

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

Which of the following result from managerial specialization?

answer

Lower unit costs
Greater efficiency

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.

answer

In the long run all resources and inputs are variable.

question

Economies of scale explain the downward-sloping part of the ______ curve

answer

long-run average-total-cost

question

Which of the following are examples of labor specialization?

answer

Hiring more workers in order to subdivide tasks
Assigning each worker one task instead of five or six

question

How does labor specialization allow a worker to become more proficient?

answer

It allows a worker to focus on fewer tasks and become more skilled in performing those tasks.

question

answer

managerial specialization

question

Learning by doing contributes to a firm's ______

answer

economies of scale

question

By expanding the size of its operations, a growing firm is able to experience economies of scale to do which of the following?

answer

lower average total cost

question

Which of the following illustrates constant returns to scale?

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.

answer

false

question

In heavy industries, small firms are unlikely to realize ______ and will be unable to compete with large-scale producers.

answer

minimum efficient scale

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?

answer

learning by doing

question

Which of the following sections of a long-run average total cost curve depicts constant returns to scale?

answer

the flat section

question

The lowest level of output at which a firm can minimize long-run average costs is called ____

answer

minimum efficient scale

question

A ______ is a relatively rare market situation in which average total cost is minimized when only one firm produces the good.

answer

natural monopoly

question

Learning by doing contributes to a firm's ______.

answer

economies of scale

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