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You are watching: Which of the following statements best describes the economic short run?

Answer-1 The correct option is c.) It is a period during which at least one of the firm's input is fixed. It describes the time period within which atleast one of the input i…View the full answer
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Transcribed image text: Multiple Choice Questions 1. Which of the following statements best describes the economic short run? a. It is a period during which firms are free to vary all of their inputs. b. It is a period during which fixed inputs become variable inputs because of depreciation. c. It is a period during which at least one of the firm's inputs is fixed. d. It is a period of one year or less. 2. The long run is a time period that is: a. five years or longer. b. long enough to change the amount of labor employed. c. long enough to change the size of the firm's plant and all other inputs. d. long enough to change the amount of labor employed but not to change the size of the plant. 3. Which of the following statements is false? a. In the short run: total cost = fixed cost + variable cost. b. In the long run there are no fixed costs. C. An explicit cost is a nonmonetary opportunity cost. d. Variable costs are costs that change as output changes. 4. The marginal product of labor is defined as: a. the additional sales revenue that results when one more worker is hired. b. the cost of hiring one more worker. c. the additional number of workers required to produce one more unit of output. d. the additional output that results when one more worker is hired, holding all other resources constant. 5. The law of diminishing marginal returns states: a. that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. b. that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. c. average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. d. that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. Total product (meals per hour) 24 20 TP 16 12 8 0 2 3 4 5 Quantity of labor (workers) Figure A 6. Figure A shows the total product curve for the Salad Bowl food truck. When labor increases from 1 worker to 2 workers, total product increases to meals and marginal product equals bowls. a. 10; 5 b. 5; 10 c. 2; 2 d. 2:5 7. Figure A shows the total product curve for the Salad Bowl food truck. As the food truck hires workers, the marginal product(s) a. up to 3; are increasing b. up to 3, are decreasing c. between 3 and 5; are increasing d. over 4; are greater than the average product Quantity of Labor (workers) Total Product (units per hour) 0 0 1 2 3 4 5 6 2| 5 | 9 15 18 17 8. The table above shows the total product schedule for The X Firm. Increasing marginal returns occur until the worker because a. 4th; the marginal product of the 4th worker exceeds the 3rd worker, but not the 5th worker b. 5th; output is maximized c. 5th; output declines with the 6th worker d. 3rd; the average product of labor is also increasing 9. The table above shows the total product schedule for The X Firm. The average product of labor is maximized at workers because a. 4; productivity is maximized when the 4th worker is employed b. 3; output starts to decrease with the 4th worker c. 5; output is maximized with the 5th worker d. 4; the marginal product of labor is increasing with the 4th worker 10. Marginal cost is equal to the a. change in total cost divided by the change in output. . change in total product divided by the change in output. C. change in average product divided by the change in output. d. change in average total costs divided by the change in output. 11. Which of the following costs will not change as output changes? a. average fixed cost b. marginal cost C. average variable cost d. total fixed cost Cost (dollars per gallon) 12+ 107 A 0 ; 8 9 10 Output (gallons per hour) The figure above shows some of a firm's cost curves. 12. Based on the figure above, curve A is the firm's: a marginal cost curve. b. total cost curve. c. average total cost curve. d. average variable cost curve. e. average fixed cost curve. 13. Based on the figure above, curve B is the firm's: a. marginal cost curve. b. total cost curve. c. average total cost curve. d. average variable cost curve. e. average fixed cost curve. 14. Based on the figure above, curve C is the firm's: a. marginal cost curve. b. total cost curve. c. average total cost curve. d. average variable cost curve. e. average fixed cost curve. 15. Based on the figure above, curve D is the firm's: a. marginal cost curve. b. total cost curve. c. average total cost curve. d. average variable cost curve. e. average fixed cost curve. 16. In the long run: a. total costs equal variable costs. b. there are no fixed costs. c. all inputs in production are variable. d. All of these options are correct. 17. Which of the following statements is TRUE? a. In the long run, the average cost curve is always downward sloping. b. In the long run, the quantities of all inputs are fixed. C. In the long run, the firm's fixed costs are greater than its variable costs. d. In the long run, all costs are variable costs. 18. The main source of economies of scale is: a. reductions in the price of factors of production. b. greater specialization of both labor and capital. c. increasing average costs. d. decreasing marginal product. 19. In the long run, if 1,000 units are produced at a cost of $8,000 and 1.200 units at a cost of $9,200, then over this range of output there are: a. constant economies of scale. b. constant returns to scale. c. diseconomies of scale. d. economies of scale. 20. Which of the following is a reason why a firm would experience diseconomies of scale? a. As the size of the firm increases, it must operate in other countries where differences in language, customs, and laws increase its average costs. 6. As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. C. As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. d. To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. 21. What does the long-run average cost curve show? a. the interaction between average fixed cost and marginal cost b. the lowest average cost to produce each output level in the long run c. the distinction between long-run fixed and long-run variable costs d. Answers A, B, and C are correct.