PreTest
1
Implicit and explicit costs are:
the same as fixed costs..
are not counted by accountants because they are not smart enough.
opportunity costs and actual payments.
on MTV everyday.
2
Total fixed cost refers to:
the cost of utilities.
the low salary of college professors.
the government buying new tanks to get rid of the bad guys.
a cost that doesn't change with production over a period of time.
3
Diminishing returns are:
lower and lower grades in our econ tests as the semester progresses.
the performance of an athlete after 45..
the reduction in production after a fixed input is beyond its capacity.
what happens after sleeping thru class.
4
Average Variable Costs:
start low, increase and then decrease again.
start high, decrease and start increasing again.
are considered irrelevant after a large volume of production.
refer to the costs of using software produced by Microsoft.
5
When it is drawn, what shape does the average total cost have?
downward sloping
upward sloping
U shape or smile shape
starts low, then goes high
6
When the average total cost is rising, the marginal cost must be
falling
below the average total cost
cost and variable cost.
above the average total cost
equal to the average total cost
7
Total Cost is obtained by adding:
adding marginal cost and variable cost.
total variable and marginal cost
total fixed and total variable cost
adding average fixed cost to marginal cost.
8
Marginal Costs:
start low, increase and then decrease again.
refer to the added cost of producing one more unit.
are considered irrelevant after a large volume of production.
refer to the costs of using software produced by Microsoft.
9
Average total cost is obtained by:
adding marginal cost and variable cost.
obtaining a pay raise to buy margaritas.
dividing total cost by the number of units.
adding average fixed cost to marginal cost.