Production Costs

Wages and salaries paid to workers are an example of implicit costs of production.

• True

• False

Which of the following is a variable cost in the short run?

• rent of the factory

• wages paid to factory workers

• interest payments on borrowed financial capital

• salaries paid to upper management

If marginal costs equal average total costs,

• average total costs are falling.

• average total costs are rising.

• average total costs are maximized.

• average total costs are minimized.

The efficient scale of production is the quantity of output that minimizes

• average fixed cost.

• average total cost.

• average variable cost.

• marginal cost.

"Economies of Scale" is the phase of increasing long run average total costs

• True

• False

A cost that is included in economic profit

• Implicit Cost

• Marginal Cost

• Average Cost

• Economic Cost

Average Total Costs are calculated by dividing Total Costs by

• Price

• Quantity or units produced

• Average Variable Costs

• Revenue

If a firm does not produce any output, its total cost in the short run is equal to

• Zero

• Its fixed costs

• Its variable costs

• Its marginal cost

Variable Cost/Quantity = _______

• Marginal Variable Cost
• Average Fixed Cost
• Average Variable Cost
• Marginal Total Cost

The main difference between the SR and the LR is that 

• the law of diminishing returns applies in the LR
• all resources are variable in the LR
• fixed costs are more important to decision making in the LR
• in the SR all resources are fixed