Chapter 13—Costs Key
1. The CEO of British Petroleum decided that the company needed to add a goal to its worldwide operations.
2. In large companies it is often the case that
3. Costs are related to output because
4. When variable inputs are added to a fixed input
5. The period of time over which all inputs are variable is the
6. The period of time over which there is at least one fixed input is the
7. The law of diminishing marginal returns is seen in the
8. According to the book, which air bag adds the most safety to passengers?
9. The law of marginal diminishing returns
10. After the point of diminishing marginal returns
11. Average total costs are defined as
12. The change in total costs when output changes is called
13. If average total cost is rising
14. If marginal cost is rising
15. Which of the following pair of terms is similar?
16. If marginal costs are rising
17. Average fixed costs
18. Average variable costs
19. Marginal cost
20. The shape of the costs curves may be traced back to
21. The long run is often referred to as the
22. According to the book, Akio Morita (the founder of Sony) drew a long-run average cost curve that was
23. In a sense, the long-run average cost curve is holding
24. When the capital (a fixed input) changes
25. In the long run, a firm can choose
26. If unit costs decrease as the quantity of production increases and all inputs are variable, then a firm is
experiencing
27. If unit costs increase as the quantity of production increases and all inputs are variable, then a firm is
experiencing
28. If unit costs remain constant as the quantity of production increases and all inputs are variable, then a firm is
experiencing
29. If a firm is experiencing economies of scale, then the long-run average cost curve is
30. If a firm is experiencing diseconomies of scale, then the long-run average cost curve is
31. If a firm is experiencing constant returns to scale, then the long-run average cost curve is
32. A U-shaped long-run average cost curve indicates that
33. Economies of scale can result from
34. How large a firm becomes is determined by
35. In the case where a firm gains an advantage from producing more than one product, it is experiencing
36. Economies of scope often occur because
37. Economies of scale are often confused with
38. The shape of an experience curve suggests that
39. When a firm divests itself of an unrelated business to focus on it core competency, the firm is
40. If services are purchased from others that were once performed internally, then a firm has
41. Retail is
42. The supply chain refers to
43. The shape of marginal cost is determined by
44. Marginal product of labor
45. Marginal product of capital
46. To understand the process of adding value, managers must understand only the costs of production.
47. The law of diminishing marginal returns describes changes in output when inputs change.
48. At first marginal product rises and then it falls.
49. If marginal product rises, then marginal costs rise.
50. If average variable costs fall, marginal costs must be less than average variable costs.
51. Fixed costs and overhead are identical.
52. The change in fixed costs over the short run is seen in the behavior of marginal costs.
53. At the low point of the average total cost curve, marginal costs and average total costs are equal.
54. The long-run and the planning horizon are synonymous.
55. If long-run average costs are falling, then the firm is experiencing diseconomies of scale.
56. Economies of scale are followed by diseconomies of scale.
57. Larger is always better.
58. Economies of scope is when a firm obtains a production advantage from producing more than one product.
59. Downsizing may result in an increase in accounting costs.
60. Value can be added by outsourcing.