Econ 40 Chapter 11

How do economists define explicit costs?

• incurred costs that cannot be recovered

• input costs that require a monetary payment

• costs that do not require a monetary payment

• costs that cannot be traced directly to a product

Unlike explicit costs, implicit costs ______.

• do not require a monetary payment

• vary depending on production output

• are tracked by a firm’s accountants

• impact long-run average total costs

Which of the following best describes the difference between the explicit costs and implicit costs of production? Explicit costs ______, whereas implicit costs ______.

• are short-term expenses; are long-term expenses

• relate to outputs; relate to inputs

• can be measured; cannot be measured

• require an outlay of money; do not require a monetary outlay

Economists assume the goal of every firm is to maximize ______.

• qualities

• profits

• costs

• incentives

Dolores is an accountant for a restaurant chain. Tracking ______ is therefore an important part of her job.

• the general manager’s social media posts

• trends in consumer dining habits

• total receipts per day and daily averages

• nutritional information for menu items

In terms of production, what do economists mean by the long run?

• a period over which all production inputs are variable

• the time it takes staff to reach peak productivity

• the length of time it takes to hire and train staff

• manufacturing projections for the following fiscal year

Why is it important to distinguish between the short run and the long run when making production decisions?

• Short-run solutions tend to have more implicit costs.

• Long-run decisions cannot be changed once approved.

• It takes more time to alter some inputs than others.

• Accountants track short-run but not long-run costs.

The change in total product that results from a one-unit change in input is that unit’s ______.

• quantity of labor

• marginal product

• accounting profit

• production function

Adding a second employee to small bakery would most likely improve marginal product by ______.

• making it possible to use a larger oven

• spreading fixed costs over a larger number of workers

• putting peer pressure on both people to work harder

• allowing one worker to run the cash register while the other bakes

Maryam owns a successful plant nursery. Over the years she has expanded her greenhouses several times. The first three expansions were all highly productive. The fourth and fifth expansions have also contributed to her business, but they have not been as productive as the prior expansions because Maryam had to build in areas that receive less sunshine. Maryam’s experience is an example of ______.

• diminishing marginal product

• constant returns to scale

• the impact of implicit costs

• the impact of total variable costs