A firm has fixed costs in the short run
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The value of the inputs owned and used by a firm is an explicit cost. Show
b. False The entrepreneur's opportunity cost is an implicit cost.
b. False Economic cost is generally lower than accounting cost.
b. False Accounting costs and explicit costs are the same.
b. False Sunk costs are not relevant to managerial decisions.
b. False In the short run, total cost is equal to zero when output is equal to zero.
b. False In the long run, total cost is equal to zero when output is equal to zero.
b. False Economic cost curves define the minimum economic costs of producing various levels of output.
b. False Total variable cost is equal to short-run total cost minus total fixed cost.
b. False The average fixed cost curve is U-shaped.
b. False The law of diminishing returns is reflected in the downward-sloping portion of the short-run marginal cost curve.
b. False Average total cost is equal to marginal cost where marginal cost is at a minimum.
b. False If the long-run average cost curve slopes upward over some range of output, then the firm is experiencing increasing returns to scale over that range of output.
b. False The point of inflection of the short-run total variable cost function corresponds to the level of output where marginal cost is at a minimum.
b. False If marginal cost is greater than average total cost, then average total cost is rising.
b. False The vertical distance between the short-run average total and average variable cost curves is equal to marginal cost.
b. False The minimum short-run average total cost occurs at a level of output that is greater than that at which average variable cost is at a minimum.
b. False The slope of a ray drawn from the origin to any point on a total cost curve is equal to average total cost at that point.
b. False If a ray that is drawn from the origin to a point on a total cost curve is tangent to the total cost curve, then its slope is equal to the minimum average total cost of production.
b. False The point at which the marginal product of a variable input is at a maximum corresponds to the point at which marginal cost is at a maximum.
b. False The level of output at which the average product of a variable input is at a maximum corresponds to the level of output where short-run average total cost is at a minimum.
b. False All costs are variable costs in the long run.
b. False The long-run total cost curve is derived from the firm's expansion path.
b. False The long-run average cost curve is tangent to the lowest points on all possible short-run average total cost curves.
b. False Long-run average cost slopes downward over a range of output where a firm experiences decreasing returns to scale.
b. False If long-run marginal cost is greater than long-run average cost, then the firm is experiencing decreasing returns to scale.
b. False Long-run marginal cost is equal to short-run marginal cost at the level of output where the corresponding short-run average total cost curve is tangent to the long-run average cost curve.
b. False Industries where the long-run average cost curve has a positive slope over a wide range of output are referred to as natural monopolies.
b. False Industries in which small and large firms coexist successfully have long-run average cost curves that are nearly horizontal. T
b. False Firms that produce more than one type of product cannot benefit from economies of scope.
b. False Learning curves slope upward.
b. False If a learning curve is represented by C = aQ, then b > 0.
b. False The brain drain refers to the emigration of highly skilled workers from their home countries.
b. False Cost-volume-profit analysis is used to determine the profit-maximizing level of output.
b. False The contribution margin per unit is equal to price minus short-run average variable cost.
b. False Breakeven output is equal to total fixed cost divided by the contribution margin per unit.
b. False The degree of operating leverage is equal to the ratio of the firm's total fixed cost to total variable cost.
b. False An increase in operating leverage results from the substitution of fixed costs for variable costs.
b. False Economic theory suggests that a cubic function is an appropriate form for an empirical short-run total variable cost curve.
b. False The survival technique is used to estimate short-run total variable cost functions.
b. False Logistics is also referred to as supply chain management.
b. False Just-in-time inventory management and globalization have contributed to the emergence and growth of logistics.
b. False Logistics refers to the rational assessment of supply and demand by consumers.
b. False While it may contribute to cost savings, logistics is not a source of competitive advantage.
b. False Logistics merges a firm’s design and manufacturing functions into a centrally managed unit.
b. False Does a firm have fixed costs in the short run?A key principle guiding the concept of the short run and the long run is that in the short run, firms face both variable and fixed costs, which means that output, wages, and prices do not have full freedom to reach a new equilibrium.
What are fixed costs in the short run?Fixed costs are expenditures that do not change regardless of the level of production, at least not in the short term. Whether you produce a lot or a little, the fixed costs are the same. One example is the rent on a factory or a retail space.
Why are there fixed costs in the short run?It is because, in the short run, fixed cost is paid regardless of the amount produced. A firm will only shut down production if the market price is lower than the minimum average variable cost of the product. Therefore, the shut-down price is equal to the minimum average variable cost.
Are fixed costs zero in the short run?In the short-run, the fixed costs are the same at all levels of output. It is the variable costs that increase with output. What also changes with the output are the different types of average costs being calculated.
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