Ch. 9 Microeconomics Quiz

The short run is characterized by increasing but not diminishing returns. fixed plant capacity. zero fixed costs. plenty of time for firms to either enter or leave the industry.

Economic cost can best be defined as the opportunity cost of using a resource already owned by the firm. the income the firm must provide to resource suppliers to attract resources from alternative uses. any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers. those payments for resources that involve an obvious cash transaction.

The long run is characterized by the ability of the firm to change its plant size. at least one fixed input. insufficient time for firms to enter or leave the industry. the relevance of the law of diminishing returns.

In the diagram, the range of diminishing marginal returns is Q1Q2. 0Q2. Q1Q3. 0Q3.

Refer to the diagram. At output level Q, total fixed cost is 0BEQ. BCDE. 0BEQ − 0AFQ. 0CDQ.

The basic difference between the short run and the long run is that at least one resource is fixed in the short run, while all resources are variable in the long run. economies of scale may be present in the short run but not in the long run. the law of diminishing returns applies in the long run but not in the short run. all costs are fixed in the short run, but all costs are variable in the long run.

The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question. Output TVC 1 $30 2 50 3 65 4 85 5 110 The marginal cost of the third unit of output is $20. $25. $105. $15.

When diseconomies of scale occur, average fixed costs will rise. the long-run average total cost curve falls. marginal cost intersects average total cost. the long-run average total cost curve rises.

Marginal cost is the rate of change in total fixed cost that results from producing one more unit of output. change in average variable cost that results from producing one more unit of output. change in average total cost that results from producing one more unit of output. change in total cost that results from producing one more unit of output.

Economies and diseconomies of scale explain why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. the profit-maximizing level of production. the distinction between fixed and variable costs. why the firm's long-run average total cost curve is U-shaped.

When a firm does more of something, it gets better at it. This learning-by-doing is called the principle of natural progression. a source of diseconomies of scale. called "spreading the overhead." a source of economies of scale.

If a technological advance increases a firm's labor productivity, we would expect its total cost curve to rise. average total cost curve to be unaffected. average total cost curve to fall. average total cost curve to rise.

Diseconomies of scale arise primarily because of the difficulties involved in managing and coordinating a large business enterprise. firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available. the short-run average total cost curve rises when marginal product is increasing. beyond some point, marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital).

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that technological progress has occurred. diseconomies of scale are being encountered. economies of scale are being realized. the firm is encountering diminishing returns.

The minimum efficient scale of a firm occurs where marginal product becomes zero. is in the middle of the range of constant returns to scale. is realized somewhere in the range of diseconomies of scale. is the smallest level of output at which long-run average total cost is minimized.

The law of diminishing returns implies that your understanding will be increased by decreasing your marginal study time. the more hours you spend studying per day, the more you will learn with each added hour. the more hours you spend studying, the less you will know. eventually, the more hours you spend studying per day, the less you will learn with each added hour.

Implicit and explicit costs are different in that implicit costs are opportunity costs; explicit costs are not. the latter refer to nonexpenditure costs and the former to monetary payments. explicit costs are opportunity costs; implicit costs are not. the former refer to nonexpenditure costs and the latter to monetary payments.

The law of diminishing returns describes the relationship between total costs and total revenues. relationship between resource inputs and product outputs in the long run. relationship between resource inputs and product outputs in the short run. profit-maximizing position of a firm.

Which of the following definitions is correct? Economic profit − implicit costs = accounting profits. Economic profit = accounting profit − implicit costs. Accounting profit + economic profit = normal profit. Economic profit − accounting profit = explicit costs.

Refer to the diagram. At output level Q, total cost is 0BEQ. 0AFQ + BCDE. BCDE. 0BEQ + BCDE.