Econ CH 9-13 P - Spring 2007 CH 9-10 1 Opportunity cost...

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Spring 2007 CH 9-10 1. Opportunity cost include Answer – both implicit and explicit costs 2. A firm’s economic profit is its total revenue minus its Answer – opportunity costs 3. When Acme, Inc. produces a certain amount of output at least cost, Acme, Inc. definitely Answer – achieves economic efficiency 4. Technological efficiency occurs when the firm produces a give output Answer – by using the least amount of inputs 5. The owner of a proprietorship might decide incorporate the firm as a corporate in order to Answer – gain limited liability 6. A high four-firm concentration ratio implies Answer – an absence of competition 8. The short run is a period of time in which Answer – the quantity used of at least one resource is fixed
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9. In the long run, a firm can vary Answer – both its labor and its capital 12. The law of diminishing returns implies that, with the use of capital fixed, as the use of labor rises, Answer – the marginal product of labor will fall eventually 18. In perfect competition, an individual firm Answer – faces a perfectly elasticity of demand 23. A perfectly competitive firm will shut down if its Answer – price is less than average variable cost 30.
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