Answer all questions

Question 11

1. 11) How do fixed and variable inputs and costs differ?
4. a. the amount of a fixed input can change in the short run and so can its cost
7. b. the amount of a variable input can change in the short run and so can its cost
10. c. the amount of a variable input cannot be changed in the short run and thus its cost cannot either
13. d. the amount of a fixed input cannot be changed in the short run but its cost can

3 points

Question 12

1. 12) If a firm's total revenue equals its total costs:
4. a. it breaks even (zero economic profit) or incurs a normal profit
7. b, it incurs an abnormal or economic profit
10. c. it incurs an economic loss that is below a normal profit
13. d. it will leave the industry

3 points

Question 13

1. 13) If the marginal product of an additional unit of a variable input is greater than its marginal cost:
4. a. the firm's abnormal or economic profit decreases
7. b. the firm's abnormal or economic profit increases
10. c. the firm's abnormal or economic profit stays the same
13. d. that unit of the variable input would not be hired

3 points

Question 14

1. 14) If the marginal cost of a variable input is greater than the average cost of all the previous units of a firm's variable inputs, then its average variable costs:
4. a. increase
7. b. decrease
10. c. stay the same
13. d. decrease more than they increase

3 points

Question 15

15) Economies of scale occur when as a firm increases output:

a. its total costs increase

b. its total costs decrease

c its total costs remain the same

d. its total costs increase more than they decrease