Question Details

Which of the following statements about cost functions is true 


1.		What method of inventory valuation should be used for economic decision-making problems?
a.	book value
b.	original cost
c.	current replacement cost
d.	cost or market, whichever is lower
e.	historical cost


	

	2.	According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
a.	decreasing returns and declining average and marginal costs
b.	increasing returns and declining average and marginal costs
c.	increasing returns and increasing average and marginal costs
d.	decreasing returns and increasing average and marginal costs
e.	none of the above


	

	3.	For a short-run cost function which of the following statements is (are) not true?
a.	The average fixed cost function is monotonically decreasing.
b.	The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
c.	The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.
d.	The marginal cost function intersects the average total cost function where the average total cost function is a minimum.
e.	b and c


	

	4.	The cost function is:
a.	a means for expressing output as a function of cost
b.	a schedule or mathematical relationship showing the total cost of producing various quantities of output
c.	similar to a profit and loss statement
d.	incapable in being developed from statistical regression analysis
e.	none of the above


	
	5.	Which of the following statements about cost functions is true?
a.	Variable costs will always increase in direct proportion to the quantity of output produced.
b.	The less capital equipment employed in the production process relative to labor and other inputs, the longer will be the period of time required to increase significantly the scale of operation.
c.	The shape of the firm's long-run cost function is important in decisions to expand the scale of operations.
d.	none of the above



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