Answer: T51.As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.Answer: T52.Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.Answer: T53.There is general agreement among economists that the long-run time period exceeds one year.Answer: FTable 13-1Listed in the table are the long-run total costs for three different firms.Quantity12345Firm A100100100100100Firm B100200300400500Firm C1003006001,0001,500
Chapter 13/The Costs of Production 8654.Refer to Table 13-1. Firm A is experiencing economies of scale.Answer: T55.Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.Answer: TSec00 - The Costs of ProductionMULTIPLE CHOICE1.Analyzing the behavior of the firm enhances our understanding of Answer: what decisions lie behind the market supply curve. 2.Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes? Answer: industrial organization3.Economists in the field of industrial organization study how Answer: firms’ decisions about prices and quantities depend on market conditions.4.Industrial organization is the study of how Answer: firms' decisions regarding prices and quantities depend on the market conditions they face
87 Chapter 13/The Costs of Production5.To an economist, the field of industrial organization answers which of the following questions?Answer: How does the number of firms affect prices and the efficiency of market outcomes?6.A student might describe information about the costs of production as Answer: All of the above could be correct.Sec01 - The Costs of Production - What Are Costs?MULTIPLE CHOICE1.Economists assume that the typical person who starts her own business does so with the intention of Answer: maximizing profits.2.Economists normally assume that the goal of a firm is toAnswer: (iii) is true.3.Economists normally assume that the goal of a firm is to earn Answer: (i) and (ii) are true.4.An entrepreneur’s motivation to start a business arises fromAnswer: All of the above could be correct.5.Economists normally assume that the goal of a firm is toAnswer: maximize its profit.6.Economists assume that the goal of the firm is to maximize total Answer: profits.7.When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?Answer: The cost of something is what you give up to get it.8.The amount of money that a firm receives from the sale of its output is calledAnswer: total revenue.9.Total revenue equals Answer: price x quantity10.The amount of money that a firm pays to buy inputs is calledAnswer: total cost
Chapter 13/The Costs of Production 8811.Total cost is the Answer: market value of the inputs a firm uses in production12.Profit is defined asAnswer: total revenue minus total cost.
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