Liberty University ECON 213 Quiz 8 Complete Solutions Correct Answers Key

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Liberty University ECON 213 quiz 8complete solutions correct answers keyTwo versionsQuestion 1 Total revenue minus total cost is equal to:Question 2 In the short run, the cost of __________ is variable, whereas the cost of __________ isfixed.Question 3 Which of the following is a question that a firm must answer in the long run but notin the short run?Question 4 If all workers are able to specialize and become more productive as more labor ishired, the amount of total output produced:Question 5 It is important for a firm to know its minimum efficient scale of production becausethat is where:Question 6 The production function of a restaurant includes items such as labor (i.e., cooks,waiters, a manager), capital (i.e., ovens, counters, tables, chairs, and a building), and land. In theshort run, the owner of the restaurant will optimize production by employing a variable amountof __________ given a fixed amount of __________.Question 7 Which is the best example of diseconomies of scale?Question 8 Refer to the accompanying graph to answer the questions that follow.If the firmdepicted in the graph had to pay higher rent to its landlord, we would expect its __________ curveto shift __________.Question9Refertothefollowinggraphtoanswerthequestionsthatfollow.Thefirmisexperiencing diminishing marginal product beyond what level of output along the marginal costcurve?Question 10 Use the following graph to answer the questions that follow. If the firm expanded itsscale of production and found that its average costs increased, which of the curves would reflectthis situation?Question 11 Which is the best example of economies of scale?Question 12 Economists consider both explicit and implicit costs when measuring economic profit.The reason they consider implicit costs is that:

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Question 13 When firms grow larger, they sometimes add many additional layers of managersbetweenthetopexecutivesandtheentrylevelemployees.Becausethesemanagersdonotactually produce any output themselves, we expect more layers of management to lead to:Question 14 The change in total output divided by the change in input is known as:Question 15 If a firm’s longrun average total costs increase as it increases its scale of production,the firm is experiencing:Question 16 If the marginal product of labor for a firm decreases as more workers are hired, weknow that:Question 17 In the accompanying table, diminishing marginal product begins after the:Question 18 If a firm hires another worker and her marginal product of labor is positive, we knowthat the firm’s total output is:Question 19 Nathan owns a coffeeroasting company. If he increases the size of his company andexperiences constant returns to scale as a result, his longrun average total cost curve should be:Question 20 In the accompanying table, diminishing marginal product begins after the:Version 2Question 1 Lauren is the owner of a bakery that earns 0 (zero) economic profit. Last year, her totalrevenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overheadexpenses were $15,000. From this information, we know that her total implicit costs were:Question 2 Use the following scenario to answer the questions that follow. Steve owns a bikestore. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costsare $450,000 per year. Last year, Steve sold 1,200 bikes. Steve’s average total cost was __________per bike.Question 3 It is important for a firm to know its minimum efficient scale of production becausethat is where:Question 4 Use the following graph to answer the questions that follow. Which of the curvesdepicts economies of scale?

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Question 5 In the accompanying table, diminishing marginal product begins after the:Question 6 Darrell owns a furniture store. If he decided to expand the size of his store in order tosell more furniture, how would he know if he is experiencing diseconomies of scale?Question 7 Ralph owns a small pizza restaurant, where he works fulltime in the kitchen. His totalrevenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee$2,000 per month, and the cost of ingredients and overhead averages $500 per month. Ralphcould earn $35,000 per year as the manager of a competing pizza restaurant nearby. His totalaccounting profit for the year was:Question 8 Steve owns a bike store. Last year, his average cost of selling a bike was $1,000. If heexpands the size of his store this year and sees his average cost remain the same, his longrunaverage total cost curve should be:Question 9 Chief executive officers (CEOs) of major corporations are often paid mostly with stockoptions,asopposedtosalariesandcashpayments.Thesestockoptionsoftencannotbeconverted into stock and sold until years after they were issued. All this is ultimately intended tocreate incentives for the CEO to:Question 10 Refer to the following table. What is the total cost of producing five (5) units of thegood?Question 11 In the accompanying table, diminishing marginal product begins after the:Question 12 When a firm hires another employee and, as a result, total output increases, thischange in total output is also known as:Question 13 Which of the following is a question that a firm must answer in the long run but notin the short run?Question 14 Ralph owns a small pizza restaurant, where he works fulltime in the kitchen. His totalrevenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee$2,000 per month, and the cost of ingredients and overhead averages $500 per month. Ralphcould earn $35,000 per year as the manager of a competing pizza restaurant nearby. His totalimplicit costs for the year were:Question 15 Steve owns a bike store. Last year his average cost of selling a bike was $1,000. If heexpands the size of his store this year and sees his average cost decrease to $950, his longrun

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