Question 1

The profit/loss box in cost curve graphs is found

between the AVC and ATC curves

between the demand and ATC curves

between the MR and MC curves

below AVC curve

Question 2

Which best describes an economic profit?

a payment to hire a resource away from competing uses

Explicit revenues+Implicit revenues-Explicit Costs-Implicit Costs

Explicit Revenue-Implicit Costs

retained earnings of a firm

Question 3

In the long run,

variable resources become fixed

all resources are variable

total costs rise

fixed resources cannot be changed

Question 4

Suppose a restaurant kitchen is suffering from diminishing returns. There is only one oven and a small preparation space. The third baker hired cannot add much to production causing rising per unit costs. How can the diminishing returns problem be solved?

invest in a larger kitchen with more ovens

increase other variable resources

fire the baker

charge more for the product

Question 5

Which of the following best describes a normal profit?

the retained earnings of a firm

Explicit Revenues-Implicit Costs

(Explicit Revenues + Implicit Revenues)-(Explicit Costs+Implicit Costs)

a payment large enough to keep you in a business

Question 6

Shutdown refers to

the dynamic contraction of an industry

temporarily closing to retool a production facility

temporarily closing to allow orders to build up and minimize losses

bankruptcy and going out of business

Question 7

The savings associated with using bigger and better tools and producing in larger quantities is called

average fixed costs

market growth

economies of scale

diminishing returns

Question 8

The payments for the production facility and equipment within the facility are called

total costs

fixed costs

variable costs

marginal costs

Question 9

The ability to pay for a production facility and capital is determined by the

the marginal costs of raw materials flowing through the facility

the size of financial markets

size of the market for the product the capital produces

the externality costs of capital production

Question 10

The fixed cost box is found

between the AVC and ATC curves

above the ATC curve

below the AVC curve

between the demand and ATC curves