Question 1

Exhibit 6-1: The production function
  
-In Exhibit 6-1,total output increases from A to C because:

Accepted Answer

A) workers receive higher wages. 
B) of technological progress in industries. 
C) the law of diminishing marginal returns sets in. 
D) of specialisation and therefore the increasing returns. 
A) workers receive higher wages. 
B) of technological progress in industries. 
C) the law of diminishing marginal returns sets in. 
D) of specialisation and therefore the increasing returns.

Question 2

Economic profit is:

Accepted Answer

A) always zero. 
B) always less than accounting profit. 
C) always more than accounting profit. 
D) only sometimes less than accounting profit. 
A) always zero. 
B) always less than accounting profit. 
C) always more than accounting profit. 
D) only sometimes less than accounting profit.

Question 3

Exhibit 6-8 Cost schedule for producing pizzas
  
-By filling in the blanks in Exhibit 6-8,the AFC 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 4

If a firm has total revenue of $300 million,explicit costs of $200 million and implicit costs of $30 million,its accounting profit is:

Accepted Answer

A) $200 million. 
B) $100 million. 
C) $70 million. 
D) -$10 million. 
E) -$20 million. 
A) $200 million. 
B) $100 million. 
C) $70 million. 
D) -$10 million. 
E) -$20 million.

Question 5

Exhibit 6-11 Long-run average cost curves
  
-In Exhibit 6-11,which firm's long-run average cost curve experiences constant returns to scale?

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 6

Long-run economies of scale exist when the long-run average cost curve:

Accepted Answer

A) rises. 
B) remains constant. 
C) falls. 
D) does not exist. 
A) rises. 
B) remains constant. 
C) falls. 
D) does not exist.

Question 7

The marginal product curve reflects the change in:

Accepted Answer

A) output because the productivity is constant. 
B) price because an introduction of competition leads to reduction in prices. 
C) wages of workers that are increasing over time. 
D) the total output curve because marginal product is the slope of the total output curve. 
A) output because the productivity is constant. 
B) price because an introduction of competition leads to reduction in prices. 
C) wages of workers that are increasing over time. 
D) the total output curve because marginal product is the slope of the total output curve.

Question 8

As a firm expands its output from zero:

Accepted Answer

A) marginal wage of labour increases. 
B) it suffers from the diseconomies of scale. 
C) it has to pay wages, rent and electricity to cover the variable costs. 
D) no change in the cost is occurring. 
A) marginal wage of labour increases. 
B) it suffers from the diseconomies of scale. 
C) it has to pay wages, rent and electricity to cover the variable costs. 
D) no change in the cost is occurring.

Question 9

In the long run,all costs are considered variable.

Accepted Answer

A) True 
 B)False

Question 10

When marginal product is rising,marginal cost will be:

Accepted Answer

A) falling. 
B) rising. 
C) rising or falling. 
D) constant. 
E) indeterminate. 
A) falling. 
B) rising. 
C) rising or falling. 
D) constant. 
E) indeterminate.

Question 11

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Accepted Answer

A) negative returns to scale. 
B) diminishing returns. 
C) inverse return to labour. 
D) demand. 
A) negative returns to scale. 
B) diminishing returns. 
C) inverse return to labour. 
D) demand.

Question 12

Implicit costs are best thought of as:

Accepted Answer

A) variable costs. 
B) marginal costs. 
C) accounting costs. 
D) opportunity costs. 
E) sunk costs. 
A) variable costs. 
B) marginal costs. 
C) accounting costs. 
D) opportunity costs. 
E) sunk costs.

Question 13

When the curve that envelops the series of possible short-run average total cost curves is horizontal,this means that there are:

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) diminishing returns. 
E) some fixed factors of production. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) diminishing returns. 
E) some fixed factors of production.

Question 14

Economies of scale are created by greater efficiency of capital and by:

Accepted Answer

A) longer chains of command in management. 
B) better wages for labour. 
C) smaller plant sizes. 
D) increased specialisation of labour. 
A) longer chains of command in management. 
B) better wages for labour. 
C) smaller plant sizes. 
D) increased specialisation of labour.

Question 15

Different scales of production
Exhibit 6-9 Cost curves
  
-In Exhibit 6-9,the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Accepted Answer

A) Diseconomies of scale; constant returns to scale; economies of scale. 
B) Constant returns to scale; economies of scale; diseconomies of scale. 
C) Economies of scale; constant returns to scale; diseconomies of scale. 
D) Diseconomies of scale; economies of scale; constant returns to scale. 
E) Economies of scale; diseconomies of scale; constant returns to scale. 
A) Diseconomies of scale; constant returns to scale; economies of scale. 
B) Constant returns to scale; economies of scale; diseconomies of scale. 
C) Economies of scale; constant returns to scale; diseconomies of scale. 
D) Diseconomies of scale; economies of scale; constant returns to scale. 
E) Economies of scale; diseconomies of scale; constant returns to scale.

Question 16

The maximum marginal product corresponds with:

Accepted Answer

A) minimum average total cost. 
B) minimum average variable cost. 
C) minimum marginal cost. 
D) maximum marginal cost. 
A) minimum average total cost. 
B) minimum average variable cost. 
C) minimum marginal cost. 
D) maximum marginal cost.

Question 17

Marginal cost initially decreases because:

Accepted Answer

A) marginal product is decreasing. 
B) additional workers add to the complexity of production. 
C) the extra cost of producing one more unit of output increases. 
D) of the specialisation of workers. 
A) marginal product is decreasing. 
B) additional workers add to the complexity of production. 
C) the extra cost of producing one more unit of output increases. 
D) of the specialisation of workers.

Question 18

Economies of scale exist over all ranges of output for which short-run average total cost exceeds long-run average cost.

Accepted Answer

A) True 
 B)False

Question 19

A farm can produce 10 000 bushels of wheat per year with five workers and 12 000 bushels with six workers.The marginal product of the sixth worker for this farm is:

Accepted Answer

A) 10 000 bushels. 
B) 2000 bushels. 
C) 500 bushels. 
D) 23 000 bushels. 
A) 10 000 bushels. 
B) 2000 bushels. 
C) 500 bushels. 
D) 23 000 bushels.

Question 20

Economic profit equals total revenue minus:

Accepted Answer

A) total explicit costs. 
B) implicit costs. 
C) total opportunity costs. 
D) variable costs. 
A) total explicit costs. 
B) implicit costs. 
C) total opportunity costs. 
D) variable costs.

Exhibit 6-1: The production function -In Exhibit 6-1,total output increases from A to C because:

Economic profit is:

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

If a firm has total revenue of $300 million,explicit costs of $200 million and implicit costs of $30 million,its accounting profit is:

Exhibit 6-11 Long-run average cost curves -In Exhibit 6-11,which firm's long-run average cost curve experiences constant returns to scale?

Long-run economies of scale exist when the long-run average cost curve:

The marginal product curve reflects the change in:

As a firm expands its output from zero:

In the long run,all costs are considered variable.

When marginal product is rising,marginal cost will be:

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Implicit costs are best thought of as:

When the curve that envelops the series of possible short-run average total cost curves is horizontal,this means that there are:

Economies of scale are created by greater efficiency of capital and by:

Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

The maximum marginal product corresponds with:

Marginal cost initially decreases because:

Economies of scale exist over all ranges of output for which short-run average total cost exceeds long-run average cost.

A farm can produce 10 000 bushels of wheat per year with five workers and 12 000 bushels with six workers.The marginal product of the sixth worker for this farm is:

Economic profit equals total revenue minus:

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

Exhibit 6-1: The production function -In Exhibit 6-1,total output increases from A to C because:

Economic profit is:

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

If a firm has total revenue of $300 million,explicit costs of $200 million and implicit costs of $30 million,its accounting profit is:

Exhibit 6-11 Long-run average cost curves -In Exhibit 6-11,which firm's long-run average cost curve experiences constant returns to scale?

Long-run economies of scale exist when the long-run average cost curve:

The marginal product curve reflects the change in:

As a firm expands its output from zero:

In the long run,all costs are considered variable.

When marginal product is rising,marginal cost will be:

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Implicit costs are best thought of as:

When the curve that envelops the series of possible short-run average total cost curves is horizontal,this means that there are:

Economies of scale are created by greater efficiency of capital and by:

Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

The maximum marginal product corresponds with:

Marginal cost initially decreases because:

Economies of scale exist over all ranges of output for which short-run average total cost exceeds long-run average cost.

A farm can produce 10 000 bushels of wheat per year with five workers and 12 000 bushels with six workers.The marginal product of the sixth worker for this farm is:

Economic profit equals total revenue minus:

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