Quiz on Firm Production and Costs

Profits and losses are calculated by comparing which two financial metrics?

• Revenue and Expenses

• Assets and Liabilities

• Cash Flow and Equity

• Market Share and Growth Rate

How much should a firm produce?

• As much as possible to maximize revenue

• Only enough to meet demand

• Until marginal cost equals marginal revenue

• Until total cost is minimized

What costs do firms consider in the short run and the long run?

• Fixed costs and variable costs

• Only fixed costs

• Only variable costs

• No costs

You're a manager of a fast food restaurant. What operation decisions do you need to make?

• Menu planning and pricing

• Staff scheduling

• Inventory management

• All of the above

Which of the following is an example of an implicit cost?

• Wages paid to employees.

• Cost of food delivery.

• The opportunity cost of the owner’s time.

• Monthly insurance premiums.

Why does this happen?

• Due to natural causes

• Because of human intervention

• It is a random occurrence

• It is scientifically unexplained

What does diminishing marginal product tell us about the firm’s labor input decision?

• It suggests that adding more labor will eventually decrease the additional output produced.

• It indicates that labor input should be increased indefinitely for maximum output.

• It shows that labor input has no effect on output levels.

• It implies that reducing labor input will always increase output.

Total output with seven workers is Q = 70. Total output with eight workers is Q = 82. What is the marginal product of the eighth worker?

• 12

• 10

• 82

• 8

Where does diminishing marginal product begin?

• 12

• 10

• 82

• 8