Econ 160 Final – Flashcards
Unlock all answers in this set
Unlock answersquestion
Explicit costs are payments the firm makes for
answer
inputs such as wages and salaries to its employees, whereas implicit costs are non-expenditure costs that occur through the use of self owned resources such as foregone income.
question
The explicit costs of going to college include
answer
tuition costs and the cost of books, whereas the implicit costs include foregone income.
question
Accounting profit equals sales revenue minus explicit costs
answer
True
question
A normal profit is considered a cost because
answer
this is the amount required to ensure continued supply of the product.
question
Wendy's builds a new restaurant.
answer
long-run adjustment
question
Harley-Davidson Corporation hires 200 more production workers.
answer
short-run adjustment
question
A farmer increases the amount of fertilizer used on his corn crop.
answer
short-run adjustment
question
An Alcoa aluminum plant adds a third shift of workers.
answer
short-run adjustment
question
Complete the following table by calculating marginal product and average product from the data given. (Equations)
answer
MC=∆TVC/∆Q TC=TFC+TVC ATC=TC/Q therefore TC=ATC(Q) AFC=TFC/Q therefore TFC=AFC(Q) AVC=TVC/Q therefore TVC=AVC(Q) ATC=AFC+AVC
question
Advertising expenditures
answer
variable cost
question
Fuel
answer
variable cost
question
Interest on company-issued bonds
answer
fixed cost
question
Shipping charges
answer
variable cost
question
Payments for raw materials
answer
variable cost
question
Real estate taxes
answer
fixed cost
question
Executive salaries
answer
fixed cost
question
Insurance premiums
answer
fixed cost
question
Wage payments
answer
variable cost
question
Depreciation and obsolescence charges
answer
fixed cost
question
Sales taxes
answer
variable cost
question
Rental payments on leased office machinery
answer
fixed cost
question
Which of the following statements is true regarding the costs associated with owning and operating an automobile?
answer
Fixed costs include insurance and variable costs include gasoline.
question
You are considering whether to drive your car or fly 1,000 miles to Florida for spring break. In making your decision you should consider
answer
the variable cost of the trip, the opportunity cost of time, and the need for transportation in Florida.
question
Long-run average total cost falls as the firm realizes _____ and later rises when the firm experiences ______.
answer
economies of scale, diseconomies of scale
question
The minimum efficient scale is the
answer
smallest level of output needed to attain all economies of scale and minimum long-run average total cost.
