Question 1

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve A is the firm's

Accepted Answer

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

Question 2

When the slope of the total product curve is steep,the marginal product is

Accepted Answer

A)  zero. 
B)  negative. 
C)  high. 
D)  low. 
E)  not defined. 
A)  zero. 
B)  negative. 
C)  high. 
D)  low. 
E)  not defined.

Question 3

Which average cost curves are U-shaped?

Accepted Answer

Both the average total cost an

Question 4

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70
\end{array}$$
-The above table shows the total product schedule for Hair Today,a hair styling salon.The average product when four workers are hired is

Accepted Answer

A)  10 hair stylings. 
B)  15 hair stylings. 
C)  20 hair stylings. 
D)  240 hair stylings. 
E)  the same as when five workers are hired. 
A)  10 hair stylings. 
B)  15 hair stylings. 
C)  20 hair stylings. 
D)  240 hair stylings. 
E)  the same as when five workers are hired.

Question 5

$$\begin{array}{l}
\text { Output }\
\begin{array} { c c } 
\begin{array} { c } 
\text { (gallons of ice } \
\text { cream per hour) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 1 \
1 & 2 \
2 & 3 \
3 & 5 \
4 & 8 \
5 & 11
\end{array}
\end{array}$$
-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Accepted Answer

A)  $2. 
B)  $3. 
C)  $5. 
D)  $8. 
E)  $32. 
A)  $2. 
B)  $3. 
C)  $5. 
D)  $8. 
E)  $32.

Question 6

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker,that worker's marginal product exceeded the marginal product of the previous worker.As a result,when the last worker was hired,Denise's average product of labor

Accepted Answer

A)  decreased. 
B)  increased. 
C)  did not change. 
D)  perhaps changed, but there is not enough information to determine whether or not it did change. 
E)  equals the marginal product of labor. 
A)  decreased. 
B)  increased. 
C)  did not change. 
D)  perhaps changed, but there is not enough information to determine whether or not it did change. 
E)  equals the marginal product of labor.

Question 7

Suppose the local newspaper hires students to fold and bag newspapers for delivery and pays them $20 per shift.Five students can fold and bag 300 newspapers per shift.The fourth student added 50 newspapers to total output.The cost of the capital the firm uses is fixed at $50 per shift.
a.Is the newspaper operating in the long run or short run? Why?
b.What is the average product of 5 students?
c.Calculate the total fixed cost,total variable cost,and total costs of folding and bagging 300 newspapers.
d.Calculate the average fixed cost,average variable cost,and average total costs of folding and bagging 300 newspapers.
e.What is the marginal cost of one of the 50 newspapers folded and bagged by the fourth student?

Accepted Answer

a.The firm is operating in the short run

Question 8

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 690 machines.Suppose Jill adds one more worker and,as a result,her factory's output increases to 700.Jill's marginal product of labor from the last worker hired equals ________.

Accepted Answer

A)  10 
B)  20 
C)  690 
D)  700 
E)  None of the above answers is correct. 
A)  10 
B)  20 
C)  690 
D)  700 
E)  None of the above answers is correct.

Question 9

Which of the following is an implicit cost in Jim's business venture?
i.the salary Jim could have earned at another job
ii.the interest Jim must pay on the loan he incurred to help open his business
iii.the interest Jim lost when he used his savings to help open his business

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 10

Cost curves shift if
i.technology changes.
ii.the prices of factors of production change.
iii.productivity changes.

Accepted Answer

A)  only i 
B)  i and iii 
C)  only ii 
D)  i and ii 
E)  i, ii, and iii 
A)  only i 
B)  i and iii 
C)  only ii 
D)  i and ii 
E)  i, ii, and iii

Question 11

The paramount goal of a firm is to

Accepted Answer

A)  maximize profit. 
B)  maximize sales. 
C)  maximize total revenue. 
D)  minimize costs. 
E)  force its competitors into bankruptcy. 
A)  maximize profit. 
B)  maximize sales. 
C)  maximize total revenue. 
D)  minimize costs. 
E)  force its competitors into bankruptcy.

Question 12

Which of the following statements correctly describes a total product curve?

Accepted Answer

A)  Points above the total produce curve are efficient. 
B)  The curve shows that output always increases as labor employed increases. 
C)  The curve separates attainable outputs from unattainable outputs. 
D)  The curve shows minimum levels of output. 
E)  The curve first falls, reaches a minimum, and then rises. 
A)  Points above the total produce curve are efficient. 
B)  The curve shows that output always increases as labor employed increases. 
C)  The curve separates attainable outputs from unattainable outputs. 
D)  The curve shows minimum levels of output. 
E)  The curve first falls, reaches a minimum, and then rises.

Question 13

If 10 workers can produce 1,500 units of output and 11 workers can produce 1,600 units of output,then the average product of 11 workers is

Accepted Answer

A)  1,600 units. 
B)  1,500 units. 
C)  145.5 units. 
D)  100 units. 
E)  136.4 units. 
A)  1,600 units. 
B)  1,500 units. 
C)  145.5 units. 
D)  100 units. 
E)  136.4 units.

Question 14

"If the marginal product of labor curve slopes downward,then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

Accepted Answer

The statement is incorrect.The relations

Question 15

$$\begin{array}{l}
\text { Labor }\
\begin{array} { c c } 
\text { (workers) } & \text { Output } \
\hline 0 & 0 \
1 & 20 \
2 & 50 \
3 & 70 \
4 & 80 \
5 & 85
\end{array}
\end{array}$$
-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

Accepted Answer

A)  less than $5. 
B)  more than $5 and less than $110. 
C)  more than $110 and less than $120. 
D)  more than $120 and less than $150. 
E)  more than $150. 
A)  less than $5. 
B)  more than $5 and less than $110. 
C)  more than $110 and less than $120. 
D)  more than $120 and less than $150. 
E)  more than $150.

Question 16

An increase in the price of labor (a variable resource)shifts

Accepted Answer

A)  all cost curves upward. 
B)  the variable cost curves upward but leaves the fixed cost curves unchanged. 
C)  the fixed cost curves upward but leaves the variable cost curves unchanged. 
D)  the marginal cost curve rightward. 
E)  none of the cost curves. 
A)  all cost curves upward. 
B)  the variable cost curves upward but leaves the fixed cost curves unchanged. 
C)  the fixed cost curves upward but leaves the variable cost curves unchanged. 
D)  the marginal cost curve rightward. 
E)  none of the cost curves.

Question 17

Which of the following is an explicit cost in Jim's business venture?

Accepted Answer

A)  the salary Jim could have earned at another job 
B)  the interest Jim does not earn because he invested his savings in his business 
C)  the wages Jim pays his workers 
D)  Jim's normal profit 
E)  Answers A, B, and D are correct. 
A)  the salary Jim could have earned at another job 
B)  the interest Jim does not earn because he invested his savings in his business 
C)  the wages Jim pays his workers 
D)  Jim's normal profit 
E)  Answers A, B, and D are correct.

Question 18

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve B is the firm's

Accepted Answer

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

Question 19

Ayanna grows herbs.Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker.This year she doubled her land to 500 square feet,doubled her workers to 2,and grew 4,500 pounds of herbs.She sells her rare,organic herbs for $50 a pound.She pays her a worker $25,000 a year and rents her land for $100 per square foot for a year.These are her only costs.
a.What was Ayanna's total cost last year and this year?
b.What was Ayanna's average total cost last year and this year?
c.Did Ayanna experience economies or diseconomies of scale?

Accepted Answer

a.Ayanna's total cost last year was $50,

Question 20

Once production has reached the maximum average product of labor,if production increases then

Accepted Answer

A)  average fixed cost rises. 
B)  total costs decrease. 
C)  total product decreases. 
D)  decreasing marginal returns occur. 
E)  the plant size must be increased. 
A)  average fixed cost rises. 
B)  total costs decrease. 
C)  total product decreases. 
D)  decreasing marginal returns occur. 
E)  the plant size must be increased.

The figure above shows some of a firm's cost curves. -Based on the figure above,curve A is the firm's

When the slope of the total product curve is steep,the marginal product is

Which average cost curves are U-shaped?

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The above table shows the total product schedule for Hair Today,a hair styling salon.The average product when four workers are hired is

Output (gallons of ice cream per hour) Total cost (dollars) 0 1 1 2 2 3 3 5 4 8 5 11 -The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker,that worker's marginal product exceeded the marginal product of the previous worker.As a result,when the last worker was hired,Denise's average product of labor

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 690 machines.Suppose Jill adds one more worker and,as a result,her factory's output increases to 700.Jill's marginal product of labor from the last worker hired equals ________.

Which of the following is an implicit cost in Jim's business venture? i.the salary Jim could have earned at another job ii.the interest Jim must pay on the loan he incurred to help open his business iii.the interest Jim lost when he used his savings to help open his business

Cost curves shift if i.technology changes. ii.the prices of factors of production change. iii.productivity changes.

The paramount goal of a firm is to

Which of the following statements correctly describes a total product curve?

If 10 workers can produce 1,500 units of output and 11 workers can produce 1,600 units of output,then the average product of 11 workers is

"If the marginal product of labor curve slopes downward,then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

Labor (workers) Output 0 0 1 20 2 50 3 70 4 80 5 85 -The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

An increase in the price of labor (a variable resource)shifts

Which of the following is an explicit cost in Jim's business venture?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve B is the firm's

Once production has reached the maximum average product of labor,if production increases then

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

The figure above shows some of a firm's cost curves. -Based on the figure above,curve A is the firm's

When the slope of the total product curve is steep,the marginal product is

Which average cost curves are U-shaped?

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The above table shows the total product schedule for Hair Today,a hair styling salon.The average product when four workers are hired is

Output (gallons of ice cream per hour) Total cost (dollars) 0 1 1 2 2 3 3 5 4 8 5 11 -The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker,that worker's marginal product exceeded the marginal product of the previous worker.As a result,when the last worker was hired,Denise's average product of labor

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 690 machines.Suppose Jill adds one more worker and,as a result,her factory's output increases to 700.Jill's marginal product of labor from the last worker hired equals ________.

Which of the following is an implicit cost in Jim's business venture? i.the salary Jim could have earned at another job ii.the interest Jim must pay on the loan he incurred to help open his business iii.the interest Jim lost when he used his savings to help open his business

Cost curves shift if i.technology changes. ii.the prices of factors of production change. iii.productivity changes.

The paramount goal of a firm is to

Which of the following statements correctly describes a total product curve?

If 10 workers can produce 1,500 units of output and 11 workers can produce 1,600 units of output,then the average product of 11 workers is

"If the marginal product of labor curve slopes downward,then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

Labor (workers) Output 0 0 1 20 2 50 3 70 4 80 5 85 -The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

An increase in the price of labor (a variable resource)shifts

Which of the following is an explicit cost in Jim's business venture?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve B is the firm's

Once production has reached the maximum average product of labor,if production increases then

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