Question 1. If Fred Morris buys wood and ivory every month to manufacture pianos in the plant he has leased for four years, he is operating

in the long run.
without a production function.
in the short run.
a vertically integrated firm.

Question 2. Accounting profit is defined as

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

Question 3. What is one thing that entrepreneurs do NOT do?

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

Question 4. Because of diminishing marginal product in the short run, a tripling of the total product (assuming input prices are constant) requires

a tripling of marginal cost.
a tripling of total cost.
less than a tripling of total variable cost.
increased average fixed cost.
more than a tripling of total variable cost.

Question 5. In the short run, if a firm has zero output, its total cost is

equal to zero.
the same as its average variable cost.
the same as its total variable cost.
the same as its total fixed cost.
the same as its average fixed cost.

Question 6. Economic profit is defined as

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

Question 7. Technical efficiency is

using the least-cost method of production.
the method of production that minimizes physical usage of inputs according to some specific rule.
the process of turning inputs into outputs.
the process of minimizing output with a given level of inputs.
the method of production that uses the least labor per unit of capital.

Question 8. Last spring, Coil Spring Co. reported that average fixed costs had increased, but average variable costs were unchanged. This indicates that

marginal costs are less than average variable cost but greater than average cost.
fixed costs have increased.
output is declining.
marginal costs have increased.

Question 9. When the marginal product curve is declining because of

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.

Question 10. A firm that owns a wheat farm, a grain elevator, a flour mill, a commercial bakery, and a grocery store chain is

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