Ch.14 MicroEcon Quiz

A difference between explicit and implicit costs is that

• explicit costs must be greater than implicit costs.

• implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.

• explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do.

• implicit costs must be greater than explicit costs.

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,

• average variable cost is $3.

• average total cost is $4.

• average fixed cost is $10.

• average total cost is $5.

Average total cost is very high when a small amount of output is produced because

• average variable cost is high.

• average fixed cost is high.

• marginal cost is high.

• marginal product is high.

As the number of workers increases,

• marginal product increases but at a decreasing rate.

• total output increases at an increasing rate.

• total output decreases.

• marginal product decreases.

Curve A is always declining because

• of diminishing marginal product.

• marginal product first decreases, then increases.

• we are dividing fixed costs by higher and higher levels of output.

• marginal product first increases, then decreases.

Curve D intersects curve C

• at the efficient scale.

• where the firm maximizes production.

• at the minimum of average fixed cost.

• where fixed costs equal variable costs.

Refer to Figure 13-5. Which of the following statements is correct?

• Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost.

• Marginal cost is minimized at B because at that quantity, marginal cost equals average variable cost.

• Marginal cost is rising for quantities higher than D because marginal cost is higher than average total cost.

• Average total cost is declining for quantities less than C because average variable cost is less than average total cost.

Refer to Figure 13-6. At levels of output less than M, the firm experiences

• both diminishing marginal productivity and coordination problems.

• diseconomies of scale.

• constant returns to scale.

• economies of scale.

If a firm uses labor to produce output, the firm's production function depicts the relationship between

• the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor.

• fixed inputs and variable inputs in the short run.

• marginal product and marginal cost.

• the number of workers and the quantity of output.

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

• coordination problems arising from the large size of the firm.

• diseconomies of scale.

• economies of scale.