Question 1

The average-marginal rule states:

Accepted Answer

A) when the marginal magnitude is rising, the average magnitude must also be rising. 
B) when the marginal magnitude is falling, the average magnitude must also be falling. 
C) when the marginal magnitude is below the average magnitude, the average magnitude falls. 
D) when the average magnitude rises, the marginal magnitude falls. 
E) a and b 
A) when the marginal magnitude is rising, the average magnitude must also be rising. 
B) when the marginal magnitude is falling, the average magnitude must also be falling. 
C) when the marginal magnitude is below the average magnitude, the average magnitude falls. 
D) when the average magnitude rises, the marginal magnitude falls. 
E) a and b

Question 2

Exhibit 21-8
​
  
-Exhibit 21-8 shows how output varies with the only variable input used in its production. Marginal physical product of the fifth unit of labor is

Accepted Answer

A) 0. 
B) 20. 
C) 50. 
D) 172. 
A) 0. 
B) 20. 
C) 50. 
D) 172.

Question 3

Which of the following is an example of market coordination?

Accepted Answer

A) Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples rises, and consumers cut back on their purchases of pineapples. 
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler. 
C) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily. 
D) a and b 
E) a, b, and c 
A) Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples rises, and consumers cut back on their purchases of pineapples. 
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler. 
C) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily. 
D) a and b 
E) a, b, and c

Question 4

Exhibit 21-2
​
  
-Refer to Exhibit 21-2. What is the average variable cost of producing 120 units of output?

Accepted Answer

A) $0.67 
B) $1.17 
C) $1.00 
D) $1.44 
E) There is not enough information provided to answer the question. 
A) $0.67 
B) $1.17 
C) $1.00 
D) $1.44 
E) There is not enough information provided to answer the question.

Question 5

In a college course it is likely that there will be ___________ shirking in a group project than in an individual project because the costs of shirking are relatively _________ in the group project.

Accepted Answer

A) less; higher 
B) more; higher 
C) less; lower 
D) more; lower 
A) less; higher 
B) more; higher 
C) less; lower 
D) more; lower

Question 6

-Refer to Situation 21-4. What are Joe's economic profits?

Accepted Answer

A) $0 
B) $25,000 
C) -$25,000 
D) $40,000 
E) $75,000 
A) $0 
B) $25,000 
C) -$25,000 
D) $40,000 
E) $75,000

Question 7

The "visible hand" is a metaphor used to describe

Accepted Answer

A) market coordination. 
B) managerial coordination. 
C) the separation of ownership from control. 
D) how price changes motivate individual coordination. 
A) market coordination. 
B) managerial coordination. 
C) the separation of ownership from control. 
D) how price changes motivate individual coordination.

Question 8

Fixed costs

Accepted Answer

A) are equal to explicit costs plus implicit costs. 
B) do not vary as output varies. 
C) are the same as total costs for any level of output greater than zero. 
D) are another name for sunk costs. 
A) are equal to explicit costs plus implicit costs. 
B) do not vary as output varies. 
C) are the same as total costs for any level of output greater than zero. 
D) are another name for sunk costs.

Question 9

Exhibit 21-3
​
  
-Refer to Exhibit 21-3. The average fixed cost of producing 25 units of output is

Accepted Answer

A) $500.00. 
B) $20.00. 
C) $50.00. 
D) $2.50. 
E) indeterminable with the information given. 
A) $500.00. 
B) $20.00. 
C) $50.00. 
D) $2.50. 
E) indeterminable with the information given.

Question 10

The law of diminishing marginal returns helps to explain why the marginal cost curve typically has a downward-sloping portion.

Accepted Answer

A) True 
 B)False

Question 11

Consider the following information about a business Diane opened last year: price = $20, quantity sold = 25,000; implicit cost = $255,000; explicit cost = $360,000. Assuming that all relevant costs and revenue are noted, what was Diane's economic profit?

Accepted Answer

A) $140,000 
B) -$115,000 
C) -$140,000 
D) $220,000 
E) $245,000 
A) $140,000 
B) -$115,000 
C) -$140,000 
D) $220,000 
E) $245,000

Question 12

A firm can use a given plant more intensively and it can change the size of a plant. When it uses a given plant more intensively, it is holding one factor __________ and therefore the time period of production is most likely the __________.

Accepted Answer

A) fixed; short run 
B) fixed; long run 
C) more important than another; long run 
D) more important than another; short run 
A) fixed; short run 
B) fixed; long run 
C) more important than another; long run 
D) more important than another; short run

Question 13

Which of the following will not change the cost curves for good X?

Accepted Answer

A) a change in the price good X 
B) a change in input prices necessary for the production of good X 
C) a change in taxes paid by the producers of good X 
D) a change in technology in the production of good X 
E) b and d 
A) a change in the price good X 
B) a change in input prices necessary for the production of good X 
C) a change in taxes paid by the producers of good X 
D) a change in technology in the production of good X 
E) b and d

Question 14

In the long run,

Accepted Answer

A) all costs are variable costs. 
B) all costs are fixed costs. 
C) there are no variable costs. 
D) b and c 
A) all costs are variable costs. 
B) all costs are fixed costs. 
C) there are no variable costs. 
D) b and c

Question 15

The main difference between the short run and the long run is that

Accepted Answer

A) firms earn losses in the long run, but not in the short run. 
B) the long run always refers to a time period of one year or longer. 
C) in the long run, only one input can be fixed. 
D) in the short run, one or more inputs are fixed. 
E) none of the above 
A) firms earn losses in the long run, but not in the short run. 
B) the long run always refers to a time period of one year or longer. 
C) in the long run, only one input can be fixed. 
D) in the short run, one or more inputs are fixed. 
E) none of the above

Question 16

Using social media, unlike traditionalmedia, people can make their opinions known with little to no marginal cost.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 21-3
​
  
-Refer to Exhibit 21-3. The average variable cost of producing 10 units of output is

Accepted Answer

A) $2.00. 
B) $1.75. 
C) $20.00. 
D) $2.25. 
E) $2.50. 
A) $2.00. 
B) $1.75. 
C) $20.00. 
D) $2.25. 
E) $2.50.

Question 18

Exhibit 21-13
​
  
-Refer to Exhibit 21-13. What dollar amounts go in blanks (V) and (W), respectively?

Accepted Answer

A) $50; $70 
B) $12.50; $14 
C) $140; $150 
D) $82.50; $80 
E) There is not enough information to answer this question. 
A) $50; $70 
B) $12.50; $14 
C) $140; $150 
D) $82.50; $80 
E) There is not enough information to answer this question.

Question 19

Exhibit 21-5
​
  
-Refer to Exhibit 21-5. Economies of scale are present between

Accepted Answer

A) points A and B. 
B) points A and C. 
C) points B and C. 
D) points B and D. 
E) points C and D. 
A) points A and B. 
B) points A and C. 
C) points B and C. 
D) points B and D. 
E) points C and D.

Question 20

Average fixed cost

Accepted Answer

A) is greater at lower levels of output than at higher levels. 
B) does not change as output changes. 
C) exists only in the short run. 
D) is usually greater at higher levels of output than at lower levels of output. 
E) a and c 
A) is greater at lower levels of output than at higher levels. 
B) does not change as output changes. 
C) exists only in the short run. 
D) is usually greater at higher levels of output than at lower levels of output. 
E) a and c

Exam 21: Production and Costs

The average-marginal rule states:

Exhibit 21-8 ​ -Exhibit 21-8 shows how output varies with the only variable input used in its production. Marginal physical product of the fifth unit of labor is

Which of the following is an example of market coordination?

Exhibit 21-2 ​ -Refer to Exhibit 21-2. What is the average variable cost of producing 120 units of output?

In a college course it is likely that there will be ___________ shirking in a group project than in an individual project because the costs of shirking are relatively _________ in the group project.

-Refer to Situation 21-4. What are Joe's economic profits?

The "visible hand" is a metaphor used to describe

Fixed costs

Exhibit 21-3 ​ -Refer to Exhibit 21-3. The average fixed cost of producing 25 units of output is

The law of diminishing marginal returns helps to explain why the marginal cost curve typically has a downward-sloping portion.

Consider the following information about a business Diane opened last year: price = $20, quantity sold = 25,000; implicit cost = $255,000; explicit cost = $360,000. Assuming that all relevant costs and revenue are noted, what was Diane's economic profit?

A firm can use a given plant more intensively and it can change the size of a plant. When it uses a given plant more intensively, it is holding one factor __________ and therefore the time period of production is most likely the __________.

Which of the following will not change the cost curves for good X?

In the long run,

The main difference between the short run and the long run is that

Using social media, unlike traditionalmedia, people can make their opinions known with little to no marginal cost.

Exhibit 21-3 ​ -Refer to Exhibit 21-3. The average variable cost of producing 10 units of output is

Exhibit 21-13 ​ -Refer to Exhibit 21-13. What dollar amounts go in blanks (V) and (W), respectively?

Exhibit 21-5 ​ -Refer to Exhibit 21-5. Economies of scale are present between

Average fixed cost

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 21-8 -Exhibit 21-8 shows how output varies with the only variable input used in its production. Marginal physical product of the fifth unit of labor is

Exhibit 21-2 -Refer to Exhibit 21-2. What is the average variable cost of producing 120 units of output?

In a college course it is likely that there will be ___ shirking in a group project than in an individual project because the costs of shirking are relatively _ in the group project.

Exhibit 21-3 -Refer to Exhibit 21-3. The average fixed cost of producing 25 units of output is

A firm can use a given plant more intensively and it can change the size of a plant. When it uses a given plant more intensively, it is holding one factor and therefore the time period of production is most likely the .

Exhibit 21-3 -Refer to Exhibit 21-3. The average variable cost of producing 10 units of output is

Exhibit 21-13 -Refer to Exhibit 21-13. What dollar amounts go in blanks (V) and (W), respectively?

Exhibit 21-5 -Refer to Exhibit 21-5. Economies of scale are present between