Question 1

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing marginal returns. 
E)  decreasing cost of marginal returns. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing marginal returns. 
E)  decreasing cost of marginal returns.

Question 2

The figure above shows some of a firm's cost curves.
-A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Accepted Answer

A)  only curve A shifts 
B)  only curve B shifts 
C)  only curve C shifts 
D)  both curves A and C shift 
E)  both curves B and C shift 
A)  only curve A shifts 
B)  only curve B shifts 
C)  only curve C shifts 
D)  both curves A and C shift 
E)  both curves B and C shift

Question 3

Total cost is equal to the sum of

Accepted Answer

A)  total revenue and total cost. 
B)  total variable cost and total product. 
C)  total variable cost and total fixed cost. 
D)  total fixed cost and total product. 
E)  the marginal cost plus the total fixed cost plus the total variable cost. 
A)  total revenue and total cost. 
B)  total variable cost and total product. 
C)  total variable cost and total fixed cost. 
D)  total fixed cost and total product. 
E)  the marginal cost plus the total fixed cost plus the total variable cost.

Question 4

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 28
\end{array}$$
-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

Accepted Answer

A)  first 
B)  fourth 
C)  fifth 
D)  sixth 
E)  third 
A)  first 
B)  fourth 
C)  fifth 
D)  sixth 
E)  third

Question 5

Which of the following is correct about marginal and average products?

Accepted Answer

A)  When the marginal product is increasing, the average product must be increasing. 
B)  When the marginal product exceeds the average product, the average product must be increasing. 
C)  When the average product is increasing, the marginal product must be decreasing. 
D)  When the marginal product is decreasing, the average product must be decreasing. 
E)  When the marginal product is increasing, the average product must be decreasing. 
A)  When the marginal product is increasing, the average product must be increasing. 
B)  When the marginal product exceeds the average product, the average product must be increasing. 
C)  When the average product is increasing, the marginal product must be decreasing. 
D)  When the marginal product is decreasing, the average product must be decreasing. 
E)  When the marginal product is increasing, the average product must be decreasing.

Question 6

A firm's long-run average cost curve shows the ________ average cost at which it is possible to produce each output when the firm has had ________ time to change both its labor force and its plant.

Accepted Answer

A)  highest; sufficient 
B)  lowest; sufficient 
C)  lowest; insufficient 
D)  highest; insufficient 
E)  average; sufficient 
A)  highest; sufficient 
B)  lowest; sufficient 
C)  lowest; insufficient 
D)  highest; insufficient 
E)  average; sufficient

Question 7

Economies of scale and diseconomies of scale explain

Accepted Answer

A)  cost behavior in the short run. 
B)  profit maximization in the long run. 
C)  the U-shape of the long-run average cost curve. 
D)  the U-shape of the short-run average total cost curve. 
E)  the U-shape of the marginal cost curves. 
A)  cost behavior in the short run. 
B)  profit maximization in the long run. 
C)  the U-shape of the long-run average cost curve. 
D)  the U-shape of the short-run average total cost curve. 
E)  the U-shape of the marginal cost curves.

Question 8

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

Accepted Answer

A)  short-run cost. 
B)  variable cost. 
C)  productivity cost. 
D)  fixed cost. 
E)  marginal cost. 
A)  short-run cost. 
B)  variable cost. 
C)  productivity cost. 
D)  fixed cost. 
E)  marginal cost.

Question 9

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

Accepted Answer

A)  marginal cost. 
B)  average fixed cost. 
C)  total fixed cost. 
D)  total variable cost. 
E)  average marginal cost. 
A)  marginal cost. 
B)  average fixed cost. 
C)  total fixed cost. 
D)  total variable cost. 
E)  average marginal cost.

Question 10

$$\begin{array} { | l | l | l | l | l | l | l | l | } 
\hline \text { Totantity of Labor (workers) } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Totact (units per hour) } & 0 & 2 & 5 & 9 & 15 & 18 & 17 \
\hline
\end{array}$$
-The table above shows the total product schedule for The X Firm.Decreasing marginal returns occur with the ________ worker because ________.

Accepted Answer

A)  5th; the marginal product of labor for the 5th worker is less than the marginal product of the 4th worker 
B)  5th; the average product of labor is also declining 
C)  4th; output reaches is maximum 
D)  6th; output starts to decline 
E)  6th; the marginal product of labor is greater than the average product of labor 
A)  5th; the marginal product of labor for the 5th worker is less than the marginal product of the 4th worker 
B)  5th; the average product of labor is also declining 
C)  4th; output reaches is maximum 
D)  6th; output starts to decline 
E)  6th; the marginal product of labor is greater than the average product of labor

Question 11

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Accepted Answer

A)  Total product increases as more labor is hired. 
B)  The marginal product is equal to the average product. 
C)  The marginal product is positive. 
D)  The marginal product is greater than the average product. 
E)  The marginal product is less than the average product. 
A)  Total product increases as more labor is hired. 
B)  The marginal product is equal to the average product. 
C)  The marginal product is positive. 
D)  The marginal product is greater than the average product. 
E)  The marginal product is less than the average product.

Question 12

Costs paid in money to hire a resource is

Accepted Answer

A)  normal profit. 
B)  an implicit cost. 
C)  an explicit cost. 
D)  an alternative-use cost. 
E)  economic profit. 
A)  normal profit. 
B)  an implicit cost. 
C)  an explicit cost. 
D)  an alternative-use cost. 
E)  economic profit.

Question 13

The long run is a time period in which

Accepted Answer

A)  some of the firm's resources are fixed. 
B)  all of the firm's resources are fixed. 
C)  all of the firm's resources are variable. 
D)  the firm cannot increase its output. 
E)  all costs become explicit costs. 
A)  some of the firm's resources are fixed. 
B)  all of the firm's resources are fixed. 
C)  all of the firm's resources are variable. 
D)  the firm cannot increase its output. 
E)  all costs become explicit costs.

Question 14

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

Accepted Answer

Yes,downsizing by laying off workers can

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

The figure above shows some of a firm's cost curves. -A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Total cost is equal to the sum of

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

Which of the following is correct about marginal and average products?

A firm's long-run average cost curve shows the average cost at which it is possible to produce each output when the firm has had time to change both its labor force and its plant.

Economies of scale and diseconomies of scale explain

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

Totantity of Labor (workers) 0 1 2 3 4 5 6 Totact (units per hour) 0 2 5 9 15 18 17 -The table above shows the total product schedule for The X Firm.Decreasing marginal returns occur with the worker because .

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Costs paid in money to hire a resource is

The long run is a time period in which

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 14: Production and Cost

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

The figure above shows some of a firm's cost curves. -A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Total cost is equal to the sum of

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

Which of the following is correct about marginal and average products?

A firm's long-run average cost curve shows the ________ average cost at which it is possible to produce each output when the firm has had ________ time to change both its labor force and its plant.

Economies of scale and diseconomies of scale explain

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

Totantity of Labor (workers) 0 1 2 3 4 5 6 Totact (units per hour) 0 2 5 9 15 18 17 -The table above shows the total product schedule for The X Firm.Decreasing marginal returns occur with the ________ worker because ________.

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Costs paid in money to hire a resource is

The long run is a time period in which

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

A firm's long-run average cost curve shows the average cost at which it is possible to produce each output when the firm has had time to change both its labor force and its plant.

Totantity of Labor (workers) 0 1 2 3 4 5 6 Totact (units per hour) 0 2 5 9 15 18 17 -The table above shows the total product schedule for The X Firm.Decreasing marginal returns occur with the worker because .