Question 1

The short run is a time period such that

Accepted Answer

A)  the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ.
B)  the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output.
C)  the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory.
D)  new firms may build plants and enter the industry.

Question 2

In the short run,the firm's average fixed costs

Accepted Answer

A)  always increase as output increases.
B)  always decline as output increases.
C)  equal zero.
D)  remain constant as output expands.

Question 3

The difference between zero accounting profit and zero economic profit is that

Accepted Answer

A)  economists include opportunity cost in zero economic profit,while accountants do not include opportunity cost in zero accounting profit.
B)  economists do not include opportunity cost in zero economic profit,while accountants do include opportunity cost in zero accounting profit.
C)  economists include opportunity cost in zero accounting profit,while accountants do not include opportunity cost in zero economic profit.
D)  economists do not include opportunity cost in zero accounting profit,while accountants do include opportunity cost in zero economic profit.

Question 4

The average variable cost curve and average total cost curve become closer together as output increases because

Accepted Answer

A)  the marginal cost curve intersects the average total cost curve at its minimum.
B)  average fixed cost remains constant as output rises.
C)  average fixed cost,which is the difference between them,declines with output.
D)  output is rising more rapidly than inputs are being increased.

Question 5

For a firm that wants to remain in business,which of the following costs could be avoided if it halted current production?

Accepted Answer

A)  fixed costs
B)  variable costs
C)  sunk costs
D)  implicit costs

Question 6

If the government levies a $1 excise tax on each unit of a good sold,what will happen to the producer's cost curve?

Accepted Answer

A)  The average total cost and marginal cost curves will shift downward by the amount of the tax.
B)  The average total cost and marginal cost curves will shift upward by the amount of the tax.
C)  The marginal cost curve will shift upward by the amount of the tax;the average total cost curve will remain unchanged.
D)  Both the marginal cost and average total costs will remain the same since taxes are not a cost of production.

Question 7

Suppose you are planning to open a lemonade stand.List separately all the explicit and implicit costs that might be involved.

Accepted Answer

The obvious explicit costs would include...

Question 8

You purchased an automobile a year ago for $10,000.Its current market price is $6,000,and the expected market value one year from now is $4,000.If the interest rate is 10 percent,how much will it cost you to keep the car for an additional year (over and above operation and maintenance costs) ?

Accepted Answer

A)  $2,000
B)  $2,600
C)  $4,000
D)  $6,000

Question 9

As output is expanded,if MC is less than ATC,

Accepted Answer

A)  ATC must be at its minimum.
B)  ATC must be at its maximum.
C)  ATC must be decreasing.
D)  the firm must be earning economic profit.

Question 10

If most businesses in an industry are earning a 13 percent rate of return on their assets,but your firm is earning 23 percent,your rate of economic profit is

Accepted Answer

A)  zero.
B)  10 percent.
C)  23 percent.
D)  36 percent.

Question 11

A downward-sloping portion of a long-run average total cost curve is the result of

Accepted Answer

A)  economies of scale.
B)  diseconomies of scale.
C)  diminishing returns.
D)  the existence of fixed resources.

Exam 21: Acosts and the Supply of Goods

Suppose you are planning to open a lemonade stand.List separately all the explicit and implicit costs that might be involved.

Correct Answer
verified
The obvious explicit costs would include...
View Answer

If most businesses in an industry are earning a 13 percent rate of return on their assets,but your firm is earning 23 percent,your rate of economic profit is

Correct Answer
verified

In the short run,the firm's average fixed costs

Correct Answer
verified

The average variable cost curve and average total cost curve become closer together as output increases because

Correct Answer
verified

The difference between zero accounting profit and zero economic profit is that

Correct Answer
verified

If the government levies a $1 excise tax on each unit of a good sold,what will happen to the producer's cost curve?

Correct Answer
verified

You purchased an automobile a year ago for $10,000.Its current market price is $6,000,and the expected market value one year from now is $4,000.If the interest rate is 10 percent,how much will it cost you to keep the car for an additional year (over and above operation and maintenance costs) ?

Correct Answer
verified

A downward-sloping portion of a long-run average total cost curve is the result of

Correct Answer
verified

As output is expanded,if MC is less than ATC,

Correct Answer
verified

The short run is a time period such that

Correct Answer
verified

For a firm that wants to remain in business,which of the following costs could be avoided if it halted current production?

Correct Answer
verified

Exam 21: Acosts and the Supply of Goods

Suppose you are planning to open a lemonade stand.List separately all the explicit and implicit costs that might be involved.

Correct AnswerverifiedThe obvious explicit costs would include...View AnswerShow Answer

If most businesses in an industry are earning a 13 percent rate of return on their assets,but your firm is earning 23 percent,your rate of economic profit is

Correct AnswerverifiedShow Answer

In the short run,the firm's average fixed costs

Correct AnswerverifiedShow Answer

The average variable cost curve and average total cost curve become closer together as output increases because

Correct AnswerverifiedShow Answer

The difference between zero accounting profit and zero economic profit is that

Correct AnswerverifiedShow Answer

If the government levies a $1 excise tax on each unit of a good sold,what will happen to the producer's cost curve?

Correct AnswerverifiedShow Answer

You purchased an automobile a year ago for $10,000.Its current market price is $6,000,and the expected market value one year from now is $4,000.If the interest rate is 10 percent,how much will it cost you to keep the car for an additional year (over and above operation and maintenance costs) ?

Correct AnswerverifiedShow Answer

A downward-sloping portion of a long-run average total cost curve is the result of

Correct AnswerverifiedShow Answer

As output is expanded,if MC is less than ATC,

Correct AnswerverifiedShow Answer

The short run is a time period such that

Correct AnswerverifiedShow Answer

For a firm that wants to remain in business,which of the following costs could be avoided if it halted current production?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The obvious explicit costs would include...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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