Test How Deep Your Knowledge Is On Microeconomics!
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The Costs of Production
- 1.Total revenue equals the quantity of output the firm produces times the price at which it sells its output
- A.
True
- B.
False
- 2.Wages and salaries paid to workers are an example of implicit costs of production
- A.
True
- B.
False
- 3.If total revenue is $100, explicit costs are $50, and implicit costs are $30, then accounting profit equals $50
- A.
True
- B.
False
- 4.If there are implicit costs of production, accounting profits will exceed economic profits
- A.
True
- B.
False
- 5.When a production function gets flatter, the marginal product is increasing
- A.
True
- B.
False
- 6.If a firm continues to employ more workers within the same size factory, it will eventually experience diminishing marginal product
- A.
True
- B.
False
- 7.If the production function for a firm exhibits diminishing marginal product, the corresponding total-cost curve for the firm will become flatter as the quantity of output expands
- A.
True
- B.
False
- 8.Fixed cost plus variable costs equal total costs
- A.
True
- B.
False
- 9.Average total costs are total costs divided by marginal costs
- A.
True
- B.
False
- 10.When marginal costs are below average total costs, average total costs must be falling
- A.
True
- B.
False
- 11.If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will be U-shaped
- A.
True
- B.
False
- 12.The average-total-cost curve crosses the marginal-cost curve at the minimum of the marginal-cost curve
- A.
True
- B.
False
- 13.The average-total-cost curve in the long run is flatter than the average-total-cost curve in the short run
- A.
True
- B.
False
- 14.The efficient scale for a firm is the quantity of output the minimizes marginal cost
- A.
True
- B.
False
- 15.In the long run, as a firm expands its production facilities, it generally first experiences diseconomies of scale then constant returns to scale, and finally economies of scale
- A.
True
- B.
False
- 16.Accounting profit is equal to total revenue minus
- A.
Implicit costs
- B.
Explicit costs
- C.
The sum of implicit and explicit costs
- D.
Marginal costs
- E.
Variable costs
- 17.Economic profit is equal to total revenue minus
- A.
Implicit costs
- B.
Explicit costs
- C.
The sum of the implicit and explicit costs
- D.
Marginal costs
- E.
Variable costs
- 18.If there are implicit costs of production
- A.
Economic profit will exceed accounting profit
- B.
Accounting profit will exceed economic profit
- C.
Economic profit and accounting profit will be equal
- D.
Economic profit will always be zero
- E.
Accounting profit will always be zero
- 19.If a production function exhibits diminishing marginal product, its slope
- A.
Becomes flatter as the quantity of the input increases
- B.
Becomes steeper as the quantity of the input increases
- C.
Is linear (a straight line)
- D.
Could be any of the above
- 20.If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve
- A.
Becomes flatter as the quantity of output increases
- B.
Become steeper as the quantity of output increases
- C.
Is linear (a straight line)
- D.
Could be any of the above
- 21.Which of the following is a variable cost in the short run?
- A.
Wages paid to factory labor
- B.
Payment on the lease for factory equipment
- C.
Rent on the factory
- D.
Interest payments on borrowed financial capital
- E.
Salaries paid to upper management
- 22.When marginal costs are below average total costs
- A.
Average fixed costs are rising
- B.
Average total costs are falling
- C.
Average total costs are are rising
- D.
average total costs are minimized
- 23.If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will
- A.
Slope upward
- B.
Be U-shaped
- C.
Slope downward
- D.
Be flat (horizontal)
- 24.In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience
- A.
Economies of scale
- B.
Constant returns to scale
- C.
Diseconomies of scale
- D.
An increase in average total costs
- 25.The efficient scale of production is the quantity of output that minimizes
- A.
Average total cost
- B.
Marginal cost
- C.
Average fixed cost
- D.
Average variable cost
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