# 41) The method of estimating long-run costs in which knowledgeable professionals familiar with produ

41)

The method of estimating long-run costs in which knowledgeable professionals

familiar with

production

facilities and processes calculate optimal combination of inputs to produce

given

quantities

and then estimate costs is known as

A)

engineering cost estimating. B) the survivorship method.

C)

regression analysis. D) None of the above.

42)

When the survivorship method of cost estimating is used, an increase, over

time, in the

proportion

of industry product produced by medium size firms indicates the existence of

A)

continuing economies of scale.

B)

continuing diseconomies of to scale.

C)

a U-shaped long-run average cost curve.

D)

large technological changes.

43)

The major advantages of using cross-sectional analysis for long-run costs

studies include

A)

the inclusion in the sample of different plants of different sizes.

B)

the avoidance of having to adjust for inflationary trends.

C)

the avoidance of having to account for interregional cost differences.

D)

All of the above.

E)

A and B above.

44)

A short-run total cost function of the following form: TC = 100 + 32Q – 4Q2 +

0.4Q3, indicates the existence of

A)

a linear total cost curve. B) a constant average variable cost curve.

C)

a U-shaped average total cost curve. D) a constant marginal cost curve.

45)

Isoquants represent

A)

combinations of inputs that produce the same output.

B)

combinations of inputs that yield the greatest output.

C)

inputs that are perfect substitutes for each other.

D)

least costly combinations of inputs.

46)

Marginal rates of technical substitution (MRTS) represent

A)

the optimum combinations of inputs.

B)

cost minimizing combinations of inputs.

C)

the degree to which one input can replace another without output changing.

D)

All of the above.

47)

Isocost curves represent

A)

least cost combinations of inputs.

B)

combinations of inputs that can be purchased given their prices and the funds

available.

C)

a producers cost function.

D)

None of the above.

48)

Short-run cost functions are estimated using

A)

time-series regression analysis. B) cross-sectional regression analysis.

C)

nominal cost data. D) present value cost data.

49)

In estimating short-run cost functions, one must adjust for

A)

price level changes. B) accounting procedure changes.

C)

product heterogeneity. D) All of the above.

50)

Long-run cost functions are estimated using

A)

time-series regression analysis. B) cross-sectional regression analysis.

C)

cost accounting data. D) None of the above.

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