Question 1

Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per unit, the economically efficient cost of producing 500 units of output is:

Accepted Answer

A) $100. 
B) $150. 
C) $300. 
D) impossible to determine using the information given. 
A) $100. 
B) $150. 
C) $300. 
D) impossible to determine using the information given.

Question 2

The standard long-run model assumes that:

Accepted Answer

A) technology improves at an increasing rate over time. 
B) technological advance is impossible. 
C) technology is fixed. 
D) costs of production are fixed. 
A) technology improves at an increasing rate over time. 
B) technological advance is impossible. 
C) technology is fixed. 
D) costs of production are fixed.

Question 3

Expected economic profit per unit is equal to:

Accepted Answer

A) expected price. 
B) expected average total cost. 
C) the difference between expected price and expected average total cost. 
D) the difference between expected total revenue and expected total cost. 
A) expected price. 
B) expected average total cost. 
C) the difference between expected price and expected average total cost. 
D) the difference between expected total revenue and expected total cost.

Question 4

Refer to the graph shown. The cheapest way to produce 1,000 units of output is with:

Accepted Answer

A) 12 units of capital and no workers. 
B) 5 workers and no capital. 
C) 2 workers and 7.2 units of capital. 
D) 4 workers and 2.4 units of capital. 
A) 12 units of capital and no workers. 
B) 5 workers and no capital. 
C) 2 workers and 7.2 units of capital. 
D) 4 workers and 2.4 units of capital.

Question 5

Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per unit, the economically efficient cost of producing 1,000 units of output is:

Accepted Answer

A) $100. 
B) $150. 
C) $300. 
D) impossible to determine using the information given. 
A) $100. 
B) $150. 
C) $300. 
D) impossible to determine using the information given.

Question 6

Technological change:

Accepted Answer

A) reduces average total cost without changing production techniques. 
B) reduces average total cost by changing production techniques. 
C) does not reduce average total cost but does change production techniques. 
D) reduces average total cost by expanding plant size. 
A) reduces average total cost without changing production techniques. 
B) reduces average total cost by changing production techniques. 
C) does not reduce average total cost but does change production techniques. 
D) reduces average total cost by expanding plant size.

Question 7

An entrepreneur is willing to bring a supply of goods to the market if expected:

Accepted Answer

A) price and expected average total cost are equal. 
B) price is greater than expected average total cost. 
C) average total cost is greater than expected price. 
D) average revenue is equal to expected price. 
A) price and expected average total cost are equal. 
B) price is greater than expected average total cost. 
C) average total cost is greater than expected price. 
D) average revenue is equal to expected price.

Question 8

The long-run average cost of producing 12 units of output is $54; the long-run average cost of producing 13 units is $56. These numbers illustrate:

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) economies of scope. 
D) diminishing marginal productivity. 
A) economies of scale. 
B) diseconomies of scale. 
C) economies of scope. 
D) diminishing marginal productivity.

Question 9

Suppose a factory that produces toasters experiences a decline in its average total cost with no change in its output level. This decline might be explained by:

Accepted Answer

A) economies of scale. 
B) decreasing marginal utility. 
C) increasing marginal productivity. 
D) technological change. 
A) economies of scale. 
B) decreasing marginal utility. 
C) increasing marginal productivity. 
D) technological change.

Question 10

At one time sea lions were depleting the stock of steelhead trout. One idea to scare sea lions away from the Washington coast was to launch fake killer whales, which are predators of sea lions. The cost of making the first whale is $16,000 ($5,000 for materials and $11,000 for the mold). The mold can be reused to make additional whales, and so additional whales cost $5,000 each. Based on these numbers, the total cost of making two fake killer whales would be:

Accepted Answer

A) $10,000. 
B) $11,000. 
C) $16,000. 
D) $21,000. 
A) $10,000. 
B) $11,000. 
C) $16,000. 
D) $21,000.

Question 11

Refer to the graph shown. The least-cost method of producing 1,000 units of output is shown at point:

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 12

Which of the following is most likely to be an example of economies of scale?

Accepted Answer

A) The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving 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 25 percent after a 30 percent increase in all inputs. 
A) The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving 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 25 percent after a 30 percent increase in all inputs.

Question 13

A firm can use 5 workers and 10 machines, 7 workers and 9 machines, or 8 workers and 9 machines to produce four cars. If each worker costs $200 and each machine is rented for $50, the economically efficient input combination is:

Accepted Answer

A) 5 workers and 10 machines. 
B) 7 workers and 9 machines. 
C) 8 workers and 9 machines. 
D) 12 workers and 19 machines. 
A) 5 workers and 10 machines. 
B) 7 workers and 9 machines. 
C) 8 workers and 9 machines. 
D) 12 workers and 19 machines.

Question 14

If a firm is able to lower total costs by specializing in marketing and distribution while outsourcing production, it is taking advantage of:

Accepted Answer

A) less developed nations. 
B) economies of scope. 
C) economies of scale. 
D) technical efficiency. 
A) less developed nations. 
B) economies of scope. 
C) economies of scale. 
D) technical efficiency.

Question 15

Refer to the graph shown. The shift from SATC1 to SATC2 reflects:

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal productivity. 
D) increasing marginal productivity. 
A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal productivity. 
D) increasing marginal productivity.

Question 16

Using 100 workers and 10 machines, a firm can produce 10,000 units of output; using 250 workers and 25 machines, the firm produces 21,000 units of output. These facts are best explained by:

Accepted Answer

A) economies of scope. 
B) diseconomies of scale. 
C) economies of scale. 
D) diminishing marginal productivity. 
A) economies of scope. 
B) diseconomies of scale. 
C) economies of scale. 
D) diminishing marginal productivity.

Question 17

Refer to the graph shown. The marginal rate of substitution at point B is:

Accepted Answer

A) the same as the marginal rate of substitution at point A. 
B) the same as the marginal rate of substitution at point C. 
C) the same as the marginal rate of substitution at point D. 
D) impossible to determine with the information given. 
A) the same as the marginal rate of substitution at point A. 
B) the same as the marginal rate of substitution at point C. 
C) the same as the marginal rate of substitution at point D. 
D) impossible to determine with the information given.

Question 18

Refer to the graph shown. The output range in region b is associated with:

Accepted Answer

A) diminishing marginal productivity. 
B) constant returns to scale. 
C) economies of scale. 
D) diseconomies of scale. 
A) diminishing marginal productivity. 
B) constant returns to scale. 
C) economies of scale. 
D) diseconomies of scale.

Question 19

Suppose you can manufacture a Blu-ray player using 5 people and 1 machine or using 1 person and 3 machines.Is it possible that both input combinations are technically efficient? What information would be needed to determine which input combination is economically efficient?

Accepted Answer

It is possible that both input combinati

Question 20

Economies of scale are associated with:

Accepted Answer

A) indivisible setup costs. 
B) zero setup costs. 
C) the short run. 
D) diminishing marginal productivity. 
A) indivisible setup costs. 
B) zero setup costs. 
C) the short run. 
D) diminishing marginal productivity.

Exam 12: Production and Cost Analysis II

Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per unit, the economically efficient cost of producing 500 units of output is:

The standard long-run model assumes that:

Expected economic profit per unit is equal to:

Refer to the graph shown. The cheapest way to produce 1,000 units of output is with:

Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per unit, the economically efficient cost of producing 1,000 units of output is:

Technological change:

An entrepreneur is willing to bring a supply of goods to the market if expected:

The long-run average cost of producing 12 units of output is $54; the long-run average cost of producing 13 units is $56. These numbers illustrate:

Suppose a factory that produces toasters experiences a decline in its average total cost with no change in its output level. This decline might be explained by:

Refer to the graph shown. The least-cost method of producing 1,000 units of output is shown at point:

Which of the following is most likely to be an example of economies of scale?

A firm can use 5 workers and 10 machines, 7 workers and 9 machines, or 8 workers and 9 machines to produce four cars. If each worker costs $200 and each machine is rented for $50, the economically efficient input combination is:

If a firm is able to lower total costs by specializing in marketing and distribution while outsourcing production, it is taking advantage of:

Refer to the graph shown. The shift from SATC1 to SATC2 reflects:

Using 100 workers and 10 machines, a firm can produce 10,000 units of output; using 250 workers and 25 machines, the firm produces 21,000 units of output. These facts are best explained by:

Refer to the graph shown. The marginal rate of substitution at point B is:

Refer to the graph shown. The output range in region b is associated with:

Suppose you can manufacture a Blu-ray player using 5 people and 1 machine or using 1 person and 3 machines.Is it possible that both input combinations are technically efficient? What information would be needed to determine which input combination is economically efficient?

Economies of scale are associated with:

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. The shift from SATC₁ to SATC₂ reflects: