1) A firm will shut down in the short run if ?
a. fixed costs exceed revenues.
b. it is suffering a loss.
c. variable costs exceed revenues
d. total costs exceed revenues
2) A firm in perfectly competitive industry is producing 50 units, its profit-maximising quantity. Industry price is £2 and total fixed costs and total variable cost are £25 and £40 respectively. The firm’s economic profit is ?
3) The formula for average variable cost (AVC) is ?
4) A graph showing all the combinations capital and labor available for a given total cost is the ?
a. expenditure set
b. isocost line.
c. budget constraint
5) A graph showing all the combinations of capital and labor that can used to produce a given amount of output is ?
a. an indifference curves.
b. an isoquant.
c. an isocost line
d. a production functions
6) Suppose Handel’s Ice Cream experiences economies of scale up to a certain point and diseconomies of scale beyond that point. Its long-run average cost curve is most likely to be ?
a. downward sloping to the right
d. upward sloping to the right
7) If the total product of two workers is 80 and the total product of 3 workers is 90 then the average product of the third worker is ________ and the marginal product of the third worker is _________?
a. 160; 270
b. 10; 30
c. 10; 3.33
d. 30; 10
8) Diminishing marginal return implies ?
a. decreasing average fixed costs.
b. decreasing marginal costs.
c. decreasing average variable costs.
d. increasing marginal costs.
9) The costs that depend on output in the short run are ?
a. total fixed cost only.
b. total variable costs only.
c. both total variable costs and total costs.
d. total costs only
10) Which statement is False ?
a. Fixed costs are zero if the firms is producing nothing.
b. Fixed costs are the difference between total costs and total variable costs
c. There are no fixed costs in the long run
d. Fixed costs do not depend on the firm’s level of output