The value of the inputs owned and used by a firm is an explicit cost.
- a. True
b. False
The entrepreneur's opportunity cost is an implicit cost.
- a. True
b. False
Economic cost is generally lower than accounting cost.
- a. True
b. False
Accounting costs and explicit costs are the same.
- a. True
b. False
Sunk costs are not relevant to managerial decisions.
- a. True
b. False
In the short run, total cost is equal to zero when output is equal to zero.
- a. True
b. False
In the long run, total cost is equal to zero when output is equal to zero.
- a. True
b. False
Economic cost curves define the minimum economic costs of producing various levels of output.
- a. True
b. False
Total variable cost is equal to short-run total cost minus total fixed cost.
- a.
True
b. False
The average fixed cost curve is U-shaped.
- a. True
b. False
The law of diminishing returns is reflected in the downward-sloping portion of the short-run marginal cost curve.
- a. True
b. False
Average total cost is equal to marginal cost where marginal cost is at a minimum.
- a. True
b. False
If the long-run average cost curve slopes upward over some range of output, then the firm is experiencing increasing returns to scale over that range of output.
- a. True
b. False
The point of inflection of the short-run total variable cost function corresponds to the level of output where marginal cost is at a minimum.
- a. True
b. False
If marginal cost is greater than average total cost, then average total cost is rising.
- a. True
b. False
The vertical distance between the short-run average total and average variable cost curves is equal to marginal cost.
- a. True
b. False
The minimum short-run average total cost occurs at a level of output that is greater than that at which average variable cost is at a minimum.
- a. True
b. False
The slope of a ray drawn from the origin to any point on a total cost curve is equal to average total cost at that point.
- a. True
b. False
If a ray that is drawn from the origin to a point on a total cost curve is tangent to the total cost curve, then its slope is equal to the minimum average total cost of production.
- a. True
b. False
The point at which the marginal product of a variable input is at a maximum corresponds to the point at which marginal cost is at a maximum.
- a. True
b. False
The level of output at which the average product of a variable input is at a maximum corresponds to the level of output where short-run average total cost is at a minimum.
- a. True
b. False
All costs are variable costs in the long run.
- a. True
b. False
The long-run total cost curve is derived from the firm's expansion path.
- a. True
b. False
The long-run average cost curve is tangent to the lowest points on all possible short-run average total cost curves.
- a. True
b. False
Long-run average cost slopes downward over a range of output where a firm experiences decreasing returns to scale.
-
a. True
b. False
If long-run marginal cost is greater than long-run average cost, then the firm is experiencing decreasing returns to scale.
- a. True
b. False
Long-run marginal cost is equal to short-run marginal cost at the level of output where the corresponding short-run average total cost curve is tangent to the long-run average cost curve.
- a. True
b. False
Industries where the long-run average cost curve has a positive slope over a wide range of output are referred to as natural monopolies.
- a. True
b. False
Industries in which small and large firms coexist successfully have long-run average cost curves that are nearly horizontal. T
-
a. True
b. False
Firms that produce more than one type of product cannot benefit from economies of scope.
- a. True
b. False
Learning curves slope upward.
- a. True
b. False
If a learning curve is represented by C = aQ, then b > 0.
-
a. True
b. False
The brain drain refers to the emigration of highly skilled workers from their home countries.
- a. True
b. False
Cost-volume-profit analysis is used to determine the profit-maximizing level of output.
- a. True
b. False
The contribution margin per unit is equal to price minus short-run average variable cost.
- a. True
b. False
Breakeven output is equal to total fixed cost divided by the contribution margin per unit.
- a. True
b. False
The degree of operating leverage is equal to the ratio of the firm's total fixed cost to total variable cost.
- a.
True
b. False
An increase in operating leverage results from the substitution of fixed costs for variable costs.
- a. True
b. False
Economic theory suggests that a cubic function is an appropriate form for an empirical short-run total variable cost curve.
- a. True
b. False
The survival technique is used to estimate short-run total variable cost functions.
- a. True
b. False
Logistics is also referred to as supply chain management.
- a. True
b. False
Just-in-time inventory management and globalization have contributed to the emergence and growth of logistics.
- a.
True
b. False
Logistics refers to the rational assessment of supply and demand by consumers.
- a. True
b. False
While it may contribute to cost savings, logistics is not a source of competitive advantage.
- a. True
b. False
Logistics merges a firm’s design and manufacturing functions into a centrally managed unit.
- a. True
b. False