Economics Quiz

When a factory is operating in the short run

• it cannot alter variable costs

• total cost and variable cost are usually the same

• average fixed cost rises as output increases

• it cannot adjust the quantity of fixed inputs

Some costs do not vary with the quantity of output produced. Those costs are called

• marginal costs

• average costs

• fixed costs

• explicit costs

In the short run, a firm operating in a competitive industry will shut down if price is

• less than average total cost

• less than average variable cost

• greater than average variable cost but less than average total cost

• greater than marginal cost

In the short run, a firm incurs fixed costs

• only if it incurs variable costs

• only if it produces no output

• only if it produces a positive quantity of output

• whether it produces output or not

The marginal product of labor can be defined as the change in

• profit divided by the change in labor

• output divided by the change in labor

• labor divided by the change in output

• labor divided by the change in total cost

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

• upward by exactly $2.00

• upward by less than $2.00

• downward by exactly $2.00

• downward by less than $2.00

A $0.10 tax levied on the sellers of chocolate bars will cause the

• supply curve for chocolate bars to shift down by $0.10

• supply curve for chocolate bars to shift up by $0.10

• demand curve for chocolate bars to shift down by $0.10

• demand curve for chocolate bars to shift up by $0.10

A production function describes

• how a firm maximizes profits

• how a firm turns inputs into output

• the minimal cost of producing a given level of output

• the relationship between cost and output

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run

• output is not variable

• the number of workers used to produce the firm's product is fixed

• the size of the factory is fixed

• there are no fixed costs

A legal minimum on the price at which a good can be sold is called a price

• subsidy

• floor

• support

• ceiling