Economics of Production and Output Essay
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 is fixed. D) in the long run, only one variable can be fixed. 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. Use the following to answer question 3: 3.
Refer to the above table. The total cost of five units of output will be: 4. If 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. 5. If marginal cost exceeds 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. 6. At an output level of 50 units per day a
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By civilization A) $925. B) $1,250. C) $1,750. D) $3,000. 7. If long-run average total cost decreases as output increases, this is due to: A) declining average fixed costs. C) economies of scale. B) the law of diminishing returns. D) externalities. 8. 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. 9. Refer to the above table.
Diminishing marginal returns set in with the addition of the: A) first unit of labor. C) third unit of labor. B) second unit of labor. D) fourth unit of labor. 10. Refer to the above table. The marginal product of the fourth unit of labor is: A) 4 units of output. C) 8 units of output. B) 6 units of output. D) 30 units of output. 1 1 . 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 12. Refer to the above table.
The total variable cost of producing 35 units of output is: A) $90. B) $120. C) $160. D) $210. 13. Refer to the above table. If output is zero, total cost is: A) $90. B) $50. C) $40. D) $0. 14. The following table shows the relationship between output and costs for two firms in 15. As output increases, average fixed costs: A) increase. C) remain constant. B) decrease. D) first increase and then decrease. 16. 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.