Economics Quiz on Market Structures

Which of the following is an implicit cost?

• Wages paid to employees

• Rent for office space

• Cost of raw materials

• The owner’s forgone salary

Economic profit equals:

• Total revenue – Explicit costs

• Accounting profit + Implicit costs

• Total revenue – Fixed costs

• Total revenue – (Explicit + Implicit costs)

The production function shows:

• Relationship between cost and revenue

• Relationship between price and output

• Relationship between profit and time

• Relationship between inputs and output

The law of diminishing marginal product means:

• Total product decreases with more input

• Average product always rises

• Marginal cost eventually decreases

• Marginal product eventually decreases

Marginal cost (MC) is:

• Total cost / Output

• Variable cost / Output

• Change in variable cost / Change in labor

• Change in total cost / Change in output

The short-run cost curves (AVC, ATC, MC) are typically:

• Straight lines

• Downward sloping

• Upward sloping

• U-shaped

The law of diminishing returns causes:

• MC to decrease

• ATC to fall

• AFC to increase

• MC to rise

In the short run, at least one input is:

• Variable

• Free

• Nonexistent

• Fixed

Economies of scale occur when:

• Long-run ATC rises with output

• Marginal product falls

• Average variable cost increases

• Long-run ATC falls with output

Which is not a characteristic of perfect competition?

• Many buyers and sellers

• Free entry and exit

• Price takers

• Differentiated products