Multiple choice questions T5

1. A firm's opportunity cost ___________________. 

a. Do not include implicit costs because implicit costs have no monetary value

b. Include explicit costs and implicit costs

c. Increase when economies of scope exist

d. Equal its explicit costs

2. Lucinda starts a business consulting company. She makes all the business decisions and bears the risk of running the business. Lucinda expects to receive _____________________.  

 a. Economic profit

b. Revenue greater than her opportunity cost

c. Revenue greater than the capital investment

d. Normal profit

 

3. Total revenue minus the sum of implicit and explicit costs is equal to _______ profit. 

a. Normal

b. Entrepreneurial

c. Opportunity

d. Economic

4. Emma owns a firm that produces raincoats. Currently, Emma produces 25 raincoats a day using the least amount of inputs. Emma is _______ efficient.

a. Economically

b. Technologically

c. Entrepreneurially

c. Consumer

5. _______ coordinate most of our economic activity because firms can _______.  

a. Markets and not firms; organise efficient team production

b. Markets; have a principal-agent problem

c. Firms and markets; reap economies of scale

d. Firms and not markets; organise efficient team production

6. The table shows some data that describes Terry's T-Shirts’ total product when Terry’s has 1 sewing machine. An increase in the number of workers from 1 to 2 a day increases average product of labour from ___________T-shirts per worker and marginal product of labour is _______T-shirts per additional worker.

Labour/worker per day	Output(T- Shirt/day)
0	0
1	8
2	18
3	26
4	32
5	36

a. 0 to 18; 18

b. 8 to 9; 10

c. 8 to 18; 9

d. 8 to 9; 1

7. When marginal product of labour is a maximum, average product of labour is _____________.  

a. Decreasing

b. A maximum

c. Increasing

d. Equal to marginal product

8. The table gives the cost of producing T-shirts. The total fixed cost is _____________ and the marginal cost of increasing production from 5 to 6 T-shirts is ______________.

Labour/worker per day	Total Cost	Total Variable cost
4	38	28
5	42	32
6	50	40

a. $5; $0

b. $15; $5

c. $10; $8

d. $18; $10

9. If total fixed cost increases, then the average total cost curve ___________ and the marginal cost curve _________________.

a. Does not shift; does not shift

b. Shifts upward; does not shift

c. Does not shift; shifts upward

d. Shifts upward; shifts upward

10. An increase in the quantity of fixed inputs shifts the average total cost curve___________ if _________________ exist.

a. Upward; constant returns to scale

b. Downward; diseconomies of scale

c. Downward; economies of scale

d. Upward; economies of scale

Answer rating: 100% (QA)

1 b is correct Include explicit costs and implicit costs opportunity cost inclu... View the full answer