Upon graduating accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually. Refer to Scenario 7.6. Your annual operating profit is A) -$10,000. B) $40,000. C) $70,000. D) $80,000. The version of the law of diminishing returns that applies to production A) implies that as we add more workers our output decreases. B) applies only in the short run. C) is true only when all inputs are variable. D) applies in the short and long run.

Upon graduating accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually. Refer to Scenario 7.6. Your annual operating profit is A) -$10,000. B) $40,000. C) $70,000. D) $80,000. The version of the law of diminishing returns that applies to production A) implies that as we add more workers our output decreases. B) applies only in the short run. C) is true only when all inputs are variable. D) applies in the short and long run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting
firm of which you and your assistant are the only employees. To start the firm you passed on
a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last
year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your
assistant's salary is $30,000 annually.
Refer to Scenario 7.6. Your annual operating profit is
A) -$10,000.
B) S40,000.
C) S70,000.
D) $80,000.
The version of the law of diminishing returns that applies to production
A) implies that as we add more workers our output decreases.
B) applies only in the short run.
C) is true only when all inputs are variable.
D) applies in the short and long run.
If the marginal product of labor is less than the average product of labour, then the
A) marginal product must be increasing.
B) average product must be decreasing.
C) marginal product must be decreasing.
D) Both B and C
Diminishing marginal returns implies
A) decreasing average variable costs.
B) decreasing marginal costs.
C) increasing marginal costs.
D) decreasing average fixed costs.
In the short run, as output increases,
A) the difference between average total cost and average variable cost decreases.
B) the difference between total cost and average variable cost decreases.
C) marginal cost eventually decreases.
D) All of the above are correct.

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