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ECON-1010-A-Introduction to Microeconomics

ECON-1010-A-Introduction to Microeconomics

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Why is normal profit part of a firm's opportunity cost of production?

It is paid in cash for entrepreneurship.

It is not paid for a factor of production.

Part of it must be paid as tax and is no longer available to the entrepreneur.

It is used to determine the tax liability of the firm.

It is the cost of a forgone alternative, which is the entrepreneur running another firm.

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If the average variable cost of producing 10 units is $18 and the average variable cost of producing 11 units is $20, which of the following situations occurs between 10 and 11 units of output?

The firm's average fixed cost of production is increasing.

The firm's marginal cost of production is increasing.

The firm's average total cost of production is minimized.

The firm's total cost of production is either increasing or decreasing.

The firm's average total cost of production is increasing.

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The firm's total cost is $20 at 4 units of output and $36 at 6 units of output. Between 4 units and 6 units of output, how does the firm's marginal cost of output compare to the firm's other costs?

The firm's marginal cost

is greater than the firm's average total cost.

is less than the firm's average total cost.

is equal to the firm's average total cost.

equals the firm's average fixed cost.

is equal to the firm's average variable cost.

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Which of the following items is the firms opportunity cost of production?

The firm's opportunity cost of production is the sum of the cost of using resources

bought in the market and supplied by the firm's owner.

bought in the market, owned by the firm, and supplied by the firm's owner.

supplied by the firm's owner.

bought in the market.

owned by the firm.

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Which of the following statements is correct?

The firm's marginal cost of production equals the increase in its

total cost when one more unit of output is produced.

fixed cost when one more unit of output is produced.

variable cost when one more unit of labour is hired.

fixed cost when one more unit of labour is hired.

total cost when one unit of labour is hired.

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Which of the following statements about the firm's timeframe is correct?

The firm's timeframe is

both the short run and the long run because it always has plenty of time to make decisions about changing its inputs.

the long run when it uses the plant for 10 years.

the short run when its plant is fixed.

the short run when it has sufficient time to change all its inputs.

the long run when the quantity of at least one input is fixed.

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When a firm's long-run average total cost decreases as it increases its output, which of the following is the firm experiencing?

diseconomies of scale

constant returns to scale

decreasing marginal returns

economies of scale

decreasing marginal cost

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Which of the following describes a firm's total product?

The firm's total product

is the relationship between the quantity of labour employed and the quantity of output produced.

is the relationship between the maximum attainable output and the size of the firm's plant, given the quantity of labour employed.

is the maximum output that a given quantity of labour can produce.

is the relationship between the quantity of output produced and the quantity of capital used.

is the minimum cost of producing a given amount of output.

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A graph plots labor versus output. In the graph, the horizontal axis is labeled labor (workers per day) and the vertical axis is labeled output (teapots per day). The horizontal axis ranges from 0 to 6 in increments of 1 unit, and the vertical axis ranges from 0 to 25 in increments of 5 units. Four upward curves are labeled Plant A, Plant B, Plant C, and Plant D.

Refer to Figure 10.4.1, which illustrates the total product curves for four different plant sizes. What is the fundamental technological fact reflected in the shape of each curve?

The fundamental technological fact reflected in the shape of the curve for each plant size is that

law of economies of scale.

fact that capital and labour cannot be substituted for each other.

price of the inputs.

price of the output.

law of diminishing marginal returns.

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When the firm increases its output and average total cost decreases along its ATC curve, how is the firm's marginal cost of production changing?

The firm's marginal cost

curve lies below the ATC curve.

curve lies above the ATC curve.

decreases along its MC curve.

curve intersects the ATC curve.

increases along its MC curve.

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