Question 1

Refer to the graph shown. If the firm wants to produce 900 units of output, it should use the plant size represented by:

Accepted Answer

A) SATC1. 
B) SATC2. 
C) SATC3. 
D) SATC4. 
A) SATC1. 
B) SATC2. 
C) SATC3. 
D) SATC4.

Question 2

An isocost line is a line that represents combinations of:

Accepted Answer

A) factors of production that produce equal amounts of output. 
B) factors of production that cost the same amount. 
C) output that can be produced from the same quantity of inputs. 
D) output that can be produced at the same cost. 
A) factors of production that produce equal amounts of output. 
B) factors of production that cost the same amount. 
C) output that can be produced from the same quantity of inputs. 
D) output that can be produced at the same cost.

Question 3

If a firm is operating at the point of tangency between an isoquant and an isocost line, its production is:

Accepted Answer

A) technically efficient but economically inefficient. 
B) technically inefficient but economically efficient. 
C) both technically and economically efficient. 
D) both technically and economically inefficient. 
A) technically efficient but economically inefficient. 
B) technically inefficient but economically efficient. 
C) both technically and economically efficient. 
D) both technically and economically inefficient.

Question 4

A social entrepreneur's central motivation in creating "for-benefit" corporations is to achieve social, not just economic, ends.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC3 minimizes:

Accepted Answer

A) both long-run and short-run average total cost. 
B) long-run average total cost only. 
C) short-run average total cost only. 
D) neither long-run nor short-run average total cost. 
A) both long-run and short-run average total cost. 
B) long-run average total cost only. 
C) short-run average total cost only. 
D) neither long-run nor short-run average total cost.

Question 6

What concept is important in determining the shape of short run cost curves (marginal cost,average cost)but plays no role in determining the shape of long-run cost curves? What are the most important factors in determining the shape of the long-run cost curves? Explain.

Accepted Answer

The dominant concept in determining the

Question 7

According to the text, globalization has led to greater U.S. specialization in:

Accepted Answer

A) marketing. 
B) manufacturing. 
C) farming. 
D) manual labor. 
A) marketing. 
B) manufacturing. 
C) farming. 
D) manual labor.

Question 8

Which of the following is most likely an example of diseconomies of scale?

Accepted Answer

A) The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government. 
B) Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs. 
C) Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant. 
D) The XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in its total cost. 
A) The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government. 
B) Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs. 
C) Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant. 
D) The XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in its total cost.

Question 9

Globalization has made economies of scope:

Accepted Answer

A) more important to firms because global corporations can segment the production process. 
B) more important to firms because global corporations do not have to segment the production process. 
C) less important to firms because global corporations can segment the production process. 
D) less important to firms because global corporations do not have to segment the production process. 
A) more important to firms because global corporations can segment the production process. 
B) more important to firms because global corporations do not have to segment the production process. 
C) less important to firms because global corporations can segment the production process. 
D) less important to firms because global corporations do not have to segment the production process.

Question 10

When the number of mega-producers of hobs that operated at a lower average cost than smaller producers rose, the number of hogs slaughtered rose to record levels. What economic concept does this describe?

Accepted Answer

A) Economies of scope 
B) Economies of scale 
C) Indivisible setup costs 
D) Minimum efficient production 
A) Economies of scope 
B) Economies of scale 
C) Indivisible setup costs 
D) Minimum efficient production

Question 11

As an employee of the Grelb Corporation (a manufacturer of gas powered generators)you have been asked to determine the nature of their long-run cost structure.Some cost data has been collected for you and appears in the table below. $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Quantity of generators } & \text { Total costs of labor } & \text { Total costs of tools } & \text { Total Costs } & \text { Average Total Costs } \
\hline 11 & \$ 192 & \$ 127 & & \
\hline 12 & 200 & 136 & & \
\hline 13 & 206 & 145 & & \
\hline 14 & 210 & 150 & & \
\hline 15 & 220 & 155 & & \
\hline 16 & 240 & 160 & & \
\hline 17 & 255 & 170 & & \
\hline 18 & 280 & 188 & & \
\hline 19 & 320 & 212 & & \
\hline 20 & 365 & 235 & & \
\hline
\end{array}$$ (a)Fill in the missing values in the table.
(b)Determine the range of output levels over which there exists economies and diseconomies of scale.
(c)Graph the firm's average total cost curve and
(d)Describe how your answer to part (b)above relates to the shape of this curve.

Accepted Answer

(a)The completed table: \[\begin{array}

Question 12

A firm's average cost increases as it increases its output by expanding its plant and hiring additional workers (its only inputs to production). The firm's owner blames the increase in per-unit costs on the law of diminishing marginal productivity. The owner's reasoning is:

Accepted Answer

A) correct because some inputs are fixed in the long run. 
B) incorrect because economies of scale are present. 
C) correct because marginal productivity must decrease in the short run. 
D) incorrect because all inputs are varied in the example. 
A) correct because some inputs are fixed in the long run. 
B) incorrect because economies of scale are present. 
C) correct because marginal productivity must decrease in the short run. 
D) incorrect because all inputs are varied in the example.

Question 13

Generally, as the size of a firm increases:

Accepted Answer

A) team spirit increases. 
B) marginal productivity rises. 
C) economies of scope fall. 
D) monitoring costs increase. 
A) team spirit increases. 
B) marginal productivity rises. 
C) economies of scope fall. 
D) monitoring costs increase.

Question 14

Why is it that a technically efficient method of producing may not be an economically efficient method of production?

Accepted Answer

Technical efficiency describes a product

Question 15

The graph shown exhibits diseconomies of scale:

Accepted Answer

A) in region a. 
B) in region b. 
C) in region c. 
D) over the entire range of output. 
A) in region a. 
B) in region b. 
C) in region c. 
D) over the entire range of output.

Question 16

You have decided to produce and market a new basketball sneaker.What decisions do you need to make besides how many shoes to produce?

Accepted Answer

In deciding to introduce a new basketbal

Question 17

Which of the following is an accurate statement about the envelope relationship?

Accepted Answer

A) At the planned output level, short-run average total cost equals long-run average cost, but at all other output levels, short-run average total cost is lower than long-run average cost. 
B) At the planned output level, short-run average total cost equals long-run average cost, but at all other output levels, short-run average total cost is higher than long-run average cost. 
C) The long-run average cost curve touches the minimum point of each short-run average total cost curve. 
D) The long-run average cost curve is identical to the lowest short-run average cost curve. 
A) At the planned output level, short-run average total cost equals long-run average cost, but at all other output levels, short-run average total cost is lower than long-run average cost. 
B) At the planned output level, short-run average total cost equals long-run average cost, but at all other output levels, short-run average total cost is higher than long-run average cost. 
C) The long-run average cost curve touches the minimum point of each short-run average total cost curve. 
D) The long-run average cost curve is identical to the lowest short-run average cost curve.

Question 18

Which of the following statements is true?

Accepted Answer

A) Many different production processes can be economically efficient, but only the method that involves the lowest possible cost is technically efficient. 
B) Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient. 
C) There is only one production process that is technically efficient, and this process is also economically efficient. 
D) There are many production processes that are both technically and economically efficient, but only one of these involves the lowest possible cost. 
A) Many different production processes can be economically efficient, but only the method that involves the lowest possible cost is technically efficient. 
B) Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient. 
C) There is only one production process that is technically efficient, and this process is also economically efficient. 
D) There are many production processes that are both technically and economically efficient, but only one of these involves the lowest possible cost.

Question 19

Since capital is relatively scarce in India, the economically efficient method of producing food would probably:

Accepted Answer

A) be land intensive. 
B) be capital intensive. 
C) not be labor intensive. 
D) not be capital intensive. 
A) be land intensive. 
B) be capital intensive. 
C) not be labor intensive. 
D) not be capital intensive.

Question 20

The production techniques available to real-world firms are constantly changing because of learning by doing and technological change.

Accepted Answer

A) True 
 B)False

Exam 12: Production and Cost Analysis II

Refer to the graph shown. If the firm wants to produce 900 units of output, it should use the plant size represented by:

An isocost line is a line that represents combinations of:

If a firm is operating at the point of tangency between an isoquant and an isocost line, its production is:

A social entrepreneur's central motivation in creating "for-benefit" corporations is to achieve social, not just economic, ends.

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC3 minimizes:

What concept is important in determining the shape of short run cost curves (marginal cost,average cost)but plays no role in determining the shape of long-run cost curves? What are the most important factors in determining the shape of the long-run cost curves? Explain.

According to the text, globalization has led to greater U.S. specialization in:

Which of the following is most likely an example of diseconomies of scale?

Globalization has made economies of scope:

When the number of mega-producers of hobs that operated at a lower average cost than smaller producers rose, the number of hogs slaughtered rose to record levels. What economic concept does this describe?

A firm's average cost increases as it increases its output by expanding its plant and hiring additional workers (its only inputs to production). The firm's owner blames the increase in per-unit costs on the law of diminishing marginal productivity. The owner's reasoning is:

Generally, as the size of a firm increases:

Why is it that a technically efficient method of producing may not be an economically efficient method of production?

The graph shown exhibits diseconomies of scale:

You have decided to produce and market a new basketball sneaker.What decisions do you need to make besides how many shoes to produce?

Which of the following is an accurate statement about the envelope relationship?

Which of the following statements is true?

Since capital is relatively scarce in India, the economically efficient method of producing food would probably:

The production techniques available to real-world firms are constantly changing because of learning by doing and technological change.

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC₃ minimizes: