Questions:
Question 1. In the short run, if a firm has zero output, its total cost is
equal to zero.
the same as its average variable cost.
the same as its total variable cost.
the same as its total fixed cost.
the same as its average fixed cost.
Question 2. Nonprofit firms, both private and governmental, may differ in behavior from profit-seeking private firms because
there is no residual claimant.
the demand for the products is inherently different.
government managers seek more capital-intensive means of production.
government firms are more difficult to manage.
private firms do not compete with government firms.
Question 3.Ralph's Travel Agency had accounting profits of $50,000 and implicit costs of $30,000. What were economic profits?
$50,000
$30,000
$20,000
The amount cannot be determined from the information given.
Question 4. Which of the following always decreases as output increases?
Fixed cost
Average cost
Average fixed cost
Marginal cost
Total cost
Question 5. A vertically integrated firm might own
a ski factory, an Alpine resort hotel, and an emergency medical center.
several plants that manufacture different qualities of skis.
a ski factory, a cigar manufacturer, and a carpet factory.
several plants in different countries that manufacture skis.
Question 6. A firm that owns a car rental agency, a modeling agency, a French bakery, and a pet store is
horizontally integrated.
vertically integrated.
inefficient.
a perfect competitor.
a conglomerate.
Question 7. A firm exists to
make money.
organize information.
make resources.
transform inputs into marketable outputs.
transform products into commodities.
Question 8. Because of diminishing marginal product in the short run, a tripling of the total product (assuming input prices are constant) requires
a tripling of marginal cost.
a tripling of total cost.
less than a tripling of total variable cost.
increased average fixed cost.
more than a tripling of total variable cost.
Question 9. The long-run decision is to select
the desired long-run AC curve.
the desired short-run AC curve.
the desired long-run MC curve.
the desired quantity of labor to go with fixed capital.
the plant size to go with the fixed quantity of labor.
Question 10. The short-run marginal cost curve falls and then rises because of
fixed costs.
diseconomies of scale.
diseconomies and economies of scale.
the principle of diminishing returns.