Reference no: EM13245998

The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
             a.   transportation costs
             b.   imperfections in the labor market
             c.   imperfections in the capital markets
             d.   all of the above
             e.   none of the above

Which of the following statements concerning the long-run average cost curve of economic theory is (are) not true?
             a.   it is L-shaped
             b.   it consists of the lower boundary of all the (infinitely many) short-run curves
           c.   the long-run average cost of producing any given level of output, in general, occurs at the point where short-run average costs are minimized
             d.   a and b
             e.   a and c

Possible sources of economies of scale (size) within a production plant include:
             a.   specialization in the use of capital and labor
             b.   imperfections in the labor market
             c.   transportation costs
             d.   a and b
             e.   a and c

The opportunity cost of the funds an owner has invested in a business is the:
             a.   risk-free rate of return
             b.   rate of return on U.S. Treasury Bills
             c.   prime rate banks charge their most credit-worthy customers
             d.   a and b
             e.   none of the above

Which of the following statements about cost functions is true?
             a.   Variable costs will always increase in direct proportion to the quantity of output produced.
             b.   The less capital equipment employed in the production process relative to labor and other inputs, the longer will be the period of time required to increase significantly the scale of operation.
             c.   The shape of the firm's long-run cost function is important in decisions to expand the scale of operations.
             d.   none of the above

______________ include the opportunity costs of time and capital that the entrepreneur has invested in the firm.
a.           Implicit costs
             b.   Explicit costs
             c.   a and b
             d.   None of the above

______________ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.
             a.   Opportunity costs
             b.   Marginal costs
             c.   Relevant costs
             d.   Sunk costs

A price elasticity (ED) of -1.50 indicates that for a ____________ increase in price, quantity demanded will ____________ by ______________.
   a.   one percent; increase; 1.50 units
             b.   one unit; increase; 1.50 units
             c.   one percent; decrease; 1.50 percent
             d.   one unit; decrease; 1.50 percent
             e.   ten percent; increase; fifteen percent

The factor(s) which cause(s) a movement along the demand curve include(s):
             a.   increase in level of advertising
             b.   decrease in price of complementary goods
             c.   increase in consumer disposable income
             d.   decrease in price of the good demanded

An increase in the quantity demanded could be caused by:
             a.   an increase in the price of substitute goods
             b.   a decrease in the price of complementary goods
             c.   an increase in consumer income levels
             d.   all of the above
             e.   none of the above

If the cross price elasticity measured between items A and B is positive, the two products are referred to as:
             a.   complements
             b.   substitutes
             c.   inelastic as compared to each other
             d.   both b and c
             e.   a, b, and c

The flat-screen plasma TVs are selling extremely well.  The originators of this technology are earning higher profits.  What theory of profit best reflects the performance of the plasma screen makers?
risk-bearing theory of profit
dynamic equilibrium theory of profit
innovation theory of profit 
managerial efficiency theory of profit
stochastic optimization theory of profit

Economies of scale exist whenever long-run average costs:  
Increase as output is increased 
Remain constant as output is increased 
 Decrease as output is increased 
Decline and then rise as output is increased

When demand elasticity is ___________ in absolute value (or _________), an increase in price will result in a(n) __________ in total revenues.
             a.   less than 1; elastic; increase
             b.   more than 1; inelastic; decrease
             c.   less than 1; elastic; decrease
            d.         less than 1; inelastic; increase