Question 1

The average variable cost curve slopes upward with a higher rate of output in the short run because of

Accepted Answer

A) The effect of diminishing returns. 
B) The shape of the average fixed cost curve. 
C) Diseconomies of scale. 
D) Implicit but not explicit costs. 
A) The effect of diminishing returns. 
B) The shape of the average fixed cost curve. 
C) Diseconomies of scale. 
D) Implicit but not explicit costs.

Question 2

A production function shows the

Accepted Answer

A) Minimum amount of output that can be obtained from alternative combinations of inputs. 
B) Maximum quantity of inputs required to produce a given quantity of output. 
C) Maximum output of a good attainable from different combinations of factor inputs. 
D) Output capacity of the entire economy. 
A) Minimum amount of output that can be obtained from alternative combinations of inputs. 
B) Maximum quantity of inputs required to produce a given quantity of output. 
C) Maximum output of a good attainable from different combinations of factor inputs. 
D) Output capacity of the entire economy.

Question 3

Which of the following is most likely a fixed cost?

Accepted Answer

A) The material used to make jackets. 
B) The labor on an automotive assembly line. 
C) The rent for a factory. 
D) The electricity used to run packaging equipment. 
A) The material used to make jackets. 
B) The labor on an automotive assembly line. 
C) The rent for a factory. 
D) The electricity used to run packaging equipment.

Question 4

The creation of the Internet has contributed to all of the following except

Accepted Answer

A) Reduced information costs. 
B) Reduced transaction costs. 
C) Increased marginal costs. 
D) Increased productivity. 
A) Reduced information costs. 
B) Reduced transaction costs. 
C) Increased marginal costs. 
D) Increased productivity.

Question 5

Refer to Figure 21.3.The vertical difference between the total cost curve and the total fixed cost curve represents

Accepted Answer

A) Total variable costs. 
B) Total marginal costs. 
C) Average fixed costs. 
D) Average variable costs. 
A) Total variable costs. 
B) Total marginal costs. 
C) Average fixed costs. 
D) Average variable costs.

Question 6

When the size of a factory (and all its associated inputs)doubles and,as a result,output more than doubles,

Accepted Answer

A) The law of diminishing returns must not apply in the smaller factory. 
B) Economies of scale must exist. 
C) The short-run ATC curve must be declining. 
D) Marginal costs must be declining. 
A) The law of diminishing returns must not apply in the smaller factory. 
B) Economies of scale must exist. 
C) The short-run ATC curve must be declining. 
D) Marginal costs must be declining.

Question 7

Intel's chief executive says the company might expand the technology it is using in its planned $2.5 billion chip-manufacturing factory in China if the U.S.government allows it,underscoring the technology giant's ambitions in the world's fourth-biggest economy.The Intel executive is making a

Accepted Answer

A) Long-run decision,and therefore an investment decision. 
B) Short-run decision,and therefore a decision about how much to produce. 
C) Decision that would definitely increase costs. 
D) Decision that would cause ATC to increase. 
A) Long-run decision,and therefore an investment decision. 
B) Short-run decision,and therefore a decision about how much to produce. 
C) Decision that would definitely increase costs. 
D) Decision that would cause ATC to increase.

Question 8

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 fourth unit of labor in Table 21.3?

Accepted Answer

A) 116. 
B) 29. 
C) 20. 
D) 5. 
A) 116. 
B) 29. 
C) 20. 
D) 5.

Question 9

Short-run choices imply that at least one factor of production is fixed.

Accepted Answer

A) True 
 B)False

Question 10

As an In-N-Out Burger restaurant increases the number of employees for a specific restaurant,

Accepted Answer

A) Total production of hamburgers will fall. 
B) Costs of production will fall. 
C) Efficiency will suffer as the restaurant becomes too crowded with employees. 
D) The production function will increase. 
A) Total production of hamburgers will fall. 
B) Costs of production will fall. 
C) Efficiency will suffer as the restaurant becomes too crowded with employees. 
D) The production function will increase.

Question 11

Changes in short-run total costs result from changes in

Accepted Answer

A) Variable costs. 
B) Fixed costs. 
C) Profit. 
D) The price elasticity of demand. 
A) Variable costs. 
B) Fixed costs. 
C) Profit. 
D) The price elasticity of demand.

Exam 21: The Costs of Production

The average variable cost curve slopes upward with a higher rate of output in the short run because of

A production function shows the

Which of the following is most likely a fixed cost?

The creation of the Internet has contributed to all of the following except

Refer to Figure 21.3.The vertical difference between the total cost curve and the total fixed cost curve represents

When the size of a factory (and all its associated inputs)doubles and,as a result,output more than doubles,

Intel's chief executive says the company might expand the technology it is using in its planned $2.5 billion chip-manufacturing factory in China if the U.S.government allows it,underscoring the technology giant's ambitions in the world's fourth-biggest economy.The Intel executive is making a

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 fourth unit of labor in Table 21.3?

Short-run choices imply that at least one factor of production is fixed.

As an In-N-Out Burger restaurant increases the number of employees for a specific restaurant,

Changes in short-run total costs result from changes in

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