Question 1

The degree of operating leverage can be described as a:

Accepted Answer

A) cost elasticity. 
B) return to scope economies. 
C) marginal profit. 
D) profit elasticity. 
A) cost elasticity. 
B) return to scope economies. 
C) marginal profit. 
D) profit elasticity. D

Question 2

When C > 1:

Accepted Answer

A) average cost is falling. 
B) increasing returns to scale are implied. 
C) decreasing returns to scale are implied. 
D) constant returns to scale are implied. 
A) average cost is falling. 
B) increasing returns to scale are implied. 
C) decreasing returns to scale are implied. 
D) constant returns to scale are implied. C

Question 3

In the long run, all costs are:

Accepted Answer

A) fixed. 
B) variable. 
C) sunk. 
D) none of these. 
A) fixed. 
B) variable. 
C) sunk. 
D) none of these. B

Question 4

If the slope of a long-run total cost function increases as output increases, the firm's underlying production function exhibits:

Accepted Answer

A) constant returns to scale. 
B) decreasing returns to scale. 
C) decreasing returns to a factor input. 
D) increasing returns to scale. 
A) constant returns to scale. 
B) decreasing returns to scale. 
C) decreasing returns to a factor input. 
D) increasing returns to scale.

Question 5

If marginal cost is less than average cost at all output levels:

Accepted Answer

A) marginal cost must be falling. 
B) average cost must be falling. 
C) average cost must be rising. 
D) none of these. 
A) marginal cost must be falling. 
B) average cost must be falling. 
C) average cost must be rising. 
D) none of these.

Question 6

Because dental customers must be willing to pay a price for dental gold that is competitive with the price paid by jewellery customers, the price of gold does not reflect the:

Accepted Answer

A) current cost concept. 
B) replacement cost concept. 
C) historical cost concept. 
D) opportunity cost concept. 
A) current cost concept. 
B) replacement cost concept. 
C) historical cost concept. 
D) opportunity cost concept.

Question 7

The cost of duplicating productive capability using current technology is called:

Accepted Answer

A) current cost. 
B) replacement cost. 
C) historical cost. 
D) opportunity cost. 
A) current cost. 
B) replacement cost. 
C) historical cost. 
D) opportunity cost.

Question 8

When knowledge gained from manufacturing experience is used to improve production methods, the resulting decline in average costs is reflected in:

Accepted Answer

A) a downward movement along the LRAC curve. 
B) an upward movement along the LRAC curve. 
C) a rightward (outward) shift in the LRAC curve. 
D) a leftward (inward) shift in the LRAC curve. 
A) a downward movement along the LRAC curve. 
B) an upward movement along the LRAC curve. 
C) a rightward (outward) shift in the LRAC curve. 
D) a leftward (inward) shift in the LRAC curve.

Question 9

Minimum efficient scale will decrease if:

Accepted Answer

A) fixed costs increase. 
B) transportation costs increase in relation to production costs. 
C) transportation costs decrease in relation to production costs. 
D) variable costs decrease. 
A) fixed costs increase. 
B) transportation costs increase in relation to production costs. 
C) transportation costs decrease in relation to production costs. 
D) variable costs decrease.

Question 10

Cash expenses include:

Accepted Answer

A) some explicit costs. 
B) all sunk costs. 
C) all incremental costs. 
D) some implicit costs. 
A) some explicit costs. 
B) all sunk costs. 
C) all incremental costs. 
D) some implicit costs.

The degree of operating leverage can be described as a:

When C > 1:

In the long run, all costs are:

If the slope of a long-run total cost function increases as output increases, the firm's underlying production function exhibits:

If marginal cost is less than average cost at all output levels:

Because dental customers must be willing to pay a price for dental gold that is competitive with the price paid by jewellery customers, the price of gold does not reflect the:

The cost of duplicating productive capability using current technology is called:

When knowledge gained from manufacturing experience is used to improve production methods, the resulting decline in average costs is reflected in:

Minimum efficient scale will decrease if:

Cash expenses include:

Nature and Scope of Managerial Economics

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters

Exam 8: Cost Analysis and Estimation

The degree of operating leverage can be described as a:

When C > 1:

In the long run, all costs are:

If the slope of a long-run total cost function increases as output increases, the firm's underlying production function exhibits:

If marginal cost is less than average cost at all output levels:

Because dental customers must be willing to pay a price for dental gold that is competitive with the price paid by jewellery customers, the price of gold does not reflect the:

The cost of duplicating productive capability using current technology is called:

When knowledge gained from manufacturing experience is used to improve production methods, the resulting decline in average costs is reflected in:

Minimum efficient scale will decrease if:

Cash expenses include:

Nature and Scope of Managerial Economics

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters