Question Details

A cottage industry exists in the home-manufacture 



1.	Which of the following statements concerning the long-run average cost curve of economic theory is true?
a.	It is L-shaped
b.	It is -shaped	
c.	It is -shaped	
d.	It is -shaped
e.	It is M-shaped


	

	2.	Possible sources of economies of scale (size) within a production plant include:
a.	specialization in the use of capital and labor
b.	imperfections in the labor market
c.	transportation costs
d.	a and b
e.	a and c


	

	3.	The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
a.	transportation costs
b.	imperfections in the labor market
c.	imperfections in the capital markets
d.	problems of coordination and control encountered by management
e.	All of the above


	

	4.	The relevant cost in economic decision-making is the opportunity cost of the resources rather than the outlay of funds required to obtain the resources.
a.	true
b.	false


	

	
	5.	____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.
a.	Opportunity costs
b.	Marginal costs
c.	Relevant costs
d.	Sunk costs
e.	None of the above


	
6.	____ include the opportunity costs of time and capital that the entrepreneur has invested in the firm.
a.	Implicit costs
b.	Explicit costs
c.	a and b
d.	None of the above


	

 7.	A cottage industry exists in the home-manufacture of ‘country crafts’.  Especially treasured are handmade quilts.  If the fourth completed quilt took 30 hours to make, and the eighth quilt took 28 hours.   What is the percentage learning?   Hint:  Percentage learning = 100% - (c2/c1)•100%.
a.	5%
b.	6.7%
c.	10%
d.	100%
e.	122%


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