Question 1

Economies of scope often occur because

Accepted Answer

A)  a production facility can be used to produce more than one product.
B)  it forces firms to search for economies of scale.
C)  it enhances the ability to find market niches.
D)  managers are able to multi-task in product markets

Question 2

Economies of scale can result from

Accepted Answer

A)  larger machines.
B)  specialization.
C)  large purchases.
D)  all of these choices.

Question 3

The change in total costs when output changes is called

Accepted Answer

A)  average variable costs.
B)  marginal product.
C)  average total cost.
D)  marginal cost. D

Question 4

If marginal costs are rising

Accepted Answer

A)  total fixed costs are falling
B)  average fixed costs are constant.
C)  average fixed costs are rising
D)  none of these choices. D

Question 5

Average total costs are defined as

Accepted Answer

A)  total costs divided by the change in output.
B)  total costs divided by output.
C)  the change in total costs when output changes.
D)  average variable costs plus marginal costs.

Question 6

The supply chain refers to

Accepted Answer

A)  the supply curve.
B)  the process of outsourcing.
C)  the process of downsizing.
D)  the process of creating and selling a product.

Question 7

To understand the process of adding value, managers must understand only the costs of production.

Accepted Answer

A) True 
 B)False

Question 8

If unit costs remain constant as the quantity of production increases and all inputs are variable, then a firm is experiencing

Accepted Answer

A)  constant returns to scale.
B)  economies of scale.
C)  diseconomies of scale.
D)  falling economies of scope.

Question 9

Costs are related to output because

Accepted Answer

A)  output is variable over the long run.
B)  inputs are related to output.
C)  some inputs are fixed.
D)  inputs must be paid their opportunity costs.

Question 10

If services are purchased from others that were once performed internally, then a firm has

Accepted Answer

A)  downsized.
B)  outsourced.
C)  reduced the economies of scope.
D)  experienced diseconomies of scale.

Question 11

Value can be added by outsourcing.

Accepted Answer

A) True 
 B)False

Question 12

When a firm divests itself of an unrelated business to focus on it core competency, the firm is

Accepted Answer

A)  using economies of scope to cut costs.
B)  downsizing.
C)  outsourcing.
D)  market sharing.

Question 13

The period of time over which all inputs are variable is the

Accepted Answer

A)  market horizon.
B)  short run.
C)  calendar year.
D)  long run.

Question 14

The shape of marginal cost is determined by

Accepted Answer

A)  the shape of average cost.
B)  the shape of marginal product.
C)  the shape of total variable cost.
D)  all of these choices.

Question 15

At first marginal product rises and then it falls.

Accepted Answer

A) True 
 B)False

Question 16

If marginal cost is rising

Accepted Answer

A)  marginal product in rising.
B)  marginal product is falling.
C)  average variable costs is equal to marginal cost.
D)  average variable cost is above average total cost.

Question 17

At the low point of the average total cost curve, marginal costs and average total costs are equal.

Accepted Answer

A) True 
 B)False

Question 18

If a firm is experiencing constant returns to scale, then the long-run average cost curve is

Accepted Answer

A)  falling.
B)  rising.
C)  horizontal.
D)  shifting C

Question 19

If average total cost is rising

Accepted Answer

A)  marginal cost is above average total cost.
B)  marginal cost is rising.
C)  marginal product is rising.
D)  marginal cost is above average total cost and is falling.

Question 20

Economies of scale are followed by diseconomies of scale.

Accepted Answer

A) True 
 B)False

Exam 13: Costs

Economies of scope often occur because

Correct AnswerverifiedShow Answer

Economies of scale can result from

Correct AnswerverifiedShow Answer

The change in total costs when output changes is called

Correct AnswerverifiedD

If marginal costs are rising

Correct AnswerverifiedD

Average total costs are defined as

Correct AnswerverifiedShow Answer

The supply chain refers to

Correct AnswerverifiedShow Answer

To understand the process of adding value, managers must understand only the costs of production.

Correct AnswerverifiedShow Answer

If unit costs remain constant as the quantity of production increases and all inputs are variable, then a firm is experiencing

Correct AnswerverifiedShow Answer

Costs are related to output because

Correct AnswerverifiedShow Answer

If services are purchased from others that were once performed internally, then a firm has

Correct AnswerverifiedShow Answer

Value can be added by outsourcing.

Correct AnswerverifiedShow Answer

When a firm divests itself of an unrelated business to focus on it core competency, the firm is

Correct AnswerverifiedShow Answer

The period of time over which all inputs are variable is the

Correct AnswerverifiedShow Answer

The shape of marginal cost is determined by

Correct AnswerverifiedShow Answer

At first marginal product rises and then it falls.

Correct AnswerverifiedShow Answer

If marginal cost is rising

Correct AnswerverifiedShow Answer

At the low point of the average total cost curve, marginal costs and average total costs are equal.

Correct AnswerverifiedShow Answer

If a firm is experiencing constant returns to scale, then the long-run average cost curve is

Correct AnswerverifiedC

If average total cost is rising

Correct AnswerverifiedShow Answer

Economies of scale are followed by diseconomies of scale.

Correct AnswerverifiedShow Answer

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D

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D

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C

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