Production and Cost Quiz

What is the economic goal of the firm?

• Maximize revenue

• Maximize market share

• Maximize profits

• Minimize costs

What is the formula for profit?

• Revenue - Variable Costs

• Fixed Costs - Total Revenue

• Total Cost - Fixed Costs

• Total Revenue - Total Cost

What are explicit costs?

• Costs that require an outlay of money by the firm

• Costs that do not require an outlay of money by the firm

• Costs that are not recorded in the firm's accounting statement

• Costs that are not related to production

What is the relationship between marginal cost and quantity of output?

• Marginal cost is not related to quantity of output

• Marginal cost remains constant regardless of quantity of output

• Marginal cost increases as quantity of output increases

• Marginal cost decreases as quantity of output increases

What is the law of diminishing returns?

• As a firm uses more of a variable input, the marginal product of the variable input becomes negative

• As a firm uses more of a variable input, the marginal product of the variable input eventually diminishes

• As a firm uses more of a variable input, the marginal product of the variable input remains constant

• As a firm uses more of a variable input, the marginal product of the variable input increases

What is the period during which at least one of a firm's resources is fixed?

• Variable Run

• Medium Run

• Long Run

• Short Run

What is the total cost of inputs including the cost of factory and cost of workers?

• Total Revenue

• Total Variable Costs

• Total Costs

• Total Fixed Costs

What is the economic profit of a firm?

• Total revenue minus explicit costs

• Total revenue minus total cost, including both explicit and implicit costs

• Total revenue minus accounting profit

• Total revenue minus implicit costs

What is the shape of the average-total-cost curve?

• Exponential

• Linear

• V-shaped

• U-shaped

What are variable resources?

• Resources that are fixed in the long run

• Resources that are not related to production

• Resources that can be varied quickly in the short run

• Resources that cannot be varied in the short run