HW 6

Question 1

costs that change as output changes are:
- variable costs
- fixed costs
- sunk costs
- none of the above

Answer 1

variable costs

Question 2

costs that are forever lost after they have been paid are:
- production costs
- fixed costs
- sunk costs
- variable costs

Answer 2

sunk costs

Question 3

sunk costs are those costs that:
- do not vary without output
- are forever lost after they have been paid
- can be collected even after they have been paid
- do vary with output

Answer 3

are forever lost after they have been paid

Question 4

the costs of production include:
- the costs that appear on the income statements
- the opportunity costs foregone by producing a given product
- accounting costs
- accounting costs and opportunity costs

Answer 4

accounting costs and opportunity costs

Question 5

which curve(s) does the marginal cost curve intersect at the (their) minimum point?
- average total cost curve
- average fixed cost curve
- average variable cost curve
- average total cost curve and average variable cost curve

Answer 5

average total cost curve and average variable cost curve

Question 6

a production function
- defines the minimum amount of output that can be produced with inputs such as capital and labor
- defines the average amount of output that can be produced with inputs such as capital and labor
- represents the technology available for turning inputs into output
- is determined only by the expenditures on R&D

Answer 6

represents the technology available for turning inputs into output

Question 7

the short run is defined as the time frame
- in which there are no fixed factors of production
- in which there are fixed factors of production
- less than one year
- less than three years

Answer 7

in which there are fixed factors of production

Question 8

the long run is defined as
- the horizon in which the manager can adjust all factors of production
- the horizon in which there are only fixed factors of production
- the horizon in which there are both fixed and variable factors of production
- greater than one year

Answer 8

the horizon in which the manager can adjust all factors of production

Question 9

when marginal cost curve is below an average cost curve, average cost is
- increasing with output
- declining with output
- not varying with output
- goes to zero with output

Answer 9

declining with output

Question 10

average fixed cost
- initially declines, reaches a minimum, and then begins to increase as output increases
- increases continuously as output is expanded
- keeps constant as output is expanded
- declines continuously as output is expanded

Answer 10

declines continuously as output is expanded