# Chapter 7: Production Costs (Multiple Choice)

 author "Patrick Rosenauer" tags "" folders "Microeconomics" description "" fileName "Chapter 7: Production Costs (Multiple Choice)" Unlike impicit costs, explicit costs:A. Reflect opportunity cost.B. Include the value of the owner's time.C. Are not included in the accounting statement of the firm.D. Are actual cash payments.E. Do not change with the output rate of the firm.D. Are actual cash payments. Which of the following is not an explicit cost? C. The firm owner's time. The amount of money that could have been made by renting a piece of land to be uesed for building an office building instead of using the land for employee parking is an: C. Implicit cost. Implicit costs are best thought of as: D. Opportunity costs. If a firm has total revenue of \$200 million, explicit costs of \$190 million, and implicit costs of \$30 million, its economic profit is: A. \$20 million. Economic profit is: A. Less than accounting profit if implicit costs are greater than zero. Economists says that a firm has a normal profit when: B. Its economic profit is zero. Which of the following is an example of a fixed input? D. All of the above. Variable inputs are defined as any resource that: D. can be increased or decreased hourly. The short run is a period of time: D. In which a firm uses at least one fixed input. During the short run, a firm has enough time to adjust: C. Its variable inputs. The long run is a period of time: B. That is long enough to permit changes in all the firm's, both fixed and variable. In the long run, total fixed cost: C. Does not exist. Which of the following statements is true? E. All of the above. A firm can produce 450 gallons of milk per day with 4 worker and 500 gallons per day with 5 workers. The marginal product of the fifth worker expressed in gallons per worker per day, is: D. 50. If the units of variable input in a production process are 1, 2, 3, 4, and 5, and the corresponding total outputs are 30, 34, 37, 39, and 40, repectively. The marginal product of the fourth unit is: D. 2. Marginal product measures the change in: D. The firm's output brought about by emplying one additional unity of input. When a total output curve is falling, its corresponding marginal product curve is: C. Falling. The law of diminishing marginal returns implies that, in the short run: B. The marginal product of the variable input must eventually decrease. In order for the law of dimising returns to be present, we must: C. At least one factor of production to be fixed. Marginal cost is defined as the increasing in total cost resulting from an increase in: D. One unit of output. Which of the following is true at the point where dimishing returns set in? C. Marginal product is at a maximum and marginal cost at a minimum. The marginal cost is the: D. B and C. When the cost curves have U-shapes, at the point where marginal cost equals average total cost: D. B and C. When marginal cost is below average total cost: D. Average total cost is falling. Which of the following statements is true? D. TFC = TC - TVC. The total cost curve is the sum of the: A. Total fixed and total variable cost curves. Which of the following statements is true? D. When marginal droductivity of a variable input is falling then marginal costs of production must be rising. Longrun economies of scale exist when the longrun average cost curve: A. Falls. Economies of scale are created by greater efficiency of capital and by: D. Increased specialization of labor. Diseconomies of scale exist over the range of output for which the long-run average cost curve is: B. Rising The primary source of scale diseconomies appears to be: E. The organizational difficulties of managina an ever larger enterprise. AuthorAnonymous ID267071 Card SetChapter 7: Production Costs (Multiple Choice) DescriptionChapter 7: Production Costs (Multiple Choice) Updated2014-03-19T09:11:36Z Show Answers