Q1. Wages paid are an example of an explicit cost of doing business. a. true b.
ID: 1167623 • Letter: Q
Question
Q1. Wages paid are an example of an explicit cost of doing business.
a. true
b. false
Q2. Those costs implied by alternatives given up are
a. explicit costs
b. historical costs
c. outlay costs
d. implicit or opportunity costs
Q3. Marginal product can never fall below zero.
a. true
b. false
Q4. Implicit cost is an opportunity cost of doing business.
a. true
b. false
Q5. The principle of diminishing marginal returns says that as more and more units of a variable resource are added to a set of fixed resources, the resulting additions to output will become increasingly smaller and, eventually, larger.
a. true
b. false
Q6. As long as the marginal product is falling, the average product falls.
a. true
b. false
Q7. An example of an implicit cost is
a. rent
b. taxes
c. wages
d. forgone interest when investing one's savings in one's own business
Q8. The average product decreases any time the marginal product is decreased.
a. true
b. false
Q9. For the principle of diminishing marginal returns to hold,
a. all resources must vary
b. at least one resource should remain fixed
c. only one resource should vary
d. a minimum of three input resources is necessary
Q10. The ATC rises whenever the
a. upward pull of the AVC is greater than the downward pull of the AFC
b. upward pull of the AFC is greater than the downward pull of the AVC
c. AVC is equal to the AFC
d. MC is above the AVC
Q11. The difference between the ATC and the AVC must represent the AFC.
a. true
b. false
Q12. As units of input are added to the productive process, the marginal product
a. increases
b. decreases
c. remains the same
d. declines then rises
Q13. Under conditions of perfect competition, if MR is below ATC at equilibrium output, the firm is suffering a loss.
a. true
b. false
Q14. Under conditions of perfect competition, if a profitable firm pushes its output beyond the point where MR equals MC,
a. profits increase
b. profits diminish
c. AFC increases
d. AVC decreases
Q15. Perfect competition assumes that a producer is interested in maximizing profit.
a. true
b. false
Q16. Since all producers have the same average revenue under conditions of perfect competition, they all have the same profits in the short run.
a. true
b. false
Q17. If all firms adhere to the conditions of perfect competition, short-run losses are avoided.
a. true
b. false
Q18. If marginal cost is less than marginal revenue, a firm should
a. expand output
b. contract output
c. maintain steady output
d. shut down
Q19. Under conditions of perfect competition, if a firm is suffering a loss but AR is above AFC, the firm should always continue to operate.
a. true
b. false
Q20. Under conditions of perfect competition, if any one producer increases output,
a. market price rises
b. market price falls
c. market price does not change
d. market price changes unpredictably up or down
Q21. The output level that yields maximum profit under perfect competition is where MR equals MC.
a. true
b. false
Q22. Consumer surplus occurs whenever the consumer pays a price
a. equal to marginal revenue
b. less than the consumer is willing to pay
c. less than marginal cost
d. equal to or less than average total cost
Q23. If one firm in a perfectly competitive industry is somehow able to produce at a lower cost than competing firms in the short run,
a. the competing firms will adopt similar production techniques in the long run
b. the more efficient firm will earn higher profits than the competing firms in the long run
c. the competing firms will earn higher profits than the more efficient firm in the short run
d. the competing firms will go out of business in the long run
Q24. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.
a. true
b. false
Q25. In monopolistic competition, there is no need for advertising.
a. true
b. false
Q26. The Clayton Act prohibits price discrimination.
a. true
b. false
Q27. Monopsony is a market condition in which there is only one seller.
a. true
b. false
Q28. U.S. patents grant a lifetime monopoly on an invention.
a. true
b. false
Q29. A kinked demand curve is associated with
a. perfect competition
b. monopolistic competition
c. an oligopoly
d. public utilities
Q30. In an oligopoly, following a rival's decrease in price tends to eliminate the
a. income effect
b. substitution effect
c. multiplier effect
d. random effect
Q31. In conditions of monopolistic competition,
a. each firm charges the same price
b. there are only two producers
c. there are many firms
d. products are identical
Q32. Forms of imperfect competition include monopoly, oligopoly, and monopolistic competition.
a. true
b. false
Q33. Public utilities are often referred to as
a. supernatural monopolies
b. oligopolistic monopolies
c. natural monopolies
d. competitive monopolies
Q34. Perfect competition always provides a lower price than monopolistic competition or an oligopoly.
a. true
b. false
Q35. A firm that is a price maker can
a. limit output and raise prices
b. ignore the law of demand
c. ignore the elasticity of the demand for the product
d. both (a) and (c)
Q36. Firms in monopolistic competition sell a similar but differentiated product.
a. true
b. false
Q37. A cartel is
a. a type of formal collusion
b. a type of informal collusion
c. characterized by a kinked demand curve
d. a form of monopolistic competition
Q38. The operation of the total economy can best be demonstrated by a
a. merry-go-round
b. circular flow
c. Ferris wheel
d. roller coaster
Q39. In the circular flow, business owners receive
a. interest
b. profits
c. rent
d. wages
Q40. If planned investment exceeds planned savings, the economy always expands.
a. true
b. false
Q41. If exports exceed imports during a period of full employment (while other planned injections equal other planned leakages), the economy
a. remains stable
b. contracts
c. experiences rising prices
d. experiences falling prices
Q42. The circular flow is unaffected by changes in the money supply or interest rates.
a. true
b. false
Q43. During times of full employment, the only way a firm can obtain additional resources is to bid the resources away from other firms.
a. true
b. false
Q44. In the circular flow, services rendered by the resource owners are compensated through payments of wages, rent, interest, and profits.
a. true
b. false
Q45. The level of total output and the price level can be affected by changes in consumption.
a. true
b. false
Q46. Which of the following are injections into the circular flow of income?
a. saving, investment, exports, and taxes
b. investment, taxes, and imports
c. saving, taxes, and imports
d. investment, government spending, and exports
Q47. Planned investment may differ from actual investment.
a. true
b. false
Q48. A balanced federal budget tends to have a neutral effect on the economy.
a. true
b. false
Q49. According to the simple circular flow concept, whenever planned investment is less than planned saving
a. inventories accumulate
b. output increases
c. prices rise
d. employment increases
Q50. The total payment of resource income in the economy is equal to
a. the total value or cost of the output
b. the total value of output plus profit
c. total profit
d. the total value of output less profit
Explanation / Answer
1.True a direct payment made to others in the course of running a business, such as wage, rent and materials are known as explicit costs.
2. The cost of next best alternative or the sacrificing cost of producing one unit of a product is OPPORTUNITY COSTS. SO correct answer is d.
3. False, because with a fall in the level of total product would result in MP to fall.
4.The implicit cost for a firm can be thought of as the opportunity cost related to undertaking a certain project or decision, such as the loss of interest as income , or depreciation and wear and tear of machinery used for a capital project. True
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