Question

1?Basic factors of production available to a society are * A. natural resources, labor and capital....

1?Basic factors of production available to a society are

* A. natural resources, labor and capital.
* B. natural resources, labor and money.
* C. labor, money and environment.
* D. natural resources, money and infrastructure.

2?Total cost is

* A. the sum of total fixed cost and total variable cost.
* B. increasing with output.
* C. equal to total fixed cost when production level is zero.
* D. all the above true.


3?Suppose a certain firm is able to produce 180 units of output per day when 10 workers are hired. The firm is able to produce 190 units of output per day when 11 workers are hired (holding other inputs fixed). Then the marginal product of the 11th worker is

* A. 10 units of output.
* B. 18 units of output.
* C. 19 units of output.
* D. 12 units of output.

4?If marginal cost is declining,

* A. average variable cost must be rising.
* B. average fixed cost must be rising.
* C. marginal product of labor must be rising.
* D. average cost must be rising.


5?Marginal cost equals average variable cost when

* A. average variable cost is at its minimum.
* B. average fixed cost is rising.
* C. average cost is rising.
* D. average variable cost is declining.
*

6?In economics, the long-run is a time period in which

* A. all factors of production are paid for.
* B. all loans are repaid.
* C. all outputs are determined.
* D. all factors of production are variable.

7?Which of the following statements is true regarding the difference between economic and accounting profit

* A. Accounting profit equals economic profit in the long run.
* B. Accounting profit includes all implicit and explicit costs.
* C. Economic profit includes implicit costs only.
* D. Accounting profit includes only explicit costs.


8?When adding another unit of labor leads to an increase in output that is larger than the increases in output that resulted from adding the previous unit of labor, we have the property of

* A. Increasing marginal product of labor.
* B. Negative marginal product of labor.
* C. Diminishing marginal product of labor.
* D. Diminishing output of labor.

9?Average productivity of labor can be defined as

* A. Change in total product divided by the number of labor employed.
* B. Total product divided by the number of labor employed.
* C. Change in profit divided by the number of labor employed.
* D. Total cost divided by the number of labor employed.
*

10?When average productivity of labor is maximum and equals the marginal productivity of labor,

* A. Marginal cost intersects average variable cost at its minimum.
* B. Marginal cost is greater than average cost.
* C. Marginal cost and average cost both are declining.
* D. Marginal cost is increasing but average cost is declining.


11?Fixed costs can be defined as costs that

* A. Vary inversely with production.
* B. Vary in proportion with production.
* C. Are incurred only when production is large enough.
* D. Are incurred even if nothing is produced.


12?Which of the following is an implicit cost?

* A. Salaries paid to workers who work for the firm.
* B. Foregone rent on office space owned and used by the firm.
* C. Cash payments for raw materials.
* D. Interest on money borrowed to finance equipment purchases.


13?Average cost (AC) tell us

* A. the cost per unit.
* B. The cost of human labor.
* C. The cost of producing the last unit of output.
* D. the fixed cost per output.

14?Which of the following is not one of the explicit costs?

* A. Opportunity Cost
* B. Capital Cost
* C. Labor Cost
* D. Natural Resources Cost
*

15?If output increases more than the percentage increase in inputs, we call this

* A. increasing return to scale.
* B. constant return to scale.
* C. diminishing marginal returns.
* D. decreasing return to scale.

Homework Answers

Answer #1

1) Solution: natural resources, labor and capital.

Explanation: Society use the three factors of production – land, labor and capital – to create the products for consumers

2) Solution: the sum of total fixed cost and total variable cost.

Explanation: TC = TFC + TVC

3) Solution: 10 units of output.

Explanation: 190 units - 180 units

4) Solution: average variable cost must be rising

Explanation: When MC > AVC, then AVC is rising

5) Solution: average variable cost is at its minimum

Explanation: When average variable cost is at its minimum, marginal cost equals average variable cost

6) Solution: all factors of production are variable.

Explanation: In the short run atleast one factor is fixed, however in long run all factors of production are variable.

7) Solution: Accounting profit includes only explicit costs.

Explanation: Accounting profit is the total revenues minus explicit costs

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