Question 1

If the marginal physical product (MPP)is falling,then the

Accepted Answer

A) Marginal cost of each unit of output is falling. 
B) Marginal cost of each unit of output is rising. 
C) Total cost of each unit of output is falling. 
D) Total cost of each unit of output is rising. 
A) Marginal cost of each unit of output is falling. 
B) Marginal cost of each unit of output is rising. 
C) Total cost of each unit of output is falling. 
D) Total cost of each unit of output is rising.

Question 2

Refer to Table 21.5: Table 21.5
$\begin{array} { | c | c | c | c | c | c | } 
\hline \mathrm { Q } & \mathrm { TFC } & \mathrm { TVC } & \mathrm { TC } & \text { AVC } & \text { MC } \
\hline 0 & & & 15 & - & - \
\hline 1 & & & 23 & & \
\hline 2 & & & & & 4 \
\hline 3 & & 15 & & & \
\hline
\end{array}$ The marginal cost of the third unit of output in Table 21.5 is

Accepted Answer

A) $4. 
B) $3. 
C) $30. 
D) $15. 
A) $4. 
B) $3. 
C) $30. 
D) $15.

Question 3

Accounting costs and economic costs differ because

Accepted Answer

A) Economic costs include implicit costs and accounting costs do not. 
B) Accounting costs include implicit costs and economic costs do not. 
C) Economic costs include explicit costs and accounting costs do not. 
D) Accounting costs include explicit costs and economic costs do not. 
A) Economic costs include implicit costs and accounting costs do not. 
B) Accounting costs include implicit costs and economic costs do not. 
C) Economic costs include explicit costs and accounting costs do not. 
D) Accounting costs include explicit costs and economic costs do not.

Question 4

The law of diminishing returns indicates that the marginal physical product of a variable input declines as more of it is employed,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 5

Unit labor cost is equal to the

Accepted Answer

A) Wage rate. 
B) Wage rate divided by MPP. 
C) The change in labor cost divided by the change in output. 
D) Marginal cost. 
A) Wage rate. 
B) Wage rate divided by MPP. 
C) The change in labor cost divided by the change in output. 
D) Marginal cost.

Question 6

If the marginal cost curve is rising,which of the following must be true?

Accepted Answer

A) The average total cost curve must be rising. 
B) The average total cost curve must be below the marginal cost curve. 
C) The average total cost curve must be above the marginal cost curve. 
D) Total costs must be rising. 
A) The average total cost curve must be rising. 
B) The average total cost curve must be below the marginal cost curve. 
C) The average total cost curve must be above the marginal cost curve. 
D) Total costs must be rising.

Question 7

The marginal physical product is the

Accepted Answer

A) Change in total input required to produce one additional unit of output. 
B) Change in total output associated with one additional unit of input. 
C) Number of units of output obtained from all units of input employed. 
D) Additional cost of an additional unit of output. 
A) Change in total input required to produce one additional unit of output. 
B) Change in total output associated with one additional unit of input. 
C) Number of units of output obtained from all units of input employed. 
D) Additional cost of an additional unit of output.

Question 8

Which of the following is least likely to increase labor productivity?

Accepted Answer

A) Technological advances. 
B) Increased managerial capabilities. 
C) A safer work environment. 
D) Improved labor skills. 
A) Technological advances. 
B) Increased managerial capabilities. 
C) A safer work environment. 
D) Improved labor skills.

Question 9

The change in total output associated with one additional unit of input is the

Accepted Answer

A) Opportunity cost of the output. 
B) Average productivity. 
C) Marginal physical product. 
D) Marginal cost. 
A) Opportunity cost of the output. 
B) Average productivity. 
C) Marginal physical product. 
D) Marginal cost.

Question 10

There are still some fixed costs in the long run,such as rent.

Accepted Answer

A) True 
 B)False

Question 11

Megan used to work at the local pizzeria for $15,000 per year but quit in order to start her own deli.To buy the necessary equipment,she withdrew $20,000 from her inheritance (which paid 8 percent interest).Last year she paid $25,000 for ingredients and $500 per month rent but had revenue of $50,000.She asked her dad the accountant and her mom the economist to calculate her costs for her.

Accepted Answer

A) Dad says her cost is $9,000 and Mom says her cost is $2,400. 
B) Dad says her cost is $31,000 and Mom says her cost is $35,000. 
C) Dad says her cost is $25,000 and Mom says her cost is $16,600. 
D) Dad says her cost is $31,000 and Mom says her cost is $47,600. 
A) Dad says her cost is $9,000 and Mom says her cost is $2,400. 
B) Dad says her cost is $31,000 and Mom says her cost is $35,000. 
C) Dad says her cost is $25,000 and Mom says her cost is $16,600. 
D) Dad says her cost is $31,000 and Mom says her cost is $47,600.

Question 12

When the wage rate is $10 per hour and the MPP of a worker is 15 units per hour,the unit labor cost is

Accepted Answer

A) $0.67 per unit. 
B) $10.00 per hour. 
C) $15.00 per unit. 
D) $150.00 per hour. 
A) $0.67 per unit. 
B) $10.00 per hour. 
C) $15.00 per unit. 
D) $150.00 per hour.

Question 13

Which of the following are factors of production?

Accepted Answer

A) Output in a production function. 
B) Productivity. 
C) Land,labor,capital,and entrepreneurship. 
D) Implicit and explicit costs. 
A) Output in a production function. 
B) Productivity. 
C) Land,labor,capital,and entrepreneurship. 
D) Implicit and explicit costs.

Question 14

The marginal physical product of the third unit of labor in Figure 21.1 is

Accepted Answer

A) 40.0 units per day. 
B) 12.0 units per day. 
C) 13.3 units per day. 
D) 4.0 units per day. 
A) 40.0 units per day. 
B) 12.0 units per day. 
C) 13.3 units per day. 
D) 4.0 units per day.

Question 15

Marginal physical product is the change in total output associated with one additional unit of input.

Accepted Answer

A) True 
 B)False

Question 16

Explain how firms' production functions and cost curves will change as science and technology advance and as the knowledge of how to organize and manage resources improves.

Accepted Answer

Advancements in science and technology a

Question 17

One In the News article titled "Funeral Giant Moves In on Small Rivals" reports that profit for a Houston-based funeral giant is 31 cents on every dollar versus a profit of 12 cents for the funeral industry in general.Such profits are most likely the result of

Accepted Answer

A) Constant returns to scale. 
B) Economies of scale. 
C) Higher minimum average costs. 
D) A downward shift in the production function. 
A) Constant returns to scale. 
B) Economies of scale. 
C) Higher minimum average costs. 
D) A downward shift in the production function.

Question 18

Refer to Figure 21.3.The best estimate of where diminishing marginal returns begin is at an output level of

Accepted Answer

A) 10. 
B) 20. 
C) 30. 
D) 40. 
A) 10. 
B) 20. 
C) 30. 
D) 40.

Question 19

In Figure 21.1,diminishing marginal returns first occur with the

Accepted Answer

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

Question 20

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

At 20 units of output in Table 21.2,the average variable cost is

Accepted Answer

A) $1.10 per unit. 
B) $1.75 per unit. 
C) $2.00 per unit. 
D) $3.10 per unit. 
A) $1.10 per unit. 
B) $1.75 per unit. 
C) $2.00 per unit. 
D) $3.10 per unit.

Exam 21: The Costs of Production

If the marginal physical product (MPP)is falling,then the

Refer to Table 21.5: Table 21.5 AVC MC 0 15 - - 1 23 2 4 3 15 The marginal cost of the third unit of output in Table 21.5 is

Accounting costs and economic costs differ because

The law of diminishing returns indicates that the marginal physical product of a variable input declines as more of it is employed,ceteris paribus.

Unit labor cost is equal to the

If the marginal cost curve is rising,which of the following must be true?

The marginal physical product is the

Which of the following is least likely to increase labor productivity?

The change in total output associated with one additional unit of input is the

There are still some fixed costs in the long run,such as rent.

When the wage rate is $10 per hour and the MPP of a worker is 15 units per hour,the unit labor cost is

Which of the following are factors of production?

The marginal physical product of the third unit of labor in Figure 21.1 is

Marginal physical product is the change in total output associated with one additional unit of input.

Explain how firms' production functions and cost curves will change as science and technology advance and as the knowledge of how to organize and manage resources improves.

One In the News article titled "Funeral Giant Moves In on Small Rivals" reports that profit for a Houston-based funeral giant is 31 cents on every dollar versus a profit of 12 cents for the funeral industry in general.Such profits are most likely the result of

Refer to Figure 21.3.The best estimate of where diminishing marginal returns begin is at an output level of

In Figure 21.1,diminishing marginal returns first occur with the

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

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