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51 terms


Accounting Profits
equal to the difference between total revenues and explicit cost
When economic profits in an industry are zero and implicit cost are greater than zero
accounting profits will be greater than zero
If a firms revenues just cover all its opportunity cost, then
economic profit is zero
an industry is expected to expand if firms in the industry are earning
economic profit
Economic profit is
total revenues minus the opportunity cost of the inputs
Suppose a firms sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following is true
The firm may earn accounting profits , but will face economic losses
Normal profits are
considered an implicit cost by economist
Implicit cost are
"payments" for the self employed resources
Economic profits for a company is defined as the total revenues of the firm minus the
opportunity cost of all resources
In the short run, output
can vary as the result of using a fixed amount of plant and equipment more or less intensively
The main difference between the short run and the long run is that
in the short run, one or more is fixed
Which of the statements is false
The short run refers to the same time period for all industries
In the short run
outputs can be change by using different levels of variable inputs
According to the law of diminishing marginal returns, eventually
the additional outputs generated by additional units of an input will diminish
Which of the following relationships will NOT result from the diminishing marginal returns
diseconomies of scale
Which of the following is true
Underlying the law of diminishing returns is the assumption that at least one input remains fixed
Diminishing returns are observed as a firm increases production by adding variable to at least one fixed input because
as more variable inputs are hired, the amounts of the fixed inputs per variable input they have to work with decreases
The law of diminishing returns implies
eventually, the more hours you spend studying per day, the less you will learn with an added hour
A professional bowler knows that practicing four hours a day will allow her to play better than if she practices three hours a day. Yet she does not practice that fourth hour. From this we can conclude that
that added benefit to her of the additional hour of practice is less than the added cost
The law of diminishing returns only applies in cases where
there is at least one fixed factor of production
In the short run, total product begins to decrease at the point where the
marginal products of labor is zero
When the total product curve is falling, the
marginal product of labor is negative
The range of diminishing marginal productivity begins when
marginal product reaches its maximum
Over the range of positive, but diminishing, marginal returns for an inputs, the total product curve
rises at a decreasing rate
When the average variable cost if an inputs exceeds the marginal cost, assuming the quantities of all other inputs are fixed, the average product
of that inputs is less than the marginal product
At the "Amarillo piano company", the average products of labor equals 5, regardless of how much labor is used. We can say that
That marginal product of labor is 5 regardless of how many workers are hired
At what point does marginal product equal average product
where marginal product is equal to its minimum value
When marginal product reaches its maximum, what can be said of total product
total product is increasing if marginal product is positive
At the point where diminishing marginal returns to a factor of production set in
the marginal product starts to decrease
The marginal product of a factor if production is measured by
the marginal product curve approaches the average product curve from above.
GO TO NUMBER 37 to do table (test bank) (next 5 questions)
There are increasing marginal returns through the
second unit of variable input
Diminishing returns set in with the addition of the
third unit of input
There are negative marginal returns when the
ninth unit is added
With the addition of the first unit of input, the marginal product
5 and average product is 5.0
When the marginal product is zero , then total product is
At what point in the graph below does the law of diminishing returns set in (see question 42)
Point B
Which of the following properly depicts the relationship TP, AP and MP? (see question 43)
Graph D
At which point is marginal product smallest? (see question 44
Point D
In the following product schedule , marginal product will be zero for which level of input?
Point D
Variable cost are
Cost that change with the level of production
Fixed cost are those cost which are
independent of the rate of output
Which of the following is not a fixed cost
a worker's wage of $15 per hour
Which of the following is the best example of a fixed cost of production to a firm
depreciation of capital
The level of fixed cost of production for a firm
is independent of the level of output in the short run
The next 5 question refer ti the following table
The total variable cost of producing 5 units is
The average total cost of producing 3 units of output is
The average fixed cost for producing 3 units of output is
The marginal cost of producing the sixth unit of output is
If you know that when a firm produces 10 units of output , total cos