1. If more of an input factor is used, while holding other inputs constant, a firm will eventually experience A) diminishing returns. B) falling marginal cost. C) rising marginal physical product. D) rising consumer demand

2.The law of diminishing returns indicates that the marginal physical product of an input declines as more A) output is produced with the most efficient combination of inputs. B) of the input is used, holding output constant. C) of the input is used, holding other inputs constant. D) of the good is consumed.

3. The reason the average total cost curve declines initially is because of A) falling average fixed costs. B) falling average variable costs. C) falling marginal costs. D) both falling average fixed costs and falling average variable costs.

4. If an additional unit of labor costs $30 and has an marginal physical product of 50 units of output per worker, the marginal cost is

A) $0.60 per unit. B) $1.66 per unit. C) $15.00 per unit. D) $1500.00 per unit

5. The main difference to an economist between "short run" and "long run" is that A) variable costs are short-run investment decisions whereas fixed costs are long-run production decisions. B) in the short run, all resources are fixed whereas in the long run all resources are variable. C) in the long run, all resources are variable whereas in the short run at least one resource is fixed. D) fixed costs are more important than variable costs in the short run.

6. Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day. If that day the firm sold 8 units at $300 per unit its accounting profits are

A) $1,500 and its economic profits are $1,700. B) $1,500 and its economic profits are $1,300. C) $1,300 and its economic profits are $1,700. D) $1,300 and its economic profits are $1,300

7. Suppose a firm has the following expenditures per day: $240 for wages, $150 for materials, and $80 for equipment rental. The owner of the firm owns the building in which it operates. If the firm were not operating in the building, he could rent the building for $70 per day. Total daily revenue is $600. What are the daily explicit costs for the firm described above? A) $320 B) $390 C) $400 D) $470