econtest2reviewquest

econtest2reviewquest - CH. 8 1. Which of the following is...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CH. 8 1. Which of the following is most likely to be an implicit cost of production? a. property taxes on a building owned by the firm b. transportation costs paid to a trucking supplier c. rental payments for a building utilized by the company and rented from another party d. interest income foregone on funds invested in the firm by the owners 2. Which of the following explains most clearly why business owners have a strong incentive to strive for operational efficiency? a. They recognize that operational efficiency promotes the public interest. b. As residual claimants, owners will receive a higher income from increased efficiency. c. The owners will be able to keep production costs low by providing free managerial services to the firm. d. The owners will be able to gain by paying employees below market wages, which will improve the overall efficiency of the economy. 3. The law of diminishing returns a. explains why marginal cost eventually increases as output expands. b. implies that average fixed cost will remain unchanged as output expands. c. is true for physical production activities but not for activities such as studying. d. applies to a capitalist economy but would be irrelevant if the means of production were owned by the state. 4. Which of the following represents a long-run adjustment? a. the hiring of four additional cashiers by a supermarket b. a cutback on purchases of coke and iron ore by a steel manufacturer c. construction of a new assembly-line plant by a car manufacturer d. the extra dose of fertilizer used by a farmer on his wheat crop 5. The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because a. larger firms always have lower per-unit costs than smaller firms. b. at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns. c. diminishing returns will be present when output is small, and high AFC will push per- unit cost to high levels when output is large. d. diseconomies of scale will be present at both small and large output rates. 6. When costs that vary with the level of output are divided by the output, you have calculated a. total changing cost. b. total fixed cost. c. average fixed cost. d. average variable cost. 7. A downward-sloping portion of a long-run average total cost curve is the result of a. economies of scale. b. diseconomies of scale. c. diminishing returns. d. the existence of fixed resources.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8. A foreign exchange student bought a used car for $10,000 and resold it one year later for $6,500. Insurance, license, and operating costs for the year were $1,500. What was his economic cost of owning and operating the car for the year if the market rate of interest was 10 percent? a.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/16/2008 for the course ASP 220 taught by Professor Blackguy during the Fall '07 term at WVU.

Page1 / 14

econtest2reviewquest - CH. 8 1. Which of the following is...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online