1.Question :When the marginal product curve is declining because of
Student Answer: increasing returns, the marginal cost curve is rising.

diminishing returns, the marginal cost curve is rising.
diminishing returns, the marginal cost curve is falling.
diminishing returns, the marginal cost curve is constant.
increasing returns, the marginal cost curve is falling.

2.Question :A firm that owns a wheat farm, a grain elevator, a flour mill, a commercial bakery, and a grocery store chain is
Student Answer: horizontally integrated.

vertically integrated.
a monopoly.
an imperfect competitor.
a conglomerate.

3.Question :Nonprofit firms, both private and governmental, may differ in behavior from profit-seeking private firms because
Student Answer:
there is no residual claimant.
the demand for the products is inherently different.
government managers seek more capital-intensive means of production.
government firms are more difficult to manage.
private firms do not compete with government firms.

4.Question :In the short run,
Student Answer: all inputs are variable.

some inputs are variable and some are fixed.
all inputs are fixed.
the time period cannot exceed one year.

5.Question :Which of the following always decreases as output increases?
Student Answer: Fixed cost
Average cost

Average fixed cost
Marginal cost
Total cost

6.Question :An example of a horizontally integrated firm is one that

Student Answer: owns several plants,

each handling a different stage of production. 

produces a variety of goods and sells them in widely disparate markets.

owns several plants, each manufacturing the same product.
owns several plants in the same state.
uses highly automated assembly line techniques.

7.Question :Accounting profit is defined as
Student Answer: total simplicit costs.

total monetary costs.
total opportunity costs.
total sales(implicit costs + explicit costs).

total sales(explicit costs - implicit costs).

8.Question :What is one thing that entrepreneurs do NOT do?
Student Answer: They identify consumer demands.

They establish supply and demand.
They organize production.
They allocate resources.
They acquire assets.

9.Question :When inputs are combined so that total production has the lowest possible cost, we are observing
Student Answer: technical efficiency.
optimal engineering.

economic efficiency.
average-cost production.

10.Question :Economic profit is defined as

Student Answer: total implicit costs.
total monetary costs.
total explicit costs.
total sales(implicit costs + explicit costs)
total sales(explicit costs - implicit costs