Economies of scale may arise from all but one of the following. Which one is it? |
government economic subsidies protect firms from competition to avoid losses |
Fixed costs are important because, at least in the ___________, the firm _______________. |
short run; cannot alter them |
Whatever the firm’s quantity of production, _____________ must exceed total costs if it is to earn a profit. |
total revenue |
In microeconomics, the term ___________________ is synonymous with decreasing returns of scale. |
diseconomies of scale |
In microeconomics, the term _____________________ is synonymous with economies of scale. |
increasing returns to scale |
___________ include all spending on labor, machinery, tools, and supplies purchased from other firms. |
Total costs |
Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it? |
physical space for the gallery |
If the firm produces 5 units (quantity) that it sells at a price of $20.00 each, what will its profits or losses equal? |
losses equal $55 |
______________ include all of the costs of production that increase with the quantity produced. |
Variable costs |
The economies-of-scale curve is a long-run average cost curve, because |
it allows all factors of production to change. |
In order to determine the average variable cost, the firm’s variable costs are divided by _______________________. |
the quantity of output |
If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero? |
variable costs |
________________________ arises where many firms are competing in a market to sell similar but differentiated products. |
Monopolistic competition |
In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity. |
either total cost or variable cost |
Which of the following should typically be ignored because spending has already been made and cannot be changed? |
sunk costs |
In economics, a firm that faces no competitors is referred to as _________________. |
a monopoly |
The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation. |
average variable cost; fixed costs |
According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will |
do so regardless of what type of competition exists in a market. |
In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm’s to ___________________ that provide alternative, more efficient methods of combining inputs to produce output. |
acquire energy efficient production technologies |
A firm’s ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production. |
fixed costs; do not change, |
If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point? |
divide total costs into two categories: fixed costs that can’t be changed in the short run and variable costs that can be |
_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price. |
total revenue |
The ______________ of all firms can be broken down into some common underlying patterns. |
cost structure |
I’MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I’MABIGCorp.’s average fixed cost to produce the 7,000 can openers was |
$2.43 |
In order to determine ____________, the firm’s total costs must be divided by the quantity of its output. |
average cost |
____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added. |
Diminishing marginal returns |
Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs? |
costs of research and development |
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises. |
decreasing returns to scale |
The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls. |
economies of scale |
Why would labor be treated as a variable cost? |
producing larger quantities of a good or service generally requires more workers |
A situation known as _____________________ occurs when all production inputs are allowed to expand, but that expansion does not result in much of a change in the average cost of production. |
constant returns to scale |
Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs? |
costs incurred in the act of producing |
The term _____________ is used to describe the additional cost of producing one more unit. |
marginal cost |
microeconomics 7
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