MICROECONOMICS
ASSIGNMENTN #3
MUHAMMAD SAAD UMAR
BS (ACF)-B 2K20
ROLL NO: 336412
1. Implicit costs are:
C). "Payments" for self-employed resources.
2. Which would be an implicit cost for a firm? The cost:
D). of wages foregone by the owner of the firm.
3. If a firm's revenues just cover all its opportunity costs, then:
B). economic profit is zero.
4. Suppose a firm sells its product at a price lower than the opportunity cost of
the inputs used to produce it. Which is true?
D) The firm may earn accounting profits, but will face economic losses.
5. Suppose that a firm produces 200,000 units a year and sells them all for $10
each. The explicit costs of production are $1,500,000 and the implicit costs of
production are $300,000. The firm has an accounting profit of:
A) $500,000 and an economic profit of $200,000.
6. The short run is a time period in which:
D) Some resources are fixed and others are variable.
7. The law of diminishing returns states that:
B) As a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of
the firm will eventually decrease.
8. The law of diminishing returns only applies in cases where:
C) There is at least one fixed factor of production.
9. The marginal product of labor curve shows the change in total product
resulting from a:
B) one-unit increase in the quantity of a particular resource used, holding constant other resources.
10. When the total product curve is falling, the:
B) Marginal product of labor is negative.
11. When marginal product reaches its maximum, what can be said of total
product?
C) Total product is increasing if marginal product is still positive
12. Variable costs are:
C) costs that change with the level of production.
13. Which is not a fixed cost?
D) A worker's wage of $15 per hour
14. If you know that with 8 units of output, average fixed cost is $12.50 and
average variable cost is $81.25, then total cost at this output level is:
. C) $750
15. With fixed costs of $400, a firm has average total costs of $3 and average
variable costs of $2.50. Its output is:
C) 800 units
16. The reason the marginal cost curve eventually increases as output
increases for the typical firm is because:
C) Of the law of diminishing returns.
17. If the short-run average variable costs of production for a firm are rising,
then this indicates that:
C) Marginal costs are above average variable costs.
18. If a more efficient technology was discovered by a firm, there would be:
D) A downward shift in the MC curve.
19. The firm's short-run marginal-cost curve is increasing when:
B) Marginal product is decreasing.
20. A firm encountering economies of scale over some range of output will
have a:
B) Falling long-run average cost curve.
21. When a firm doubles its inputs and finds that its output has more than
doubled, this is known as:
A) Economies of scale.
22. The larger the diameter of a natural gas pipeline, the lower is the average
total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an
example of:
A) Economies of scale.
23. If all resources used in the production of a product are increased by 20
percent and output increases by 20 percent, then there must be:
. C) Constant returns to scale.
24. Economies and diseconomies of scale explain why the:
C) long-run average total cost curve is typically U-shaped.
25. In the graph above, minimum efficient scale occurs at:
B) Q2
