Question 1

The long-run average total cost curve is constructed from the

Accepted Answer

A) Minimum points of the short-run marginal cost curves. 
B) Minimum points of the short-run average variable cost curves. 
C) Lowest average total cost for producing each level of output. 
D) Minimum points of the long-run marginal cost curves. 
A) Minimum points of the short-run marginal cost curves. 
B) Minimum points of the short-run average variable cost curves. 
C) Lowest average total cost for producing each level of output. 
D) Minimum points of the long-run marginal cost curves.

Question 2

Explicit costs

Accepted Answer

A) Include only payments to labor. 
B) Are the dollar payments made for the use of resources. 
C) Include the market value of all resources used to produce a good. 
D) Are the total value of resources used to produce a good but for which no monetary payment is made. 
A) Include only payments to labor. 
B) Are the dollar payments made for the use of resources. 
C) Include the market value of all resources used to produce a good. 
D) Are the total value of resources used to produce a good but for which no monetary payment is made.

Question 3

Economic cost

Accepted Answer

A) Includes both implicit and explicit costs. 
B) Is the sum of actual monetary payments made for resources used to produce a good. 
C) Includes only implicit costs. 
D) Decreases as the level of production increases. 
A) Includes both implicit and explicit costs. 
B) Is the sum of actual monetary payments made for resources used to produce a good. 
C) Includes only implicit costs. 
D) Decreases as the level of production increases.

Question 4

Refer to Table 21.3 below: Table 21.3
$$\begin{array} { | c | r | r | } 
\hline \text { Units of Lubor } & \text { Units of Output } & \text { MPP } \
\hline 0 &0& \
\hline 1 & &30 \
\hline 2 & 66& \
\hline 3 &&30 \
\hline 4 & 116 \
\hline
\end{array}$$ What is the marginal physical product of the second unit of labor in Table 21.3?

Accepted Answer

A) 66. 
B) 36. 
C) 33. 
D) 18. 
A) 66. 
B) 36. 
C) 33. 
D) 18.

Question 5

The marginal physical product of labor in Figure 21.1 is negative for the

Accepted Answer

A) Third worker. 
B) Fourth worker. 
C) Fifth worker. 
D) Sixth worker. 
A) Third worker. 
B) Fourth worker. 
C) Fifth worker. 
D) Sixth worker.

Question 6

The marginal cost curve intersects the minimum of the average total cost curve and also the minimum of the average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 7

In the short run,when a firm produces zero output,total cost equals

Accepted Answer

A) Zero. 
B) Variable costs. 
C) Fixed costs. 
D) Marginal costs. 
A) Zero. 
B) Variable costs. 
C) Fixed costs. 
D) Marginal costs.

Question 8

Better management shifts the production function downward and the total cost curve upward.

Accepted Answer

A) True 
 B)False

Question 9

Table 21.4 $\begin{array}{|c|r|}
\hline \text { Output (Units per Day) } & \text { Total Cost (Dollars per Day) } \
\hline 0 & 16 \
\hline 1 & 30 \
\hline 2 & 42 \
\hline 3 & 58 \
\hline 4 & 78 \
\hline
\end{array}$
 At 3 units of output in Table 21.4,average fixed costs are

Accepted Answer

A) $16.00. 
B) $19.50. 
C) $5.33. 
D) $15.50. 
A) $16.00. 
B) $19.50. 
C) $5.33. 
D) $15.50.

Question 10

Refer to Table 21.3 below: Table 21.3
$$\begin{array} { | c | r | r | } 
\hline \text { Units of Lubor } & \text { Units of Output } & \text { MPP } \
\hline 0 &0& \
\hline 1 & &30 \
\hline 2 & 66& \
\hline 3 &&30 \
\hline 4 & 116 \
\hline
\end{array}$$
 What is the unit labor cost in Table 21.3 for the second unit of labor if the MPP represents daily output and the wage rate is $72 per day?

Accepted Answer

A) $0.50 per unit of output. 
B) $2.00 per unit of output. 
C) $36.00 per unit of output. 
D) $72.00 per unit of output. 
A) $0.50 per unit of output. 
B) $2.00 per unit of output. 
C) $36.00 per unit of output. 
D) $72.00 per unit of output.

Question 11

Table 21.1 $$\begin{array} { | c | r | } 
\hline \text { Units of Labor } & \text { Units of Output } \
\hline 0 & 0 \
\hline 1 & 15 \
\hline 2 & 35 \
\hline 3 & 45 \
\hline 4 & 52 \
\hline
\end{array}$$ With which unit of labor do diminishing marginal returns first appear in Table 21.1?

Accepted Answer

A) The first. 
B) The second. 
C) The third. 
D) The fourth. 
A) The first. 
B) The second. 
C) The third. 
D) The fourth.

Question 12

Technological changes that increase productivity shift the

Accepted Answer

A) Production function downward. 
B) Average total cost curve downward. 
C) Marginal cost curve upward. 
D) Marginal physical product curve downward. 
A) Production function downward. 
B) Average total cost curve downward. 
C) Marginal cost curve upward. 
D) Marginal physical product curve downward.

Question 13

The most desirable rate of output for a firm is the output that

Accepted Answer

A) Minimizes total costs. 
B) Maximizes total profit. 
C) Minimizes marginal costs. 
D) Maximizes total revenue. 
A) Minimizes total costs. 
B) Maximizes total profit. 
C) Minimizes marginal costs. 
D) Maximizes total revenue.

Question 14

Refer to Figure 21.5.Economies of scale occur in the following range of factory sizes

Accepted Answer

A) #1 to #2. 
B) #1 through #3. 
C) #3 only. 
D) #1 through #5. 
A) #1 to #2. 
B) #1 through #3. 
C) #3 only. 
D) #1 through #5.

Question 15

Table 21.1 $\begin{array} { | c | r | } 
\hline \text { Units of Labor } & \text { Units of Output } \
\hline 0 & 0 \
\hline 1 & 15 \
\hline 2 & 35 \
\hline 3 & 45 \
\hline 4 & 52 \
\hline
\end{array}$ What is the marginal physical product of the second unit of labor in Table 21.1?

Accepted Answer

A) 20. 
B) 17. 
C) 35. 
D) 5. 
A) 20. 
B) 17. 
C) 35. 
D) 5.

Question 16

More education and better technology contribute to an increase in productivity,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 17

The productivity of any input is independent and is not affected by the other resources that are used.

Accepted Answer

A) True 
 B)False

Question 18

What is the total variable cost when output is 100 units in Figure 21.2?

Accepted Answer

A) $9,600. 
B) $296. 
C) $200. 
D) $20,000. 
A) $9,600. 
B) $296. 
C) $200. 
D) $20,000.

Question 19

In Figure 21.4,a firm that produces between 600 and 800 units per period should choose a plant with a short-run average total cost function of

Accepted Answer

A) ATC2 only. 
B) ATC1 only. 
C) ATC3 only. 
D) ATC2 or ATC3. 
A) ATC2 only. 
B) ATC1 only. 
C) ATC3 only. 
D) ATC2 or ATC3.

Question 20

Table 21.2 $\begin{array}{|l|r|r|r|r|}
\hline \text { Output (units per day) } & 0 & 10 & 20 & 30 \
\hline \text { Total cost (dollars per day) } & \$ 40 & \$ 54 & \$ 62 & \$ 80\
\hline
\end{array}$

Above 10 units of output,the average fixed cost in Table 21.2

Accepted Answer

A) Rises above $2.00. 
B) Remains constant. 
C) Stays below $0.50. 
D) Continues to decline. 
A) Rises above $2.00. 
B) Remains constant. 
C) Stays below $0.50. 
D) Continues to decline.

Exam 21: The Costs of Production

The long-run average total cost curve is constructed from the

Explicit costs

Economic cost

Refer to Table 21.3 below: Table 21.3 Units of Lubor Units of Output MPP 0 0 1 30 2 66 3 30 4 116 What is the marginal physical product of the second unit of labor in Table 21.3?

The marginal physical product of labor in Figure 21.1 is negative for the

The marginal cost curve intersects the minimum of the average total cost curve and also the minimum of the average variable cost curve.

In the short run,when a firm produces zero output,total cost equals

Better management shifts the production function downward and the total cost curve upward.

Table 21.4 Output (Units per Day) Total Cost (Dollars per Day) 0 16 1 30 2 42 3 58 4 78 At 3 units of output in Table 21.4,average fixed costs are

Refer to Table 21.3 below: Table 21.3 Units of Lubor Units of Output MPP 0 0 1 30 2 66 3 30 4 116 What is the unit labor cost in Table 21.3 for the second unit of labor if the MPP represents daily output and the wage rate is $72 per day?

Table 21.1 Units of Labor Units of Output 0 0 1 15 2 35 3 45 4 52 With which unit of labor do diminishing marginal returns first appear in Table 21.1?

Technological changes that increase productivity shift the

The most desirable rate of output for a firm is the output that

Refer to Figure 21.5.Economies of scale occur in the following range of factory sizes

Table 21.1 Units of Labor Units of Output 0 0 1 15 2 35 3 45 4 52 What is the marginal physical product of the second unit of labor in Table 21.1?

More education and better technology contribute to an increase in productivity,ceteris paribus.

The productivity of any input is independent and is not affected by the other resources that are used.

What is the total variable cost when output is 100 units in Figure 21.2?

In Figure 21.4,a firm that produces between 600 and 800 units per period should choose a plant with a short-run average total cost function of

Table 21.2 Output (units per day) 0 10 20 30 Total cost (dollars per day) \ 40 \ 54 \ 62 \ 80 Above 10 units of output,the average fixed cost in Table 21.2

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