1. The main difference between the short run and the long run is that:
- A) firms earn zero profits in the long run.
- B) the long run always refers to a time period of one year or longer.
- C) in the short run, one or more inputs are fixed.
- D) in the long run, only one variable can be fixed.
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2. At the level of output where marginal cost equals average variable cost:
- A) average total cost is decreasing.
- B) average variable cost is decreasing.
- C) marginal cost equals average total cost.
- D) marginal cost is decreasing.
3. If the average variable cost is $74 and total fixed cost is $100 at 5 units of output, then average total cost at this output level is:
- A) $91.
- B) $94.
- C) $97.
- D) $100.
4. If the marginal cost exceeds the average variable cost, then:
- A) average variable cost must be increasing.
- B) average total cost must be increasing.
- C) average fixed costs must be increasing.
- D) marginal cost must be decreasing.
5. At an output level of 50 units per day, a firm has average total costs of $60 and Economics of Production and Output by civilization
- A) $925.
- B) $1,250.
- C) $1,750.
- D) $3,000.
6. If the long-run average total cost decreases as output increases, this is due to:
- A) declining average fixed costs.
- B) economies of scale.
- C) the law of diminishing returns.
- D) externalities.
7. At an output of 20,000 units per year, a firm's variable costs are $80,000 and its average fixed costs are $3. The total costs per year for the firm are:
- A) $80,000.
- B) $100,000.
- C) $140,000.
- D) $240,000.
Use the following to answer questions 9-10: Assume that the only variable resource used to produce output is labor.
8. Diminishing marginal returns set in with the addition of the:
- A) first unit of labor.
- B) third unit of labor.
- C) the second unit of labor.
- D) fourth unit of labor.
9. Refer to the above table. The marginal product of the fourth unit of labor is:
- A) 4 units of output.
- B) 8 units of output.
- C) 6 units of output.
- D) 30 units of output.
10. Which is not a fixed cost?
- A) monthly rent of $1,000 contractually specified in a one-year lease
- B) an insurance premium of $50 per year, paid last month
- C) an attorney's retainer of $50,000 per year
- D) a worker's wage of $15 per hour
11. The total variable cost of producing 35 units of output is:
- A) $90.
- B) $120.
- C) $160.
- D) $210.
12. Refer to the above table. If the output is zero, the total cost is:
- A) $90.
- B) $50.
- C) $40.
- D) $0.
13. As output increases, average fixed costs:
- A) increase.
- B) remain constant.
- C) decrease.
- D) first increase and then decrease.
14. America Aniline's cost of delivering Internet access to each additional user has fallen over time because:
- A) of constant returns to scale.
- C) of economies of scale.
- B) of minimum efficient scale.
- D) it is a natural monopoly.
Remember. This is just a sample.
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