A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest per year. What is the firm's economic profit?
zero
The units of variable input in a production process are 1, 2, 3, 4, and 5, and the corresponding total outputs are 30, 34, 37, 39, and 40, respectively. What is the marginal product of the fourth unit?
2
The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of
diminishing returns
Which of the following is true if the total variable cost curve is rising?
marginal cost is increasing
If the minimum points of all possible short-run average total cost curves become successively lower as quantity of output increases,
there are economies of scale
A young chef is considering opening his own sushi bar. To do so he would have to quit his current job, which pays $20,000 a hear, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi b
$52,000
An economist left her $100,000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $150,000. She made an
economic loss
Which of the following best describes total fixed costs?
costs that do not vary as output varies
A farm can produce 10,000 bushels of wheat per year with five workers and 13,000 bushels with six workers. What is the marginal product of the sixth worker for this farm?
3,000 bushels
The law of diminishing returns applies to which of the following segments of the marginal product of labor curve?
the downward-sloping segment only
Which of the following is true at the point where diminishing returns set in?
the marginal product is at a maximum
In the long run, total fixed cost
does not exist
Which of the following is considered a fixed cost of operating an automobile?
registration fees
Which of the following is an example of a fixed cost for a fishing company?
the monthly loan payment on the boat
The decreasing portion of a firm's long-run average cost curve is attribuatble to
economies of scale
Diseconomies of scale exist over the range of output for which of the long-run average cost curve is
rising
Assume both the marginal cost and average variable cost curves are U-shaped. At the minimum point on the AVC curve, marginal cost must be
equal to the average variable cost