Economics chapter 9

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Economics chapter 9
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2012-08-31 05:28:42
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Economics Chapter 9
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  1. The law of diminishing returns indicates that:
    A. As extra units of a variable resource are added to a fixed resource, the extra or marginal product will decline beyond some point.
    B. the demand for goods produced by purely competitive industries is down sloping.
    C. beyond some point, the extra utility derived from additional units of a product will yield for the consumer smaller and smaller extra amounts of satisfaction. 
    D. because of economies and diseconomies of scale, a competitive firm's long-run average cost curve will be U-shaped.
    A. As extra units of a variable resource are added to a fixed resource, the extra or marginal product will decline beyond some point.
    (this multiple choice question has been scrambled)
  2. Which of the following definitions is correct?
    A. Accounting profit + economic profit = normal profit.
    B. Economic profit – accounting profit = explicit costs.
    C. Economic profit = accounting profit – implicit costs.
    D. Economic profit – implicit costs = accounting profits.
    C. Economic profit = accounting profit – implicit costs.
    (this multiple choice question has been scrambled)
  3. Economic profits are calculated by subtracting
    A. Explicit and Implicit costs from total revenue
    B. Implicit costs from normal profits.
    C. explicit costs from total revene
    D. Implicit costs from total revenue.
    A. Explicit and Implicit costs from total revenue
    (this multiple choice question has been scrambled)
  4. Normal Profit is:
    A. Determined by subtracting implicit costs from total revenue
    B. Determined by subtracting explicit costs from total revenue.
    C. The return to the entrepreneur when economic profits are zero.
    D. The average profitabilityof an industry over the preceding 10 years.
    C. The return to the entrepreneur when economic profits are zero.
    (this multiple choice question has been scrambled)
  5. To economists, the main difference between 'the short run' and 'the long run' is that:
    A. Fixed costs are more important to decision making in the long run than they are in the short run.
    B. The law of diminishing returns applies in the long run, but not in the short run.
    C. In the long run, all resources are variable while, in the short run, at least one resource is fixed.
    D. In the short run all resources are fixed, while in the long run, all resources are variable.
    C. In the long run, all resources are variable while, in the short run, at least one resource is fixed.
    (this multiple choice question has been scrambled)
  6. 'Economies of scale' refers to:
    A. Public investments in highways, schools, utilities etc.
    B. The reallocation of labour from less productive to more productive to more productive uses.
    C. The notion that small firms are less bureaucratic and, therefore, more efficient than corporations.
    D. The fact that large producers may be able to use more efficient technologies.
    D. The fact that large producers may be able to use more efficient technologies.
    (this multiple choice question has been scrambled)
  7. Economic cost can best be defined as:
    A. Compensations which must bereceived by resource owners to ensure their continued supply.
    B. Any contractual obligation which results in a flow of money expenditures from an enterprise to resource suppliers.
    C. Any contractual obligation to labour, or material suppliers.
    D. All costs, exclusive of payments to fixed factors of production.
    A. Compensations which must be received by resource owners to ensure their continued supply.
    (this multiple choice question has been scrambled)
  8. The basic characteristic of the short run is that:
    A. The firm does not have sufficient time to change the amounts of any of the resources it employs.
    B. The firm does not have sufficient time to cut its rate of output to zero.
    C. 'Barriers to entry' prevent new firms from entering the industry.
    D. The firm does not have sufficient time to change the size of its plant.
    D. The firm does not have sufficient time to change the size of its plant.
    (this multiple choice question has been scrambled)
  9. Suppose that a business incurred implicit costs of $200 000 and explicit costs of $1 million in a specific year. It the firm sold 4000 units of its output at $300 per unit, its accounting profits were:
    A. $200 000, and its economic profits were zero.
    B. $100 000, and its economic profits were zero.
    C. Zero, and its economic loss was $200 000.
    D. $100 000, and its economic profits were $100 000
    A. $200 000, and its economic profits were zero.
    (this multiple choice question has been scrambled)
  10. Which of the following constitutes an implicit cost to the Jackson Manufacturing Company?
    A. Payments of wages to its office workers.
    B. Rent paid for the use of equipment owned by the Schultz Machinery Company.
    C. Property taxes.
    D. Depreciation charges on company - owned equipment.
    D. Depreciation charges on company - owned equipment.
    (this multiple choice question has been scrambled)

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