In: Economics
QUESTION 1
The law of diminishing marginal productivity pertains to_____:
| a. | the short run. | |
| b. | the long run. | |
| c. | both the short run and the long run. | |
| d. | the short run for small firms, and the long run for large firms. | 
1 points
QUESTION 2
Assume that you own a sole proprietorship. Your first year earnings were $75,000, and your explicit costs were $55,000. If you could have worked at another establishment and earned $25,000, which of the following is true?
| a. | Your firm earned an economic profit of $20,000. | |
| b. | Your firm's total implicit costs were $80,000. | |
| c. | Your firm sustained an economic loss of $5,000. | |
| d. | Your firm's total costs are $100,000. | 
1 points
QUESTION 3
Which of the following is true regarding accounting profit?
| a. | It is typically smaller than economic profit. | |
| b. | It includes all explicit and implicit cost of production. | |
| c. | It includes depreciation. | |
| d. | All of the above. | 
1 points
QUESTION 4
Marginal cost is understood as the change in__________ when producing one more unit of output. In the short run, marginal cost can also be determined by the change in__________ when producing one more unit of output.
| a. | variable cost; fixed cost | |
| b. | total cost; fixed cost | |
| c. | fixed cost; variable cost | |
| d. | total cost; variable cost | 
1 points
QUESTION 5
Which of the following are characteristics of a perfectly competitive market?
| a. | Firms are price takers. | |
| b. | Firms produce identical or nearly identical products. | |
| c. | Firms can enter the market without any restrictions. | |
| d. | All of the above. | 
1 points
QUESTION 6
An organization with 50 employees will add 10 employees next month. This is_____:
| a. | a long run decision. | |
| b. | a long run and a short run decision. | |
| c. | a short run decision. | |
| d. | none of the above. | 
1 points
QUESTION 7
Fixed inputs are_____:
| a. | those inputs to production that have a fixed price. | |
| b. | those inputs to production that result in a fixed variable product. | |
| c. | those inputs to production that cannot be varied in the short run. | |
| d. | those inputs to production that have a fixed market. | 
1 points
QUESTION 8
When deciding whether to continue operations or shutdown, a perfectly competitive firm should_____:
| a. | continue operations if the price of the firm's product falls below the minimum average variable cost. | |
| b. | shut down if the price of the firm's product falls below the minimum average variable cost. | |
| c. | continue operations if the marginal cost of a new invention for the firm surpasses average variable cost. | |
| d. | shut down if it can cover all of its costs, but only at a diminishing marginal rate. | 
1 points
QUESTION 9
If the total output rises while the cost per unit fails, a firm is understood to be enjoying_____:
| a. | increased profits. | |
| b. | economies of scale. | |
| c. | maximum efficiency. | |
| d. | all of the above. | 
1 points
QUESTION 10
Firms that compete in perfectly competitive markets must decide_____:
| a. | the quantity to produce. | |
| b. | the price to charge. | |
| c. | the price to charge and the quantity to produce. | |
| d. | none of the above. |