Exam #1 (pt. 3)

Question 1

What are the units for TC?
A. lbs
B. $
C. lb./$
D. $/lb.

Answer 1

B.

Question 2

What are the units for TFC?
A. lbs.
B. $
C. lb./$
D. $/lb.

Answer 2

B.

Question 3

What are the units for ATC?
a. lbs.
b. $
c. lb./$
d. $/lb.

Answer 3

D.

Question 4

What are the units for AVC?
a. lbs.
b. $
c. lb./$
d. $/lb.

Answer 4

d.

Question 5

What are the units for MC?
a. lbs
b. $
c. lb./$
d. $/lb.

Answer 5

d.

Question 6

What are the units for Y?
a. lbs.
b. $
c. lb./$
d. $/lb.

Answer 6

a.

Question 7

profit is:
a. the difference between marginal cost and price
b. the difference between total variable costs and total revenues
c. the difference between total revenues and total costs
d. the difference between total fixed cost and price

Answer 7

c.

Question 8

marginal cost is equal to:
a. the added cost of producing an additional unit of input
b. the price of a unit of output
c. the change in total cost divided by the change in output
d. total cost divided by the output level

Answer 8

c.

Question 9

an industry is:
a. perfectly competitive
b. a firm
c. manufacturing, rather than agricultural
d. a group of firms that all produce and sell the same product

Answer 9

d.

Question 10

an example of a homogeneous product is:
a. wheat
b. toothpaste
c. branded cattle
d. big macs

Answer 10

a.

Question 11

for an increasing cost firm:
a. MC = AC
b. MC > AC
c. marginal cost chases average cost
d. MC < AC

Answer 11

b.

Question 12

in a competitive industry such as agriculture:
a. firms can freely enter, but not exit
b. firms can freely exit, but not enter
c. firms can neither freely enter nor exit
d. firms can freely enter and exit

Answer 12

d.

Question 13

an example of a decreasing cost firm is:
a. a beef packing plant
b. an oil company
c. a feedlot
d. a lumber company

Answer 13

a.

Question 14

the oil industry is an example of:
a. an increasing cost industry
b. a constant cost industry
c. a decreasing cost industry
d. an industry with huge fixed costs

Answer 14

a.

Question 15

profits are:
a. the value of production minus the cost of producing the output
b. TR minus TC
c. maximized by producers
d. all of the above answers

Answer 15

d.

Question 16

a fixed input:
a. does not vary with price
b. does not vary with costs
c. does not vary with the level of output
d. remains fixed in both the SR and the LR

Answer 16

c.

Question 17

constants returns output:
a. reflect scarcity
b. does not vary with output
c. increases at an increasing rate as more input is added to the production process
d. increases at a constant rate as more input is added to the production process

Answer 17

d.

Question 18

variable inputs:
a. cannot exist in the long run
b. cannot exist in the short run
c. cannot exist in the immediate run
d. are less expensive than fixed inputs

Answer 18

c.

Question 19

the railroad industry is an example of:
a. a decreasing cost industry
b. a constant cost industry
c. an increasing cost industry
d. an industry with huge variable costs

Answer 19

a.

Question 20

economic profit equals:
a. total revenues minus fixed costs
b. total revenues minus opportunity costs
c. total revenues minus explicit costs
d. total revenues minus both explicit and opportunity costs

Answer 20

d.

Question 21

which is always true?
a. ATC > AVC
b. MC > AVC
c. MC > ATC
d. ATC > MC

Answer 21

a.

Question 22

accounting profit equals:
a. total revenues minus explicit costs
b. total revenues minus opportunity costs
c. total revenues minus both explicit and opportunity costs
d. total revenues minus fixed costs

Answer 22

a.

Question 23

the feedlot industry is an example of what type of cost structure?
a. increasing
b. decreasing
c. constant
d. standard

Answer 23

c.

Question 24

to “think like an economist,” decisions should include:
a. total fixed costs
b. accounting costs
c. explicit costs
d. opportunity costs

Answer 24

d.

Question 25

MC are defined as:
a. change in TC given a change in output
b. change in ATC given a change in output
c. change in TC given a change in input
d. change in ATC given a change in input

Answer 25

a.

Question 26

ATC are defined as:
a. change in TC given a change in output
b. total per-unit costs
c. costs per unit of fixed inputs
d. costs per unit of variable inputs

Answer 26

b.

Question 27

AVC are defined as:
a. change in TC given a change in output
b. total per-unit costs
c. costs per unit of fixed inputs
d. costs per unit of variable inputs

Answer 27

d.

Question 28

the opportunity cost of attending college is:
a. the salary that will be earned after college in the best opportunity
b. housing and food costs and tuition, books, and fees
c. tuition, books, and fees only
d. how much the student could earn in the next-best alternative job

Answer 28

d.