Tackle the Test: Multiple-Choice Questions

1. Question

   In the long run,

   A.

   all inputs are variable.

   B.

   all inputs are fixed.

   C.

   some inputs are variable and others are fixed.

   D.

   a firm will go out of business.

   E.

   firms increase in size.

   In the long run,

2. Question

   Which of the following is always considered the long run?

   A.

   1 month

   B.

   1 year

   C.

   5 years

   D.

   10 years

   E.

   none of the above

   Which of the following is always considered the long run?

3. Question

   Which of the following statements is generally correct?

   
   

   
   

   1. The long-run average total cost curve is U-shaped.

      
      
   
   

   2. The short-run average total cost curve is U-shaped.

      
      
   
   

   3. Firms tend to experience economies of scale at low levels of production and diseconomies of scale at high levels of production.

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following statements is generally correct?

4. Question

   When making decisions, which of the following costs should be ignored?

   A.

   average costs

   B.

   total costs

   C.

   marginal costs

   D.

   sunk costs

   E.

   None of the above—no costs should be ignored.

   When making decisions, which of the following costs should be ignored?

5. Question

   Economies of scale will allow which of the following types of cities to lower their average total cost of clearing snow by investing in larger snow plow fleets? Cities with

   A.

   more people

   B.

   more existing snow plows

   C.

   less snowfall

   D.

   larger budgets

   E.

   more snowfall

   Economies of scale will allow which of the following types of cities to lower their average total cost of clearing snow by investing in larger snow plow fleets? Cities with