Question 1

Explain the difference between economies of scale and economies of scope.

Accepted Answer

Economies of scale occur when average to

Question 2

When comparing countries with big labor supplies like China to countries with relatively lower labor supplies like the United States and Canada, we would expect production in countries like China to be

Accepted Answer

A) labor intensive because of the relative abundance of labor. 
B) labor intensive because of the relatively high expense of labor. 
C) capital intensive because of the high value of capital. 
D) capital intensive because of the relative scarcity of labor. 
E) labor intensive because of traditional production practices. 
A) labor intensive because of the relative abundance of labor. 
B) labor intensive because of the relatively high expense of labor. 
C) capital intensive because of the high value of capital. 
D) capital intensive because of the relative scarcity of labor. 
E) labor intensive because of traditional production practices.

Question 3

Marginal product increases over some range because of specialization that takes place within a firm.

Accepted Answer

A) True 
 B)False

Question 4

The long-run average total cost curve is often bumpy because

Accepted Answer

A) capital can be varied only in tiny increments. 
B) capital can often be varied only in large increments. 
C) short-run average variable cost curves are bumpy. 
D) short-run average total cost curves are bumpy 
E) capital cannot be increased with labor at the same time. 
A) capital can be varied only in tiny increments. 
B) capital can often be varied only in large increments. 
C) short-run average variable cost curves are bumpy. 
D) short-run average total cost curves are bumpy 
E) capital cannot be increased with labor at the same time.

Question 5

If average variable cost is falling, then marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 6

A competitive firm should shut down when price is

Accepted Answer

A) below the minimum of AFC. 
B) equal to MC. 
C) below the minimum of AVC. 
D) above the AVC but below ATC. 
E) above ATC. 
A) below the minimum of AFC. 
B) equal to MC. 
C) below the minimum of AVC. 
D) above the AVC but below ATC. 
E) above ATC.

Question 7

Exhibit 8-1  
-Refer to Exhibit 8-1. At 70 units of output, fixed costs equal

Accepted Answer

A) $50. 
B) $100. 
C) $1,000. 
D) $3,500. 
E) $4,000. 
A) $50. 
B) $100. 
C) $1,000. 
D) $3,500. 
E) $4,000.

Question 8

The shapes of firms' cost curves are important because

Accepted Answer

A) they tell us whether a firm is profitable or not. 
B) they help us determine how much a firm will produce and even how it will produce it. 
C) cost curves tell us the profitability of the firm. 
D) cost curves give us an idea of what a firm's total revenues will be at different output levels 
E) they help us understand the market that the firm is in. 
A) they tell us whether a firm is profitable or not. 
B) they help us determine how much a firm will produce and even how it will produce it. 
C) cost curves tell us the profitability of the firm. 
D) cost curves give us an idea of what a firm's total revenues will be at different output levels 
E) they help us understand the market that the firm is in.

Question 9

Use the cost function information provided in the table below to answer the following questions.

Accepted Answer

The answer of Use the cost function information provided in...

Question 10

Suppose the wage rate is $20 and the price of capital is $100. Graph the isocost line for a firm with a total cost of $400. What happens to the isocost line if the price of capital goes up to $200? Graph this isocost line, assuming that the firm maintains a total cost of $400. What happens to production in this case?

Accepted Answer

The isocost line gets flatter when the p

Question 11

Explain why economies of scale occur.

Accepted Answer

Economies of scale occur when

Explain the difference between economies of scale and economies of scope.

When comparing countries with big labor supplies like China to countries with relatively lower labor supplies like the United States and Canada, we would expect production in countries like China to be

Marginal product increases over some range because of specialization that takes place within a firm.

The long-run average total cost curve is often bumpy because

If average variable cost is falling, then marginal cost must also be falling.

A competitive firm should shut down when price is

Exhibit 8-1 -Refer to Exhibit 8-1. At 70 units of output, fixed costs equal

The shapes of firms' cost curves are important because

Use the cost function information provided in the table below to answer the following questions.

Explain why economies of scale occur.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

Exam 8: Costs and the Changes at Firms Over Time

Explain the difference between economies of scale and economies of scope.

When comparing countries with big labor supplies like China to countries with relatively lower labor supplies like the United States and Canada, we would expect production in countries like China to be

Marginal product increases over some range because of specialization that takes place within a firm.

The long-run average total cost curve is often bumpy because

If average variable cost is falling, then marginal cost must also be falling.

A competitive firm should shut down when price is

Exhibit 8-1 -Refer to Exhibit 8-1. At 70 units of output, fixed costs equal

The shapes of firms' cost curves are important because

Use the cost function information provided in the table below to answer the following questions.

Explain why economies of scale occur.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters