Production and Costs

Which of the following is an implicit cost?

• raw material costs

• insurance

• rent

• lost profit opportunities

Which of the following costs are generally assumed to be fixed?

• utilities

• wages for employees

• rent

• transportation expenses

How do you calculate MPP (or MPL)?

• TFC/Q

• the change in Q / the change in labor

• the change in output / # of workers

• TFC / change in Q

Economies of scale occur when the percentage increase in inputs is ____________________ the percentage increase in output.

• less than

• greater than

• equal to

A normal economic profit occurs when economic profit is

• greater than zero.

• less than zero.

• equal to zero.

A period of time when at least one factor of production is fixed is called the

• short run.

• long run.

• fun run.

Diminishing returns is based off of which variable?

• marginal product

• average product

If the marginal cost curve (MC) is above the average cost curves, the average curves are

• increasing.

• decreasing.

• neither increasing or decreasing.

TR = $240,000 Total Explicit Costs = $160,000 Total Implicit Costs = $70,000

What are the accounting and economic profit?

• $10,000; $80,000

• $80,000; $10,000

• $90,000; -$10,000

• $70,000; -$10,000

Which of the following would cause total product to decline?

• MP decreases

• MP increases

• AP decreases

• MP becomes negative