Test Bank #2

Test Bank #2 - P = change in quantity/ change in labor Test...

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Unformatted text preview: P = change in quantity/ change in labor Test Bank Number 2 1. To economists, normal profit: a. must equal zero in the long run. b. equals accounting profit. c. is considered a production cost. d. equals economic profit. e. All of the above. 2. If a variable resources marginal product exceeds its average product, the average: a. must be rising. b. may be rising. c. must be falling. d. may be falling. e. must be perfectly horizontal. 3. A period of time in which at least one resource is fixed is called the: a. short run. b. long run. c. home run. d. fixed resource time period. e. profit period. 4. Variable costs are incurred only: a. when production occurs. b. if a positive profit is possible. c. in the long run. d. in the short run. e. when a business is not bankrupt. 5. The value of an entrepreneurs resources that she uses in production are known as: a. explicit costs. b. sunk costs. c. operating expenses. d. technological expenses. e. implicit costs. 6. If the average variable cost is falling, then the marginal cost must be: a. falling. b. rising. c. unchanging. d. below the average variable cost. e. above the average variable cost. 7. The marginal cost crosses the ______ at its minimum value. a. average total cost. b. average variable cost. c. average fixed cost. d. All of the above. e. Both A and B of the above. 8. In an increasing cost industry, the long run consequences to an increase in demand is that the market price will: a. rise b. fall. c. remain unchanged. d. change, but in an uncertain direction. e. double. 9. In the long run, to stay in business, a firm must earn: a. a positive economic profit. b. a normal profit. c. a small profit. d. at least double its costs. e. at least triple its costs. 10. If average variable costs fall as output grows: a. marginal costs must also be declining. b. fixed cost must also be declining. c. total cost must also be declining. d. average total cost must be below average variable cost. e. marginal cost must be below average variable cost. 11. Fixed costs exist in the short run because: a. this time period lasts only a few days. b. all costs are fixed. c. at least one resource is fixed in the short run. d. All of the above. e. None of the above. 12. Sue Templeton owns her own business; the value of her own labor is a(n): a. implicit cost. b. sunk cost. c. fixed cost. d. explicit cost. e. social cost. 13. A period of time in which at least one resource is fixed is called the: a. short run. b. long run. c. home run. d. fixed resource time period. e. profit period. 14. Which of the following formulas is correct? a. TVC = w * L b. ATC = TC/Q c. MC = TVC/Q d. All of the above. e. None of the above. 15. Variable costs would include: a. labor costs....
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This note was uploaded on 05/04/2011 for the course ECON 284 taught by Professor Smith during the Spring '11 term at ASU.

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Test Bank #2 - P = change in quantity/ change in labor Test...

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