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Economics Study Set 8

Business

Quiz 11 :

Production and Cost Analysis I

Quiz 11 :

Production and Cost Analysis I

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As output increases, average total cost always falls because average fixed cost declines.
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True False
Answer:

Answer:

False

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The vertical distance between the average total cost and average variable cost curves falls as output rises.
Free
True False
Answer:

Answer:

True

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Accounting profit is equal to:
Free
Multiple Choice
Answer:

Answer:

B

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A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals:
Multiple Choice
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The law of diminishing marginal productivity states that as more units of a variable input are added, holding other inputs constant (ceteris paribus), the additional output obtained from each new unit of the variable input eventually falls.
True False
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Accounting profit and economic profit differ because economic profit does not take into account opportunity cost.
True False
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When average total cost is rising, the marginal cost curve must be above the average total cost curve.
True False
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A business produces 400 items and sells them for $15 each for a total of $6,000. The total cost of producing the items is $4,500 in explicit cost and $1,000 in implicit cost. Economic profit is:
Multiple Choice
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The marginal cost curve intersects the average fixed cost curve at the minimum point of the average fixed cost curve.
True False
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If the law of diminishing marginal productivity holds true, both average total cost and marginal cost must diminish as output increases.
True False
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The law of diminishing marginal productivity implies that identical increases in all inputs eventually will result in smaller incremental increases in total output.
True False
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In the long run all inputs are variable; in the short run some inputs are fixed.
True False
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If average fixed cost is $2 and average variable cost is $3, total cost is $5.
True False
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Fixed costs remain the same regardless of the level of production.
True False
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A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, accounting profit for 50 items is:
Multiple Choice
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If marginal costs are rising, average total costs must be rising.
True False
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The forgone income that the owner of a business could have made by spending time working in another job is called:
Multiple Choice
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Explicit revenue minus explicit measurable costs equals:
Multiple Choice
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A business produces eight items and sells them for $25 each. The total cost of producing the items is $190 for explicit costs and $200 for implicit costs. Accounting profit is:
Multiple Choice
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If total cost is 100, total fixed cost is 30, and output is 20, average variable cost is 3.5.
True False
Answer:
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