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Question
1 of 30
A payment for the use of any resource over and above its opportunity cost is called
accounting profit.
economic profit.
normal cost.
economic rent.
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Question
2 of 30
An individual would willingly give a concert for $2,000. If she is paid $5,000 for the
concert, she is
receiving $3,000 to cover her opportunity cost.
not being paid her full opportunity cost.
receiving $3,000 of economic rent.
certainly being paid more than warranted by the level of demand.
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Question
3 of 30
Economic profit can be calculated as
total revenue - explicit costs.
total revenue - implicit costs.
total revenue - explicit costs - implicit costs.

total revenue - fixed costs.

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Question
4 of 30
In a partnership, legal responsibility for all debts is
shared by the partners.
passed to the shareholders.
paid by the principle owner.
handled by the bondholders.
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Question
5 of 30
Implicit costs are measured by
the value of the next-best alternative uses of inputs.
actual expenses paid by a firm.
total revenues minus total costs.
the lowest value of all alternative uses of inputs.
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Question
6 of 30
Interest is paid to
all holders of stock.
individuals who own gold.
owners of capital.
borrowers of funds.
0 out of 1

The correct answer is:

owners of capital.

Question
7 of 30
The greater is the risk of non-repayment of a loan, the
higher is the expected rate of interest.
longer is the expected time to repay the loan.
lower is the handling charges for the loan.
lower is the expected rate of interest.
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Question
8 of 30
Businesses demand funds because
they prefer earlier consumption to later consumption.
they have deficits to cover.
they prefer to purchase capital goods in the current year.
they make investments that they believe will increase productivity and profitability.
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Question
9 of 30
A share of stock in a corporation is
a guarantee to a fixed amount of income from the corporation.
a legal claim to a lump-sum payment at a specified point of time in the future.
a legal claim to a dividend, regardless of the corporation's ability to pay its interest
payments.
a legal claim to a share of the company's future profits.
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Question
10 of 30
A legal claim against a firm that usually entitles the owner of the claim to receive a fixed
annual coupon payment, plus a lump-sum payment at some future date, is known as
a bond.
a share of common stock.
a share of preferred stock.
a reinvestment coupon.
1 out of 1

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Question
11 of 30
The three primary sources of corporate funds are
banks, friends, and family.
government, other corporations, and the central bank.
investment banks, brokerages, and insurance companies.
stocks, bonds, and reinvestment of profits.
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Question
12 of 30
The theory that there is no predictable trends in securities prices is the
opportunity cost of capital.
random walk theory.
capital reinvestment.
present value.
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Question

13 of 30
Which of the following is a TRUE statement about stock markets?
Economists can make above-average profits in the stock market because of their
specialized knowledge of economics.
It is always better to buy growth stocks than the older and more stable blue-chip
stocks.
The stock market on average over time is random and totally unrelated to the
performance of the economy.
It is illegal for a friend of a corporate executive to make large profits in the stock
market by using his inside information.
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Question
14 of 30
Economists generally define the short run as being
that period of time in which at least one of the firm's inputs, usually plant size, is
fixed.
that period of time in which all inputs are variable.
any period of time less than one year.
any period of time less than six months.
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Question
15 of 30
Which of the following is TRUE about the long run?
All resources are variable.
All resources are fixed.
At least one resource is fixed.
None of the above.
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Question

16 of 30
Mr. James' company produces candy bars. Which is NOT a variable input for this firm?
Sugar
Assembly line workers
The big chocolate-stirring machines
Packaging materials
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Question
17 of 30
Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies
together, and three workers can produce 65 cookies together. What is the marginal
product of the 2nd worker?
15 cookies
20 cookies
30 cookies
35 cookies
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Question
18 of 30
The concept of the production function implies that a firm using resources inefficiently
will
obtain more output than the theoretical production function shows.
obtain exactly the amount that the theoretical production function shows.
not be subject to diminishing marginal product.
obtain less output than the theoretical production function shows.
0 out of 1

The correct answer is:

obtain less output than the theoretical production function shows.

Question

19 of 30
Average physical product is calculated by dividing total product by the
amount of variable and fixed inputs employed.
quantity of the variable input.
quantity of the fixed input.
production function.
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Question
20 of 30
The marginal productivity of labor will eventually decrease as more workers are
employed because
average product is increasing.
total product is decreasing.
the amount of capital will also be increasing.
on the average each worker will have fewer inputs to work with.
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Question
21 of 30
Suppose that a firm is currently producing 1,000 units of output. At this level of output,
AVC is $1 per unit, and TFC is $500. What is the firm's TC?
$1,500
$1,000
$501
$499
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Question
22 of 30

In economics, a fixed cost is a cost that

is present only in the short run.
goes up as the level of output goes up.
goes down as the level of output goes up.
does not vary with the level of output.
0 out of 1

The correct answer is:

does not vary with the level of output.

Question
23 of 30
At the output rate at which diminishing marginal product begins, a firm will experience
constant average total costs.
increasing average fixed costs.
increasing marginal costs.
decreasing average variable costs.
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Question
24 of 30
If the price of labor is constant and a firm experiences diminishing marginal product, then
its
marginal costs increase.
marginal costs decrease.
fixed costs increase.
total costs decrease.
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Question
25 of 30
In economics, the planning horizon is defined as

10 years for every firm.

the longest time period over which the firm can make decisions.
the period of time for which technology is fixed.
the long run, during which all inputs are variable.
1 out of 1

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Question
26 of 30
Which of the following is NOT one of the reasons a firm might be expected to experience
economies of scale?
specialization
the dimensional factor
improved productive equipment
depreciation
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Question
27 of 30
Due to extremely large fixed costs, an electricity generating plant probably experiences
which of the following returns to size?
diseconomies of scale
diminishing marginal product
constant returns to scale
economies of scale
0 out of 1

The correct answer is:

economies of scale

Question
28 of 30
If a firm gets so large that management of employees and other resources becomes a
costly problem, it will be experiencing

diseconomies of scale.
diminishing marginal product.
constant returns to scale.
economies of scale.
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Question
29 of 30
Minimum efficient scale is defined as
the lowest output level at which long-run average costs are at their minimum.
the amount of labor that maximizes the marginal product of labor.
the point at which marginal cost, average variable cost, and average fixed cost are
all equal.
the point at which economies of scale are at their maximum.
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Question
30 of 30

Refer to the above figure. The curve reflects

the law of diminishing marginal product in labor.
the law of increasing marginal product in labor.
the law of diminishing marginal product in capital.
the law of increasing marginal product in capital.
1 out of 1

Correct!!