Deck 4: Managing Costs

Question 1

Fixed costs never change.

Answer 1

False

Question 2

The total costs are made up of fixed costs plus _________ costs

Answer 2

variable

Question 3

The short run in economics is less than 5 years

Answer 3

False

Question 4

The difference between revenue and variable costs is a _____________ to fixed costs

Question 5

A profit is made when

A) Total contribution is greater than fixed costs
B) Total contribution is less than fixed costs
C) Total contribution is equal to variable costs
D) Total contribution is greater than variable costs.

Question 6

The level of output at which revenue equals total costs is known as the _______-______ output

Question 7

The shut-down point occurs when

A) Revenue equals fixed costs
B) Revenue equals total costs
C) Revenue equals variable costs
D) Revenue equals contribution

Question 8

Labour productivity measures ___________ per employee

Question 9

The extra output from employing another unit of a variable factor is known as the ________ product. Is it "total"? "marginal"? "average"?

Question 10

If marginal product is greater than average product then average product will fall.

Question 11

If marginal cost is greater than average cost then average costs fall.

Question 12

The marginal cost curve cuts the average cost at its minimum point.

Question 13

Economies of scale occur when total costs fall when output increase

Question 14

Natural monopolies occur when there are very high diseconomies of scale