ECO 550 Final Guide (All Possible Questions)
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Chapter 9—Applications of Cost Theory
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
4. Break-even analysis usually assumes all of the following except:
5. What is another term meaning the degree of operating leverage?
6. In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:
7. George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
8. In determining the shape of the cost-output relationship only ____ depreciation is relevant.
9. Which of the following is not a limitation of the survivor technique for measuring the optimum size of firms within an industry?
10. The primary disadvantage of engineering methods for measuring cost functions is that they deal with the managerial and entrepreneurial aspects of the production process or plant.
11. A linear total cost function implies that:
12. A ____ total cost function implies that marginal costs ____ as output is increased.
13. A ____ total cost function implies that marginal costs ____ as output is increased.
14. A ____ total cost function yields a U-shaped average total cost function.
15. In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
16. Which of the following is not an assumption of the linear breakeven model:
17. In the linear breakeven model, the breakeven sales volume (in dollars) is...