Question : 8.2   The Short Run and the Long Run in Economics 1) : 1245252

8.2   The Short Run and the Long Run in Economics

1) A characteristic of the long run is

A) there are fixed inputs.

B) all inputs can be varied.

C) plant capacity cannot be increased or decreased.

D) there are both fixed and variable inputs.

2) Which of the following is a factor of production that generally is fixed in the short run?

A) raw materials

B) labor

C) a factory building

D) water

3) Which of the following is an example of a long run adjustment?

A) Your university offers Saturday morning classes next fall.

B) Ford Motor Company lays off 2,000 assembly line workers.

C) A soybean farmer turns on the irrigation system after a month long dry spell.

D) Wal-Mart builds another Supercenter.

4) Which of the following is the best example of a short run adjustment?

A) A local bakery purchases another commercial oven as part of its capacity expansion.

B) Your local Wal-Mart hires two more associates.

C) Smith University completed negotiations to acquire a large piece of land to build its new library.

D) Toyota builds a new assembly plant in Texas.

5) If a producer is not able to expand its plant capacity immediately, it is

A) bankrupt.

B) operating in the long run.

C) operating in the short run.

D) losing money.

6) Which of the following is a fixed cost?

A) payment to hire a security worker to guard the gate to the factory around the clock

B) wages to hire assembly line workers

C) payments to an electric utility

D) costs of raw materials

7) Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication. Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year. The salaries and benefits of people in these job categories will be included in

A) fixed cost and marginal cost but not variable cost.

B) fixed cost but not variable cost and total cost.

C) marginal cost and total cost but not fixed cost.

D) fixed cost and total cost but not variable cost.

8) Economic costs of production differ from accounting costs in that

A) economic costs include expenditures for hired resources while accounting costs do not.

B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

C) accounting costs include expenditures for hired resources while economic costs do not.

D) accounting costs are always larger than economic cost.

9) Implicit costs can be defined as

A) accounting profit minus explicit cost.

B) the non-monetary opportunity cost of using the firm’s own resources.

C) the deferred cost of production.

D) total cost minus fixed costs.

10) Which of the following is an implicit cost of production?

A) interest paid on a loan to a bank

B) wages paid to labor plus the cost of carrying benefits for workers

C) the utility bill paid to water, electricity, and natural gas companies

D) rent that could have been earned on a building owned and used by the firm