Question 1

The slope of a typical isoquant is negative because to produce a given output, a producer

Accepted Answer

A)  will use more of one input only if it uses more of another. 
B)  can use less of one input only if the productivity of that input increases 
C)  can use less of one input only if it uses more of another. 
D)  will use more of one input only if the price of that input falls. 
A)  will use more of one input only if it uses more of another. 
B)  can use less of one input only if the productivity of that input increases 
C)  can use less of one input only if it uses more of another. 
D)  will use more of one input only if the price of that input falls.

Question 2

Table 11-2
   Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April.
-Refer to Table 11-2. What is the average product of labor when the orchard employs 5 workers?

Accepted Answer

A)  270 bushels 
B)  54 bushels 
C)  40 bushels 
D)  8 bushels 
A)  270 bushels 
B)  54 bushels 
C)  40 bushels 
D)  8 bushels

Question 3

Which of the following is an implicit cost of production?

Accepted Answer

A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm 
A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm

Question 4

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 5

Ford Motor Company started producing the Model A at plants scattered around the United States

Accepted Answer

A)  to save on transport costs. 
B)  because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C)  to locate its production centers closer to its customers. 
D)  because it was not able to attract skilled workers in Michigan (where its first plant was located). 
A)  to save on transport costs. 
B)  because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C)  to locate its production centers closer to its customers. 
D)  because it was not able to attract skilled workers in Michigan (where its first plant was located).

Question 6

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

Accepted Answer

A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. 
A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

Question 7

Which of the following can a firm do in the long run but not in the short run?

Accepted Answer

A)  decrease the size of its physical plant 
B)  reduce its rate of output by laying off workers 
C)  increase its variable costs 
D)  increase its use of raw materials 
A)  decrease the size of its physical plant 
B)  reduce its rate of output by laying off workers 
C)  increase its variable costs 
D)  increase its use of raw materials

Question 8

Figure 11-16  
-Refer to Figure 11-16. The figure above illustrates a series of isoquants. Which of the following statements is true?

Accepted Answer

A)  Points x, z, and y all represent the same output. 
B)  Points z and y represent the same output; this output is produced with more capital at z than at y. 
C)  Point x and y represent the same output but the cost of production at y is greater than the cost of production at x. 
D)  Point z represents a greater output than point x or point y. 
A)  Points x, z, and y all represent the same output. 
B)  Points z and y represent the same output; this output is produced with more capital at z than at y. 
C)  Point x and y represent the same output but the cost of production at y is greater than the cost of production at x. 
D)  Point z represents a greater output than point x or point y.

Question 9

Figure 11-18  
-Refer to Figure 11-18. Starting from point D, a movement along isoquant2 to point F

Accepted Answer

A)  increases the total cost of production with no change in output. 
B)  increases output but not the total cost of production. 
C)  increases the total cost of production and decreases output. 
D)  increases both the total cost of production and output. 
A)  increases the total cost of production with no change in output. 
B)  increases output but not the total cost of production. 
C)  increases the total cost of production and decreases output. 
D)  increases both the total cost of production and output.

Question 10

Table 11-2
   Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April.
-Refer to Table 11-2. What is the marginal product of the 4th worker?

Accepted Answer

A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels 
A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels

Question 11

Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain.

Accepted Answer

For many firms, the cost of utilities ca

Question 12

If a firm decreases its plant size and finds that its long-run average costs have decreased, then

Accepted Answer

A)  its labor is more productive in a smaller plant. 
B)  its diseconomies of scale are less. 
C)  the firm should reduce its plant size even more. 
D)  the firm is now profitable. 
A)  its labor is more productive in a smaller plant. 
B)  its diseconomies of scale are less. 
C)  the firm should reduce its plant size even more. 
D)  the firm is now profitable.

Question 13

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?

Accepted Answer

A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative. 
A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative.

Question 14

Diminishing marginal product of labor occurs when adding another unit of labor

Accepted Answer

A)  decreases output. 
B)  changes output by an amount smaller than the output added by the previous unit of labor. 
C)  increases output by an amount larger than the output added by the previous unit of labor. 
D)  decreases output by an amount smaller than the output added by the previous unit of labor. 
A)  decreases output. 
B)  changes output by an amount smaller than the output added by the previous unit of labor. 
C)  increases output by an amount larger than the output added by the previous unit of labor. 
D)  decreases output by an amount smaller than the output added by the previous unit of labor.

Question 15

Which of the following is a factor of production that generally is fixed in the short run?

Accepted Answer

A)  raw materials 
B)  labor 
C)  a factory building 
D)  water 
A)  raw materials 
B)  labor 
C)  a factory building 
D)  water

Question 16

Which of the following statements is false?

Accepted Answer

A)  An explicit cost is a nonmonetary opportunity cost. 
B)  In the short run: total cost = fixed cost + variable cost. 
C)  Variable costs are costs that change as output changes. 
D)  In the long run there are no fixed costs. 
A)  An explicit cost is a nonmonetary opportunity cost. 
B)  In the short run: total cost = fixed cost + variable cost. 
C)  Variable costs are costs that change as output changes. 
D)  In the long run there are no fixed costs.

Question 17

Table 11-1
   Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

Accepted Answer

A)  4 pounds 
B)  10.8 pounds 
C)  38.2 pounds 
D)  54 pounds 
A)  4 pounds 
B)  10.8 pounds 
C)  38.2 pounds 
D)  54 pounds

Question 18

If average product is decreasing, then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false?

Accepted Answer

A)  Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B)  When marginal cost is less than average total cost, average total cost will fall. 
C)  When marginal cost is greater than average total cost, average total cost will rise. 
D)  Marginal cost will equal average total cost when average total cost is at its lowest point. 
A)  Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B)  When marginal cost is less than average total cost, average total cost will fall. 
C)  When marginal cost is greater than average total cost, average total cost will rise. 
D)  Marginal cost will equal average total cost when average total cost is at its lowest point.

Question 20

The absolute value of the slope of an isocost line equals the ratio of

Accepted Answer

A)  the marginal productivities of the two inputs. 
B)  the prices of the two inputs. 
C)  the marginal utilities of the two inputs. 
D)  the quantities of the two inputs. 
A)  the marginal productivities of the two inputs. 
B)  the prices of the two inputs. 
C)  the marginal utilities of the two inputs. 
D)  the quantities of the two inputs.

Exam 11: Technology, Production, and Costs

The slope of a typical isoquant is negative because to produce a given output, a producer

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2. What is the average product of labor when the orchard employs 5 workers?

Which of the following is an implicit cost of production?

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Ford Motor Company started producing the Model A at plants scattered around the United States

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

Which of the following can a firm do in the long run but not in the short run?

Figure 11-16 -Refer to Figure 11-16. The figure above illustrates a series of isoquants. Which of the following statements is true?

Figure 11-18 -Refer to Figure 11-18. Starting from point D, a movement along isoquant2 to point F

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2. What is the marginal product of the 4th worker?

Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain.

If a firm decreases its plant size and finds that its long-run average costs have decreased, then

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?

Diminishing marginal product of labor occurs when adding another unit of labor

Which of the following is a factor of production that generally is fixed in the short run?

Which of the following statements is false?

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

If average product is decreasing, then marginal product must be negative.

Which of the following statements is false?

The absolute value of the slope of an isocost line equals the ratio of

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Figure 11-18 -Refer to Figure 11-18. Starting from point D, a movement along isoquant₂ to point F