ECO 1104 Study Guide - Average Cost, Marginal Product, European Cooperation In Science And Technology

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ECO 1104 Full Course Notes

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Accouting profit total revenue (tr) minus total explicit cost ( tec ) pg 272. Average fixed cost - fixed costs divided by the quantity of output pg 278 afc = fc / q. Average total cost - total cost didived by the quantity of output t/q = atc. Average variable costs - variable costs divided by the quantity of output , avc = vc/q. Constant returns to scale - the property where by long-run atc cost stays the same ,as quantity of output changes. Diminishing marginal product - the property where by the marginal product of an input declinese as the quantity of the input increases pg. Diseconomies of scale - the property whereby the long run atc rises as quantity put increase (q ^ ) Economic profit total revenue minus total cost , including both explicit and implicit costs pg. 272. Tr - tc = economic provit , both implicit (opportunity cost ) and explicit ( accounting prices)

Related Questions

1. Marginal cost is defined as

a. a change in total costs from producing one more unit of output.

b. the change in fixed cost from producing one more unit of output.

c. total cost divided by total output.

d. total variable cost divided by total output.

2. The marginal cost curve often decreases at first and then starts to increase. This is explained by:

a. the law of diminishing returns.

b. economies of scale.

c. increasing ATC.

3. From the information given in the following table, calculate the marginal cost of the 3rd unit of output. Enter your answer exactly; do not round.

Output	Total Cost	Marginal Cost
0	$20	N/A
1	$35	$15
2	$45	$10
3	$65
4	$90	$25

azuremuskrat765

Q1. Average total cost is equal to
a. AFC + AVC
b. AFC/total output
c. AFC/AVC
d. AVC/AFC

Q2. As output increases, the ATC
a. increases
b. decreases
c. remains constant
d. falls and then rises

Q3. Total profit is equal to
a. total revenue minus total cost
b. total revenue minus explicit cost
c. total revenue minus variable cost
d. total revenue minus marginal cost

Q4. Marginal cost crosses the
a. AVC curve at the highest point of the AVC curve
b. ATC curve at the lowest point of the ATC curve
c. AFC curve at the lowest point of the AFC curve
d. ATC curve at the highest point of the ATC curve

Q5. Wages paid are an example of an explicit cost of doing business.
a. true
b. false

Q6. Any revenue over and above total cost is labeled economic profit.
a. true
b. false

Q7. If the selling price of a product is $10, the average total cost is $8, and total sales are 5,000 units, the total profit will be
a. $5,000
b. $8,000
c. $10,000
d. $20,000

Q8. Whenever marginal revenue exceeds marginal cost,
a. profit declines if output increases
b. profit increases if output increases
c. losses increase if output increases
d. marginal revenue must be rising

Q9. Under perfectly competitive conditions, marginal revenue is
a. greater than average revenue
b. equal to average revenue
c. less than average revenue
d. equal to the average variable

Q10. A firm's break-even point occurs where
a. marginal revenue equals marginal cost
b. marginal revenue equals average variable cost
c. total revenue equals total cost
d. total revenue equals total variable cost

Q11. The addition to total output resulting from using one more unit of a productive resource is the
a. average product
b. marginal input
c. total product
d. marginal product

Q12. Unlike a firm in pure competition, a monopolist may be able to
a. block the entry of new firms into the industry
b. continue to earn economic profits in the long run
c. earn economic profits in the short run
d. both (a) and (b)

Q13. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.
a. true
b. false

Q14. In the long run, under conditions of perfect competition, market forces come into play to
a. enhance profits
b. increase demand
c. eliminate profits
d. separate MR and AR

Q15. Consumer surplus is the area above the demand curve and below the equilibrium price.
a. true
b. false

Q16. Under perfect competition, market price is determined by market demand and supply.
a. true
b. false

Q17. The more that firms advertise, the closer they get to perfect competition.
a. true
b. false

Q18. Perfect competition assumes that a producer is interested in maximizing profit.
a. true
b. false

Q19. In the long run, under conditions of perfect competition, the buyer will eventually be able to buy the product at a
a. price equal to the lowest point on the ATC curve past the optimal scale of operation
b. price below cost
c. price equal to the lowest point on the ATC curve at the optimal scale of operation
d. discount

Q20. The lowest possible ATC curve is attained at the optimal scale of output.
a. true
b. false

1. If marginal cost is less than average total cost, then:

A. average total cost is increasing with output.
B. average total cost is decreasing with output.
C. average variable cost is increasing with output.
D. average variable cost is decreasing with output.

2. The law of diminishing marginal productivity:

A. states that as more and more of a variable input is added to an existing fixed input, after some point the additional output one gets from the additional input will fall.

B. states that as more and more of a variable input is added to an existing fixed input, after some point the additional output one gets from the additional input will rise.

C. explains why marginal costs of production fall as additional units of output are produced.

D. explains why average productivity always rises.

azuremuskrat765

ECO 1104 Study Guide - Average Cost, Marginal Product, European Cooperation In Science And Technology

ECO 1104 Full Course Notes

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