Economics: Microeconomic Analysis - Reading 17: Output and likely

mayanfang1

Q1. A firm realizes that it is producing more than the profit maximizing level of output and makes a short-run decision to decrease its output. Which of the firm’s cost measures is least likely to decrease as a result?

A)   Average variable cost.

B)   Marginal cost.

C)   Average fixed cost.

Q2. Which of the following two factors are most likely to be considered variable during the short run?

A)   Labor and raw materials.

B)   Labor and technology.

C)   Raw materials and technology.

Q3. The short run is best defined as:

A)   the period for which the quantities of all factors of production are fixed.

B)   the time frame within which working capital decisions cannot be altered.

C)   the period for which the quantities of some resource inputs are fixed.

Q4. Which of the following factors of production is least likely to be fixed in the short run?

A)   Technology.

B)   Plant size.

C)   Labor.

mayanfang1

答案和详解如下：

Q1. A firm realizes that it is producing more than the profit maximizing level of output and makes a short-run decision to decrease its output. Which of the firm’s cost measures is least likely to decrease as a result?

A)   Average variable cost.

B)   Marginal cost.

C)   Average fixed cost.

Correct answer is C)

A short-run decrease in output will cause a firm’s average fixed costs to increase because its fixed costs are spread over a smaller number of units. In terms of cost curves, average fixed cost never slopes upward, so a decrease in output never reduces average fixed costs. The average variable cost, average total cost, and marginal cost curves all have upward sloping components along which a lower level of output would result in a lower cost.

Q2. Which of the following two factors are most likely to be considered variable during the short run?

A)   Labor and raw materials.

B)   Labor and technology.

C)   Raw materials and technology.

Correct answer is A)

Of the sets of factors listed, the two that are typically considered variable in the short run are labor and raw materials.

Q3. The short run is best defined as:

A)   the period for which the quantities of all factors of production are fixed.

B)   the time frame within which working capital decisions cannot be altered.

C)   the period for which the quantities of some resource inputs are fixed.

Correct answer is C)

The short run is typically defined as the period for which the quantities of some, but not all, resources are fixed. Working capital is the difference between a firm’s current assets and current liabilities and consists of items (such as cash) that the firm can adjust in the short run.

Q4. Which of the following factors of production is least likely to be fixed in the short run?

A)   Technology.

B)   Plant size.

C)   Labor.

Correct answer is C)

Labor is typically assumed to be variable in the short run.

 

 

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