Question 1. 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 2. When inputs are combined so that total production has the lowest possible cost, we are observing

technical efficiency.

optimal engineering.

economic efficiency.

average-cost production.

Question 3. Average fixed cost plus average variable cost equals

marginal cost.

total cost.

average total cost.

total variable cost.

marginal fixed cost.

Question 4. 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 5. The change in total cost due to producing one more unit of output is called the

long-run average cost.

short-run average cost.

marginal product.

average variable cost.

marginal cost.

Question 6. A vertically integrated firm might own

a ski factory, an Alpine resort hotel, and an emergency medical center.

several plants that manufacture different qualities of skis.

a ski factory, a cigar manufacturer, and a carpet factory.

several plants in different countries that manufacture skis.

Question 7. Firms exist for all but which one of the following reasons?

To reduce transactions costs

To produce things

To organize teams

To monitor shirking

To reduce the costs of buying

Question 8. Which of the following always decreases as output increases?

Fixed cost

Average cost

Average fixed cost

Marginal cost

Total cost

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. The short run is

less than six months.

more than six months, but less than a year.

in the short run, some productive resources may be fixed although some other resources may be varied.

the period of time in which all the productive resources can be varied.

the period of time in which all the inputs are fixed.