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WorksheetsMicroeconomics_Cost of Production
Total questions: 41
Worksheet time: 14mins
Wages and salaries paid to workers are an example of implicit costs of production.
True
False
Which of the following is a variable cost in the short run?
rent of the factory
wages paid to factory workers
interest payments on borrowed financial capital
salaries paid to upper management
If marginal costs equal average total costs,
average total costs are falling.
average total costs are rising.
average total costs are maximized.
average total costs are minimized.
The efficient scale of production is the quantity of output that minimizes
average fixed cost.
average total cost.
average variable cost.
marginal cost.
"Economies of Scale" is the phase of increasing long run average total costs
True
False
A cost that is included in economic profit
Implicit Cost
Marginal Cost
Average Cost
Economic Cost
Average Total Costs are calculated by dividing Total Costs by
Price
Quantity or units produced
Average Variable Costs
Revenue
If a firm does not produce any output, its total cost in the short run is equal to
Zero
Its fixed costs
Its variable costs
Its marginal cost
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
the $20 million payment that the firm pays each year for accounting services
the cost of the steel that is used in producing automobiles
the rent that the firm pays for office space in a suburb of St. Louis
All of the above are correct.
Q7 How is Average Total Cost composed?
ATC = MC + AVC
ATC = AVC + AFC
ATC = AFC - AVC
ATC + AFC = AVC
Q9 Where does the Average Total Cost have its minimum?
Where the AVC curve intersects it
Where profit is maximized
Where the AFC curve intersects it
Where the MC curve intersects it
Economist assume that producers try to maximise
revenue
utility
sales
profit
The opportunity cost of a resource
includes both explicit and implicit costs
includes none
includes explicit costs only
includes implicit costs only
When resources are owned by the firm, and no payment is made for their use, they :
are considered to be free resources
have no alternative uses
represent implicit costs
represent explicit costs
Explicit costs are
not part of opportunity cost
the only cost considered in opportunity costs
exactly the same as implicit costs
actual monetary payments for resources purchased
Accounting profit is
equal to economic profit
always smaller than economic profit
equal to total revenue minus both implicit and explicit costs
equal to total revenue minus explcit costs
economic profit is
equal to accounting profit
always greater than accounting profit
equal to total revenue minus explicit costs
equal to total revenue minus both implicit and explicit costs
Fixed inputs are resources
whose quantities do not change in the short run
who quantities do not change in the long run
who quantities can be changed at any time
which are too large and bulky to be moved easily
the short run is defined as the period of time
in which all inputs are fixed
in which at least one input is fixed
in which no inputs are fixed
of one year or less
which of the following is not included in Total cost
the cost of the product to the buyer
variable costs
explicit costs
implicit costs
marginal cost is defined as
total cost divided by output
the additional cost of one more unit of an input
the price of the product
the change in total cost divided by the change in output
You own a restaurant and every month you must pay your water bill. However, you never know how much that bill will be because the amount changes based upon how much water your business uses. This is a...
fixed cost
variable cost
Which of these are costs?
fixed
variable
operating
revenue
ΔTR/ΔQ = _____
You own a lawn-care business and you have two employees. You pay these employees a salary meaning you pay each of these workers $900 every month no matter how much they work. This is an example of a...
fixed cost
variable cost
Kelly makes and sells quilted blankets out of her home. She charges $50 per blanket. For each blanket she makes, she must spend $1 on thread, $2 in electricity and $12 on cloth. This month she made and sold 15 blankets. What is Kelly's total cost?
$25
$225
$375
$750
Kelly makes and sells quilted blankets out of her home. She charges $50 per blanket. For each blanket she makes, she must spend $1 on thread, $2 in electricity and $12 on cloth. This month she made and sold 15 blankets. What is Kelly's total revenue?
$25
$225
$375
$750
If you own a home, you must pay for electricity you use. The amount you pay changes every month depending on how much you use. This is an example of a...
fixed cost
variable cost
Which of the following is an implicit cost?
raw material costs
insurance
rent
lost profit opportunities
A period of time when at least one factor of production is fixed is called the
short run.
long run.
fun run.
TR = $240,000 Total Explicit Costs = $160,000 Total Implicit Costs = $70,000
What are the accounting and economic profit?
$10,000; $80,000
$80,000; $10,000
$90,000; -$10,000
$70,000; -$10,000
A firm will begin to experience diminishing returns at the point where
A. marginal cost increases.
B. marginal cost decreases.
C. marginal product increases.
Both B and C are correct.
