Question 1

Which of the following is considered to be a fixed cost of operating a hairdressing salon?

Accepted Answer

A) Wages. 
B) Insurance. 
C) Cost of receipt books. 
D) Cost of shampoos. 
A) Wages. 
B) Insurance. 
C) Cost of receipt books. 
D) Cost of shampoos.

Question 2

The vertical distance between the TC and TVC is:

Accepted Answer

A) AVC. 
B) MC. 
C) TFC. 
D) ATC. 
E) TMC. 
A) AVC. 
B) MC. 
C) TFC. 
D) ATC. 
E) TMC.

Question 3

The decreasing portion of a firm's long-run average cost curve is attributable to:

Accepted Answer

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

Question 4

The law of diminishing returns applies to which of the following segments of the marginal product of labour curve?

Accepted Answer

A) The entire curve. 
B) The downward-sloping segment only. 
C) The upward-sloping segment only. 
D) The point where labour input is zero. 
A) The entire curve. 
B) The downward-sloping segment only. 
C) The upward-sloping segment only. 
D) The point where labour input is zero.

Question 5

Which of the following is true at the point where diminishing returns set in?

Accepted Answer

A) Both marginal product and marginal cost are at a maximum. 
B) Both marginal product and marginal cost are at a minimum. 
C) Marginal product is at a maximum and marginal cost at a minimum. 
D) Marginal product is at a minimum and marginal cost at a maximum. 
A) Both marginal product and marginal cost are at a maximum. 
B) Both marginal product and marginal cost are at a minimum. 
C) Marginal product is at a maximum and marginal cost at a minimum. 
D) Marginal product is at a minimum and marginal cost at a maximum.

Question 6

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business.In the first year,she had total revenue of $200 000 and business expenses of $100 000.She made a/an:

Accepted Answer

A) economic profit. 
B) economic loss. 
C) implicit profit. 
D) accounting loss but not an economic loss. 
E) zero economic profit. 
A) economic profit. 
B) economic loss. 
C) implicit profit. 
D) accounting loss but not an economic loss. 
E) zero economic profit.

Question 7

Exhibit 6-4 Workers and output data
  
-In Exhibit 6-4,the marginal returns are largest when the _____ worker is hired.

Accepted Answer

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

Question 8

Suppose a firm earns an accounting profit.This means the firm also earns a positive economic profit.

Accepted Answer

A) True 
 B)False

Question 9

If MC is greater than ATC,we know that:

Accepted Answer

A) ATC must be rising. 
B) AVC must be falling. 
C) ATC must be falling. 
D) ATC could be rising or falling. 
E) AVC must be rising. 
A) ATC must be rising. 
B) AVC must be falling. 
C) ATC must be falling. 
D) ATC could be rising or falling. 
E) AVC must be rising.

Question 10

Exhibit 6-5 Cost schedule for a firm
  
-In Exhibit 6-5,by filling in the blanks it can be determined the variable costs for the first unit is:

Accepted Answer

A) $0. 
B) $200. 
C) $700. 
D) $1000. 
E) $3000. 
A) $0. 
B) $200. 
C) $700. 
D) $1000. 
E) $3000.

Question 11

Exhibit 6-6 Cost schedule for firm X
  
-As shown in Exhibit 6-6,the total cost of producing 4 units is:

Accepted Answer

A) $0. 
B) $227. 
C) $250. 
D) $100. 
A) $0. 
B) $227. 
C) $250. 
D) $100.

Question 12

A zero economic profit is the same as a zero accounting profit.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 6-11 Long-run average cost curves
  
-Which firm in Exhibit 6-11 displays a long-run average cost curve with diseconomies of scale beginning at 2000 units of output per week?

Accepted Answer

A)  Firm A. 
B)  Firm B. 
C)  Firm C. 
D)  Firms A and C. 
A)  Firm A. 
B)  Firm B. 
C)  Firm C. 
D)  Firms A and C.

Question 14

The shape of the total cost curve is:

Accepted Answer

A) it completely follows the shape of TFC. 
B) always upwards sloping. 
C) intersecting the TVC at its minimum. 
D) it mimics the shape of the TVC. 
A) it completely follows the shape of TFC. 
B) always upwards sloping. 
C) intersecting the TVC at its minimum. 
D) it mimics the shape of the TVC.

Question 15

A firm can produce 450 litres of milk per day with four workers and 500 litres per day with five workers.The marginal product of the fifth worker expressed in gallons per worker per day,is:

Accepted Answer

A) 35. 
B) 50. 
C) 70. 
D) 350. 
A) 35. 
B) 50. 
C) 70. 
D) 350.

Question 16

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases,then:

Accepted Answer

A) the firm should try to produce less output. 
B) total fixed costs are constant along the LRAC curve. 
C) there are economies of scale. 
D) the firm is probably having significant management problems. 
E) when output is doubled, total costs are doubled. 
A) the firm should try to produce less output. 
B) total fixed costs are constant along the LRAC curve. 
C) there are economies of scale. 
D) the firm is probably having significant management problems. 
E) when output is doubled, total costs are doubled.

Question 17

If MC is less than ATC,we know that:

Accepted Answer

A) ATC must be rising. 
B) AVC must be falling. 
C) ATC must be falling. 
D) ATC could be rising or falling. 
E) AVC must be rising. 
A) ATC must be rising. 
B) AVC must be falling. 
C) ATC must be falling. 
D) ATC could be rising or falling. 
E) AVC must be rising.

Question 18

Exhibit 6-8 Cost schedule for producing pizzas
  
-By filling in the blanks in Exhibit 6-8,the AVC of 3 pizzas is shown to be equal to:

Accepted Answer

A) $9.00. 
B) $10.00. 
C) $13.33. 
D) $22.33. 
E) $40.00. 
A) $9.00. 
B) $10.00. 
C) $13.33. 
D) $22.33. 
E) $40.00.

Question 19

Which of the following statements is true?

Accepted Answer

A) The law of diminishing returns states that beyond some point the marginal product of a variable resource continues to rise. 
B) The marginal product is the change in total output by adding one additional unit of a fixed input. 
C) Fixed costs are costs which vary with the output level. 
D) When marginal productivity of a variable input is falling, then marginal costs of production must be rising. 
E) When marginal cost is below average cost, average cost rises; when marginal cost is above average cost, average cost falls. 
A) The law of diminishing returns states that beyond some point the marginal product of a variable resource continues to rise. 
B) The marginal product is the change in total output by adding one additional unit of a fixed input. 
C) Fixed costs are costs which vary with the output level. 
D) When marginal productivity of a variable input is falling, then marginal costs of production must be rising. 
E) When marginal cost is below average cost, average cost rises; when marginal cost is above average cost, average cost falls.

Question 20

If ATC = $10,AVC = $8,AFC = $2 and MC = $12,then:

Accepted Answer

A) the firm must be operating on the downward-sloping section of its ATC curve. 
B) the firm must be operating on the upward-sloping section of its AFC curve. 
C) the firm must be operating on the upward-sloping section of its ATC curve. 
D) it is uncertain from the figures given where the firm is operating. 
E) the firm must be operating on the downward-sloping section of its AVC curve. 
A) the firm must be operating on the downward-sloping section of its ATC curve. 
B) the firm must be operating on the upward-sloping section of its AFC curve. 
C) the firm must be operating on the upward-sloping section of its ATC curve. 
D) it is uncertain from the figures given where the firm is operating. 
E) the firm must be operating on the downward-sloping section of its AVC curve.

Which of the following is considered to be a fixed cost of operating a hairdressing salon?

The vertical distance between the TC and TVC is:

The decreasing portion of a firm's long-run average cost curve is attributable to:

The law of diminishing returns applies to which of the following segments of the marginal product of labour curve?

Which of the following is true at the point where diminishing returns set in?

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business.In the first year,she had total revenue of $200 000 and business expenses of $100 000.She made a/an:

Exhibit 6-4 Workers and output data -In Exhibit 6-4,the marginal returns are largest when the _____ worker is hired.

Suppose a firm earns an accounting profit.This means the firm also earns a positive economic profit.

If MC is greater than ATC,we know that:

Exhibit 6-5 Cost schedule for a firm -In Exhibit 6-5,by filling in the blanks it can be determined the variable costs for the first unit is:

Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the total cost of producing 4 units is:

A zero economic profit is the same as a zero accounting profit.

Exhibit 6-11 Long-run average cost curves -Which firm in Exhibit 6-11 displays a long-run average cost curve with diseconomies of scale beginning at 2000 units of output per week?

The shape of the total cost curve is:

A firm can produce 450 litres of milk per day with four workers and 500 litres per day with five workers.The marginal product of the fifth worker expressed in gallons per worker per day,is:

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases,then:

If MC is less than ATC,we know that:

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AVC of 3 pizzas is shown to be equal to:

Which of the following statements is true?

If ATC = $10,AVC = $8,AFC = $2 and MC = $12,then:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 6: Production costs

Which of the following is considered to be a fixed cost of operating a hairdressing salon?

The vertical distance between the TC and TVC is:

The decreasing portion of a firm's long-run average cost curve is attributable to:

The law of diminishing returns applies to which of the following segments of the marginal product of labour curve?

Which of the following is true at the point where diminishing returns set in?

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business.In the first year,she had total revenue of $200 000 and business expenses of $100 000.She made a/an:

Exhibit 6-4 Workers and output data -In Exhibit 6-4,the marginal returns are largest when the _____ worker is hired.

Suppose a firm earns an accounting profit.This means the firm also earns a positive economic profit.

If MC is greater than ATC,we know that:

Exhibit 6-5 Cost schedule for a firm -In Exhibit 6-5,by filling in the blanks it can be determined the variable costs for the first unit is:

Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the total cost of producing 4 units is:

A zero economic profit is the same as a zero accounting profit.

Exhibit 6-11 Long-run average cost curves -Which firm in Exhibit 6-11 displays a long-run average cost curve with diseconomies of scale beginning at 2000 units of output per week?

The shape of the total cost curve is:

A firm can produce 450 litres of milk per day with four workers and 500 litres per day with five workers.The marginal product of the fifth worker expressed in gallons per worker per day,is:

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases,then:

If MC is less than ATC,we know that:

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AVC of 3 pizzas is shown to be equal to:

Which of the following statements is true?

If ATC = $10,AVC = $8,AFC = $2 and MC = $12,then:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters