microeconomics ch 9 – Flashcards
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economic cost can best be defined as:
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a payment that musy be made to obtain and retain the services of a resource.
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which of the following constitutes an implicit cost to the johnson manufacturing company?
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use of building johnson owns instead of renting it to another entity to generate income
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an explicit cost is:
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a money payment made for resources not owned bg the firm itself.
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accounting profits equal total revenue minus:
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total explicit costs
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accounting profits are typically:
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greater than economic profits because they do not take implicit costs into account
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the basic characteristic of a short run:
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the firm does not have sufficient time to change the size of its plant
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which of the following represents a long-run adjustment?
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unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants
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which of the following is a short-run adjustment?
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a local bakery hires two additional bakers
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to economists, the main difference between the short run and the long run is that:
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in the long run, all resources are variable. while in the short run, AT LEAST one is fixed
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the amount of calendar time associated with the long run:
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varies from industry to industry
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which of the following best expresses the law of diminishing returns?
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as successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline
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which of the following is not a source of economies of scale?
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producing small amounts
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the minimum efficient scale of a firm:
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is the smallest level of production a company can achieve while taking full advantage of economies of scale with regards to supplies and costs
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diseconomies of scale arise primarily because:
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of the difficulties involved in managing and coordinating a large business enterprise
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if the law of diminishing returns applies to study time:
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the tenth hour of study will likely be less productive than the third
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which would be an implicit cost for a firm? the cost:
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of wages foregone by the owner of the firm
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for a time, larger plant sizes will lead to lower unity costs. this is due to
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economies of scale
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the ability of Intel to spread product development costs over a larger number of units:
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economies of scale
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at times firms becomes too large and expansion may lead to higher average total costs. this is:
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diseconomies of scale
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which is not an example of diseconomies of scale:
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labor specialization
