Question 1

If a firm's production process exhibits diseconomies of scale for all levels of output,then the firm's long-run average cost curve will be:

Accepted Answer

A) horizontal. 
B) positively sloped. 
C) negatively sloped. 
D) U-shaped. 
A) horizontal. 
B) positively sloped. 
C) negatively sloped. 
D) U-shaped.

Question 2

The short run can be defined as any period of time:

Accepted Answer

A) less than one year. 
B) in which some inputs are fixed. 
C) in which all inputs are variable. 
D) in which price is fixed. 
A) less than one year. 
B) in which some inputs are fixed. 
C) in which all inputs are variable. 
D) in which price is fixed.

Question 3

-Refer to Figure 8.8.Curve 2 is Outdoor Equipment's:

Accepted Answer

A) marginal cost curve. 
B) average variable cost curve. 
C) average total cost curve. 
D) average fixed cost curve. 
A) marginal cost curve. 
B) average variable cost curve. 
C) average total cost curve. 
D) average fixed cost curve.

Question 4

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Accepted Answer

The vertical distanc

Question 5

Explain why the wind power have economies of scale.

Accepted Answer

The reason why is because a large wind t

Question 6

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

Accepted Answer

A) a 
B) b 
C) c 
D) e 
A) a 
B) b 
C) c 
D) e

Question 7

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Accepted Answer

A) True 
 B)False

Question 8

Table 8.4
-Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to:

Accepted Answer

A) $2. 
B) $3. 
C) $6. 
D) $50. 
A) $2. 
B) $3. 
C) $6. 
D) $50.

Question 9

If a firm's long-run average cost curve is horizontal the firm is experiencing economies of scale

Accepted Answer

A) True 
 B)False

Question 10

-Refer to Figure 8.2.The marginal product of the fifth worker is ________.

Accepted Answer

A) one 
B) five 
C) eight 
D) ten 
A) one 
B) five 
C) eight 
D) ten

Question 11

Suppose that at Jones & Smith Shoe Factory,the marginal cost of making a pair of shoes is $15 and average variable cost is $15.For the next pair of shoes produced marginal cost will be ________ $15 and average variable cost will be ________ $15.

Accepted Answer

A) greater than;less than 
B) less than;greater than 
C) less than;less than 
D) greater than;greater than 
A) greater than;less than 
B) less than;greater than 
C) less than;less than 
D) greater than;greater than

Question 12

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

Accepted Answer

A) True 
 B)False

Question 13

-Refer to Figure 8.3.Micro Oven's total fixed costs are:

Accepted Answer

A) $0. 
B) $200. 
C) $500. 
D) indeterminate from this information. 
A) $0. 
B) $200. 
C) $500. 
D) indeterminate from this information.

Question 14

Tom's landscaping service has only one variable input which is labor.Tom's landscaping service labor costs are $300 a day and Tom's landscaping service does 9 yards per day.To do 10 yards per day,Tom's landscaping service labor costs increase to $325 a day.The marginal cost of doing that 10th yard is:

Accepted Answer

A) $25. 
B) $32.5. 
C) $45. 
D) indeterminate from the information given. 
A) $25. 
B) $32.5. 
C) $45. 
D) indeterminate from the information given.

Question 15

A firm's accounting cost is always higher than its economic cost.

Accepted Answer

A) True 
 B)False

Question 16

Decreasing marginal product implies decreasing marginal costs.

Accepted Answer

A) True 
 B)False

Question 17

The opportunity cost of an entrepreneur's time is an explicit cost.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following industries is most likely to exhibit significant economies of scale?

Accepted Answer

A) home building 
B) vegetable farming 
C) motorcycle production 
D) electric power generation 
A) home building 
B) vegetable farming 
C) motorcycle production 
D) electric power generation

Question 19

Average variable cost and average total costs get closer together as output increases because:

Accepted Answer

A) diminishing returns set in. 
B) average fixed costs decrease as output increases. 
C) marginal costs decrease as output increases. 
D) economies of scale become apparent. 
A) diminishing returns set in. 
B) average fixed costs decrease as output increases. 
C) marginal costs decrease as output increases. 
D) economies of scale become apparent.

Question 20

Suppose that a donut bakery has $1,500 of variable costs and $2,500 of fixed costs when it produces 1000 donuts and sells them for $1 per donut.Average total cost is equal to:

Accepted Answer

A) $4. 
B) $25. 
C) $2. 
D) $1.5. 
A) $4. 
B) $25. 
C) $2. 
D) $1.5.

If a firm's production process exhibits diseconomies of scale for all levels of output,then the firm's long-run average cost curve will be:

The short run can be defined as any period of time:

-Refer to Figure 8.8.Curve 2 is Outdoor Equipment's:

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Explain why the wind power have economies of scale.

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Table 8.4 -Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to:

If a firm's long-run average cost curve is horizontal the firm is experiencing economies of scale

-Refer to Figure 8.2.The marginal product of the fifth worker is ________.

Suppose that at Jones & Smith Shoe Factory,the marginal cost of making a pair of shoes is $15 and average variable cost is $15.For the next pair of shoes produced marginal cost will be $15 and average variable cost will be $15.

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

-Refer to Figure 8.3.Micro Oven's total fixed costs are:

A firm's accounting cost is always higher than its economic cost.

Decreasing marginal product implies decreasing marginal costs.

The opportunity cost of an entrepreneur's time is an explicit cost.

Which of the following industries is most likely to exhibit significant economies of scale?

Average variable cost and average total costs get closer together as output increases because:

Suppose that a donut bakery has $1,500 of variable costs and $2,500 of fixed costs when it produces 1000 donuts and sells them for $1 per donut.Average total cost is equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 8: Production Technology and Cost

If a firm's production process exhibits diseconomies of scale for all levels of output,then the firm's long-run average cost curve will be:

The short run can be defined as any period of time:

-Refer to Figure 8.8.Curve 2 is Outdoor Equipment's:

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Explain why the wind power have economies of scale.

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Table 8.4 -Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to:

If a firm's long-run average cost curve is horizontal the firm is experiencing economies of scale

-Refer to Figure 8.2.The marginal product of the fifth worker is ________.

Suppose that at Jones & Smith Shoe Factory,the marginal cost of making a pair of shoes is $15 and average variable cost is $15.For the next pair of shoes produced marginal cost will be ________ $15 and average variable cost will be ________ $15.

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

-Refer to Figure 8.3.Micro Oven's total fixed costs are:

A firm's accounting cost is always higher than its economic cost.

Decreasing marginal product implies decreasing marginal costs.

The opportunity cost of an entrepreneur's time is an explicit cost.

Which of the following industries is most likely to exhibit significant economies of scale?

Average variable cost and average total costs get closer together as output increases because:

Suppose that a donut bakery has $1,500 of variable costs and $2,500 of fixed costs when it produces 1000 donuts and sells them for $1 per donut.Average total cost is equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Suppose that at Jones & Smith Shoe Factory,the marginal cost of making a pair of shoes is $15 and average variable cost is $15.For the next pair of shoes produced marginal cost will be $15 and average variable cost will be $15.