Economics test 2 chapter 7

question

Which of the following is a variable cost?

answer

Raw materials

question

Which of the following is an implicit cost?

answer

Depreciation in the value of a company-owned car as it wears out.

question

If the output levels at which short-run marginal and average cost curves reach a minimum are listed in order from smallest to greatest, then the order would be?

answer

MC, AVC, ATC.

question

Learning curves represent the relationship between?

answer

Average variable cost and the cumulative number of units produced.

question

If an input is owned and used by a firm, then its?

answer

Explicit cost is zero.

question

Short-run marginal cost is equal to?

answer

The change in total cost divided by the change in output. The change in total variable cost divided by the change in output and the cost per unit of the variable input divided by the marginal product of the variable input.

question

Short-run average variable cost is equal to?

answer

Total variable cost divided by output. Average total cost minus average fixed cost. The cost per unit of the variable input divided by the average product of the variable input.

question

Which of the following short-run cost curves declines continuously?

answer

Average fixed cost.

question

The law of diminishing returns begins at the level of output where?

answer

Marginal cost is at a minimum.

question

The long-run average cost curve is at a minimum at a level of output where?

answer

The firm is experiencing constant returns to scale. It is equal to long-run marginal cost. The long-run average cost curve is tangent to the lowest point on a short-run average total cost curve.

question

If a firm has a downward sloping long-run average cost curve, then?

answer

It is a monopoly.

question

One reason that a firm may experience increasing returns to scale is that greater levels of output make it possible for the firm to?

answer

Employ more specialized machinery. Obtain bulk purchase discounts. Employ a greater division of labor.

question

One reason that a firm may experience decreasing returns to scale is that greater levels of output can result in?

answer

An increase in meetings and paperwork.

question

Economies of scope refers to the decrease in average total cost that can occur when a firm?

answer

Produces more than one product.

question

Breakeven analysis identifies the?

answer

Level of output where economic profit is equal to zero.

question

Which of the following is an assumption of linear breakeven analysis?

answer

Average fixed cost is constant.

question

The responsiveness or sensitivity of a firm's profits to changes in output is measured by a firm's?

answer

Degree of operating leverage.

question

Which of the following values cannot be calculated at the firm's breakeven level of output?

answer

Degree of operating leverage.

question

If a linear short-run variable cost function is estimated using cross-sectional data, then the corresponding marginal cost function will be

answer

Horizontal

question

The survival technique, can be used to estimate short-run total variable cost functions. Is based on a technical knowledge of a firms production function. Uses regression analysis in combination with time-series or cross-sectional data. True or false

answer

False

question

The process whereby firms reduce their production costs by taking advantage of international differences in the prices of inputs and international similarities in preferences is referred to as the?

answer

New international economies of scale.

question

Which of the following would be referred to as outsourcing?

answer

Subcontracting production to firms in other countries.

question

When a firms designs a core product for the entire world that can be adapted in a number of ways to accommodate different types of markets, it is taking advantage of the?

answer

new international economies of scale.

question

The Japanese cost-management system involves?

answer

Determining how much a product should cost and then determining how it should be produced.

question

The contribution margin per unit is equal to the?

answer

Difference between price and average variable cost.

1 of 25

question

Which of the following is a variable cost?

answer

Raw materials

question

Which of the following is an implicit cost?

answer

Depreciation in the value of a company-owned car as it wears out.

question

If the output levels at which short-run marginal and average cost curves reach a minimum are listed in order from smallest to greatest, then the order would be?

answer

MC, AVC, ATC.

question

Learning curves represent the relationship between?

answer

Average variable cost and the cumulative number of units produced.

question

If an input is owned and used by a firm, then its?

answer

Explicit cost is zero.

question

Short-run marginal cost is equal to?

answer

question

Short-run average variable cost is equal to?

answer

Total variable cost divided by output. Average total cost minus average fixed cost. The cost per unit of the variable input divided by the average product of the variable input.

question

Which of the following short-run cost curves declines continuously?

answer

Average fixed cost.

question

The law of diminishing returns begins at the level of output where?

answer

Marginal cost is at a minimum.

question

The long-run average cost curve is at a minimum at a level of output where?

answer

The firm is experiencing constant returns to scale. It is equal to long-run marginal cost. The long-run average cost curve is tangent to the lowest point on a short-run average total cost curve.

question

If a firm has a downward sloping long-run average cost curve, then?

answer

It is a monopoly.

question

One reason that a firm may experience increasing returns to scale is that greater levels of output make it possible for the firm to?

answer

Employ more specialized machinery. Obtain bulk purchase discounts. Employ a greater division of labor.

question

One reason that a firm may experience decreasing returns to scale is that greater levels of output can result in?

answer

An increase in meetings and paperwork.

question

Economies of scope refers to the decrease in average total cost that can occur when a firm?

answer

Produces more than one product.

question

Breakeven analysis identifies the?

answer

Level of output where economic profit is equal to zero.

question

Which of the following is an assumption of linear breakeven analysis?

answer

Average fixed cost is constant.

question

The responsiveness or sensitivity of a firm's profits to changes in output is measured by a firm's?

answer

Degree of operating leverage.

question

Which of the following values cannot be calculated at the firm's breakeven level of output?

answer

Degree of operating leverage.

question

If a linear short-run variable cost function is estimated using cross-sectional data, then the corresponding marginal cost function will be

answer

Horizontal

question

answer

False

question

The process whereby firms reduce their production costs by taking advantage of international differences in the prices of inputs and international similarities in preferences is referred to as the?

answer

New international economies of scale.

question

Which of the following would be referred to as outsourcing?

answer

Subcontracting production to firms in other countries.

question

When a firms designs a core product for the entire world that can be adapted in a number of ways to accommodate different types of markets, it is taking advantage of the?

answer

new international economies of scale.

question

The Japanese cost-management system involves?

answer

Determining how much a product should cost and then determining how it should be produced.

question

The contribution margin per unit is equal to the?

answer

Difference between price and average variable cost.

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Economics test 2 chapter 7

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