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Week 4 Midterm Review Over Chapter 6
Test Description: This quiz review game will help you prepare for the questions on Businesses and their Costs that will be on the midterm.
Instructions: Answer all questions to get your test result.
1) When an economist talks about total cost, they include:
A
Implicit and Explicit Costs
B
Sunk Costs
C
Implicit Costs but not Explicit Costs
D
Explicit Costs but not Implicit Costs
2) An economic profit is usually:
A
Smaller than an accounting profit because it includes explicit costs.
B
Smaller than an accounting profit because it includes implicit costs.
C
Bigger than an accounting profit because it includes explicit costs.
D
Bigger than an accounting profit because it includes implicit costs.
3) Which of the following would be considered to be a short-run adjustment?
A
A new firm enters the gaming industry offering a highly superior gaming platform.
B
Ford Motor Company constructs a new plant.
C
Proctor and Gamble announces that they are going to hire 2,000 additional workers.
D
The number of restaurants in the local area increases by 12% due to more favorable taxation laws.
4) The main difference between the short-run and the long-run is:
A
The short-run is less than 6 months, the long-run is greater than 6 months.
B
Firms can freely enter in the short-run, but they can't exit.
C
Firms can freely exit in the short-run, but they can't enter.
D
At least one input is fixed in the short-run whereas all inputs are variable in the long run.
5) We calculate marginal product by:
A
Subtracting the difference between the total products for two levels of production.
B
Taking the average of the total products divided by the number of labor inputs.
C
Subtracting the difference between the labor inputs for two levels of production.
D
Adding up the total product and dividing by the number of production levels.
6) Variable cost is:
A
A cost that changes based on the number of units produced.
B
Zero in the short run.
C
Average cost multiplied by the number of units produced.
D
Found by taking the difference between total cost and sunk cost.
7) If you ran a day care facility, which of the following would be a short-run variable cost?
A
Salaries
B
Diapers
C
Insurance
D
Electricity
8) If we take ATC and subtract AVC, we would get:
A
average fixed cost.
B
the law of demand
C
economies of scale
D
marginal cost
9) Let's assume that in the short run a firm is producing 100 units of output, that they have average total costs of $1000, and average variable costs of $900. The firm's total fixed costs are:
A
$1,000
B
$900
C
$100
D
$10,000
10) If everything else is held constant, if a firm's variable inputs increase,
A
the firm's marginal cost, average variable cost, and average total cost will decrease.
B
we can not predict what will happen to the firm's unit production costs.
C
the firm's marginal cost, average variable cost, and average total cost will increase.
D
the firm's marginal cost, average variable cost, and average fixed cost will increase.
11) Let's assume that a firm is losing money, so they decide not to produce anything in the short run. The firms costs would be:
A
Zero
B
It's marginal costs.
C
The fixed costs.
D
The variable costs.
12) In the short-run, Wednesday's Widgets is producing 100 units of output. It's average variable costs are $10 and average fixed costs are $0.75. Its total costs are:
A
$10.75
B
$107.50
C
$1000
D
$1075
13) Let's assume that a new employee training program increases labor productivity. We would expect
A
Average Total Cost to fall.
B
Average Total Cost to rise.
C
Marginal costs of production to increase.
D
Total Cost to rise.
14) Firms experience diseconomies of scale primarily due to:
A
Firms have to be very large absolutely and relatively to employ the best production techniques.
B
The short-run average total cost curve rises as marginal product increases.
C
After adding additional variable inputs to a fixed capital input marginal product declines.
D
it is hard to manage and coordinate a large business enterprise.
15) A local corporation increases it's inputs by 7% and gets a 5% increase in product. The firm is operating under:
A
Economies of Scale
B
Constant Returns to Scale
C
The point of minimum efficient scale.
D
Diseconomies of Scale.
16) A firm increases it's inputs by 12% and output increases by 12%. The firm is operating under:
A
Constant Returns to Scale
B
Marginal Productivity
C
Economies of Scale
D
Diseconomies of Scale
17) A firm increases all it's inputs by 6% and output increases by 8%. The firm is operating under:
A
Economies of Scale
B
Marginal Returns to Scale
C
Diseconomies of Scale
D
Constant Returns to Scale
*select an answer for all questions
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