Question 1

Figure 11-5  
-Refer to Figure 11-5. Identify the curves in the diagram.

Accepted Answer

A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve. 
A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.

Question 2

When the marginal product of labor rises

Accepted Answer

A)  the marginal cost of production will exceed the average total cost. 
B)  the marginal cost of production also rises. 
C)  the marginal cost of production falls. 
D)  the average total cost of production also rises. 
A)  the marginal cost of production will exceed the average total cost. 
B)  the marginal cost of production also rises. 
C)  the marginal cost of production falls. 
D)  the average total cost of production also rises.

Question 3

The slope of an isocost line ________ and equals the negative of ________.

Accepted Answer

A)  increases as we move down the line; the ratio of input prices 
B)  decreases as we move down the line; the ratio of the marginal products 
C)  is constant; the ratio of input prices 
D)  is constant; the ratio of the marginal products 
A)  increases as we move down the line; the ratio of input prices 
B)  decreases as we move down the line; the ratio of the marginal products 
C)  is constant; the ratio of input prices 
D)  is constant; the ratio of the marginal products

Question 4

If fixed costs do not change, then marginal cost

Accepted Answer

A)  also remains constant. 
B)  equals the change in variable cost divided by the change in output. 
C)  equals the change in average variable cost divided by the change in output. 
D)  equals the change in average fixed cost divided by the change in output. 
A)  also remains constant. 
B)  equals the change in variable cost divided by the change in output. 
C)  equals the change in average variable cost divided by the change in output. 
D)  equals the change in average fixed cost divided by the change in output.

Question 5

What is an isoquant? What is the slope of an isoquant?

Accepted Answer

An isoquant is a curve that shows all th

Question 6

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Accepted Answer

A)  the marginal product of labor. 
B)  the division of labor. 
C)  the average product of labor. 
D)  the average cost of production. 
A)  the marginal product of labor. 
B)  the division of labor. 
C)  the average product of labor. 
D)  the average cost of production.

Question 7

The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers. An increase in the demand for its product led Santa Fe to hire 150 new workers. Santa Fe also plans to expand the capacity of its plant but this project will take 2 years to complete. Which of the following statements is true?

Accepted Answer

A)  The wages and benefits paid to the new workers are implicit costs. 
B)  The long run for Santa Fe is longer than 1 year. 
C)  The short run for Santa Fe is 1 year. 
D)  In the short run Santa Fe's variable costs increase but its fixed costs decrease. 
A)  The wages and benefits paid to the new workers are implicit costs. 
B)  The long run for Santa Fe is longer than 1 year. 
C)  The short run for Santa Fe is 1 year. 
D)  In the short run Santa Fe's variable costs increase but its fixed costs decrease.

Question 8

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s. Bill took out a loan from his bank to pay for his store and its initial inventory. Bill pays the bank $900 per week for his loan. The $900 bank payment

Accepted Answer

A)  is a long-run implicit cost. 
B)  is a fixed cost. 
C)  is a short-run implicit cost. 
D)  is a variable cost. 
A)  is a long-run implicit cost. 
B)  is a fixed cost. 
C)  is a short-run implicit cost. 
D)  is a variable cost.

Question 9

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the total cost of producing 40,000 flash drives is $120,000, and the fixed cost is $30,000.
a. What is the variable cost?
b. When output is 40,000, what are the average variable cost and the average fixed cost?
c. Assuming the cost curves have the usual shape, is the dollar difference between the average total cost and the average variable cost greater when the output is 40,000 flash drives or when the output is 60,000 flash drives? Explain.

Accepted Answer

a. Variable cost = total cost - fixed co

Question 11

In the short run, marginal product of labor increases at first and then falls because

Accepted Answer

A)  as more labor is hired, they are not as skilled as the first ones hired. 
B)  there are fewer opportunities for division of labor and specialization when fewer workers are hired. 
C)  managerial inefficiency sets in when a firm gets too large. 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive. 
A)  as more labor is hired, they are not as skilled as the first ones hired. 
B)  there are fewer opportunities for division of labor and specialization when fewer workers are hired. 
C)  managerial inefficiency sets in when a firm gets too large. 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive.

Question 12

The marginal product of labor is defined as

Accepted Answer

A)  the additional sales revenue that results when one more worker is hired. 
B)  the additional output that results when one more worker is hired, holding all other resources constant. 
C)  the additional number of workers required to produce one more unit of output. 
D)  the cost of hiring one more worker. 
A)  the additional sales revenue that results when one more worker is hired. 
B)  the additional output that results when one more worker is hired, holding all other resources constant. 
C)  the additional number of workers required to produce one more unit of output. 
D)  the cost of hiring one more worker.

Question 13

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

Accepted Answer

A) True 
 B)False

Question 14

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Accepted Answer

A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labor. 
D)  average product of labor. 
A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labor. 
D)  average product of labor.

Question 15

Average total cost is

Accepted Answer

A)  total cost divided by the quantity of output produced. 
B)  total explicit costs divided by the quantity of output produced. 
C)  variable cost divided by the quantity of output produced. 
D)  the change in fixed plus variable cost divided by the quantity of output produced. 
A)  total cost divided by the quantity of output produced. 
B)  total explicit costs divided by the quantity of output produced. 
C)  variable cost divided by the quantity of output produced. 
D)  the change in fixed plus variable cost divided by the quantity of output produced.

Question 16

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

Accepted Answer

A) True 
 B)False

Question 17

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

Accepted Answer

A)  experiences an increase in demand. 
B)  experiences positive technological change. 
C)  will hire more workers in order to produce more output. 
D)  is operating in the short run. 
A)  experiences an increase in demand. 
B)  experiences positive technological change. 
C)  will hire more workers in order to produce more output. 
D)  is operating in the short run.

Question 18

What is the difference between between total costs, variable costs, and fixed costs?

Accepted Answer

Total costs are the costs of all inputs

Question 19

Jill Johnson owns a pizzeria. She currently produces 10,000 pizzas per month at a total cost of $500. If she produced one more pizza her total cost rises to $500.11. What does this tell us about Jill's marginal cost of producing pizzas?

Accepted Answer

A)  The marginal cost of producing pizzas is constant. 
B)  The marginal cost of producing pizzas is falling. 
C)  The marginal cost of producing pizzas cannot be determined without more information. 
D)  The marginal cost of producing pizzas is rising. 
A)  The marginal cost of producing pizzas is constant. 
B)  The marginal cost of producing pizzas is falling. 
C)  The marginal cost of producing pizzas cannot be determined without more information. 
D)  The marginal cost of producing pizzas is rising.

Question 20

Which of the following is an example of a long-run adjustment?

Accepted Answer

A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter. 
A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter.

Exam 11: Technology, Production, and Costs

Figure 11-5 -Refer to Figure 11-5. Identify the curves in the diagram.

When the marginal product of labor rises

The slope of an isocost line ________ and equals the negative of ________.

If fixed costs do not change, then marginal cost

What is an isoquant? What is the slope of an isoquant?

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s. Bill took out a loan from his bank to pay for his store and its initial inventory. Bill pays the bank $900 per week for his loan. The $900 bank payment

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

In the short run, marginal product of labor increases at first and then falls because

The marginal product of labor is defined as

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Average total cost is

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

What is the difference between between total costs, variable costs, and fixed costs?

Jill Johnson owns a pizzeria. She currently produces 10,000 pizzas per month at a total cost of $500. If she produced one more pizza her total cost rises to $500.11. What does this tell us about Jill's marginal cost of producing pizzas?

Which of the following is an example of a long-run adjustment?

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

Filters

The slope of an isocost line and equals the negative of .