The difference between the short-run and the long-run is ________. (Points : 4)

Question

The difference between the short-run and the long-run is ________. (Points : 4)        three months, or one business quarter
       the time it takes for firms to change all inputs in the production process
       the time it takes for firms to change only their variable inputs
       More information is required to answer this question Question 3.3. Stage III of the short-run production function is ________. (Points : 4)        the most efficient mix of inputs
       the least costly level of output
       where additional units of variable inputs will lead to less output
       where additional units of variable inputs will lead to more output Question 4.4. The Law of Diminishing Returns states that ________. (Points : 4)        additional inputs will reduce output
       additional inputs will decrease average productivity
       the supply of inputs is becoming scarce
       eventually, additional inputs will lead to less additional output Question 5.5. Which of the following combinations of inputs is most closely reflective of decreasing marginal rate of technical substitution (MRTS)? (Points : 4)        oil and natural gas
       sugar and high fructose corn syrup
       computers and clerks
       keyboards and computers Question 6.6. Isocost curves represent ________. (Points : 4)        least cost combinations of inputs
       combinations of inputs that can be purchased given their prices for the same total cost
       a producer’s cost function
       None of the above Question 7.7. When the exponents of a Cobb-Douglas production function sum to more than 1, the function exhibits ________. (Points : 4)        constant returns
       increasing returns
       decreasing returns
       either increasing or decreasing returns Question 8.8. Output (total product) is maximized when ________. (Points : 4)        average productivity is at its maximum
       the Law of Diminishing Returns sets in
       marginal productivity is zero
       marginal productivity is at its maximum Question 9.9. Answer the question based on the following information.

                      Number of Workers  Units of Output
                                      0                                0
                                      1                              40
                                      2                              90
                                      3                            126
                                      4                            150

The marginal product of the fourth worker is ________. (Points : 4)        150 units of output
       24 units of output
       negative
       36 units of output Question 10.10. Average product is at a maximum when the number of workers hired is ________. (Points : 4)        1
       2
       3
       4 Question 11.11. To an economist, total costs include ________. (Points : 4)        explicit, but not implicit costs
       implicit, but not explicit costs
       explicit and implicit costs
       neither explicit nor implicit costs Question 12.12. Which of the following distinctions does NOT help to explain the difference between relevant and irrelevant cost? (Points : 4)        Historical vs. replacement cost
       Sunk vs. incremental cost
       Variable vs. fixed cost
       Out-of-pocket vs. opportunity cost Question 13.13. Costs of production that change with the rate of output are ________. (Points : 4)        sunk costs
       opportunity costs
       fixed costs
       variable costs Question 14.14. In the long run, ________. (Points : 4)        fixed costs tend to be greater than variable costs
       variable costs tend to be greater than fixed costs
       all costs are fixed costs
       all costs are variable costs Question 15.15. Economies of scale are created by greater efficiency of capital and by ________. (Points : 4)        longer chains of command in management
       better wages for labor
       smaller plant sizes
       increased specialization of labor Question 16.16. The distinction between sunk and incremental costs is most helpful in answering which question? (Points : 4)        How many more people should be added to the production process?
       What is the correct price to charge?
       Should we begin to build a new factory?
       Should we continue developing a new software application that we began last year? Question 17.17. A short-run total cost function, TC = 100 + 32Q – 4Q2 + 0.4Q3, indicates the existence of ________. (Points : 4)        a linear total cost curve
       a constant average variable cost curve
       a U-shaped average variable cost curve
       a constant marginal cost curve Question 18.18. If a firm's rent increases, it will affect its cost structure in which of the following ways? (Points : 4)        AVC will increase.
       MC will increase.
       TFC will increase.
       MC will increase. Question 19.19. The learning curve indicates that ________. (Points : 4)        economies of scale are taking effect
       repetition of various production tasks cause unit costs to decrease
       workers must learn new skills in order to improve
       it takes time to learn a new skill Question 20.20. The main factor that explains the difference between accounting cost and economic cost is ________. (Points : 4)        opportunity cost
       fixed cost
       variable cost
       sunk cost The difference between the short-run and the long-run is ________. (Points : 4)        three months, or one business quarter
       the time it takes for firms to change all inputs in the production process
       the time it takes for firms to change only their variable inputs
       More information is required to answer this question

Explanation / Answer

3.2 Option b as in the long run all the inputs are variable.

3.3 Option C . Additional variable units employed will lead to fall in the output due to over utilization of fixed input.

4.4 Option D. It applies only in short run as the other factor of production is fixed.

5.5 Option B. Oil and natural gas are substitutes so MRTS will be constant, Computers and keyboards are complements and Computers and clerks are also complements.

6.6 Option B.

7.7 Option A. It will exhibit constant returns to scale.

8.8 Option C.At marginal product = 0, the output is maximized.

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