Question 1

Exhibit 6-5 Cost schedule for a firm
  
-In Exhibit 6-5,by filling in the blanks it can be determined that the total cost of the second unit of output is:

Accepted Answer

A) $0. 
B) $700. 
C) $1000. 
D) $1200. 
E) $1800. 
A) $0. 
B) $700. 
C) $1000. 
D) $1200. 
E) $1800.

Question 2

Which of the following are implicit costs for a typical firm?

Accepted Answer

A) Insurance costs. 
B) Electricity costs. 
C) Opportunity costs of capital owned and used by the firm. 
D) Cost of labour hired by the firm. 
E) The cost of raw materials. 
A) Insurance costs. 
B) Electricity costs. 
C) Opportunity costs of capital owned and used by the firm. 
D) Cost of labour hired by the firm. 
E) The cost of raw materials.

Question 3

The marginal cost is the change in:

Accepted Answer

A) average variable cost as the quantity changes by two units. 
B) total cost as the quantity changes by a number of units. 
C) total variable cost as the quantity changes by one unit. 
D) total fixed cost as the quantity changes by one unit. 
A) average variable cost as the quantity changes by two units. 
B) total cost as the quantity changes by a number of units. 
C) total variable cost as the quantity changes by one unit. 
D) total fixed cost as the quantity changes by one unit.

Question 4

The law of diminishing returns explains why:

Accepted Answer

A) when marginal product falls, marginal cost rises. 
B) economies of scale exist. 
C) marginal product and marginal cost are directly related. 
D) AFC declines over the entire range of output in the long run. 
E) firms produce at the minimum point on the MC curve. 
A) when marginal product falls, marginal cost rises. 
B) economies of scale exist. 
C) marginal product and marginal cost are directly related. 
D) AFC declines over the entire range of output in the long run. 
E) firms produce at the minimum point on the MC curve.

Question 5

When marginal product = 0,marginal cost equals:

Accepted Answer

A) 0. 
B) 1. 
C) the wage rate for one worker. 
D) -1. 
E) not enough information to say. 
A) 0. 
B) 1. 
C) the wage rate for one worker. 
D) -1. 
E) not enough information to say.

Question 6

If a firm increases output and its average total cost declines,then the firm is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 6-8 Cost schedule for producing pizzas
  
-By filling in the blanks in Exhibit 6-8,the AFC of 4 pizzas is shown to be equal to:

Accepted Answer

A) $9.50. 
B) $10.00. 
C) $19.50. 
D) $40.00. 
E) $78.00. 
A) $9.50. 
B) $10.00. 
C) $19.50. 
D) $40.00. 
E) $78.00.

Question 8

The law of diminishing marginal returns explains:

Accepted Answer

A) the rising part of average variable costs. 
B) the economies of scale and the increasing wages. 
C) the shape of the average fixed cost and its correspondence with the total costs. 
D) the declining part of the marginal product curve that corresponds to the rising part of the marginal cost curve. 
A) the rising part of average variable costs. 
B) the economies of scale and the increasing wages. 
C) the shape of the average fixed cost and its correspondence with the total costs. 
D) the declining part of the marginal product curve that corresponds to the rising part of the marginal cost curve.

Question 9

Marginal cost is defined as the increase in total cost resulting from an increase in:

Accepted Answer

A) 1 unit of output. 
B) output of 100 units. 
C) a firm's plant size. 
D) 1 unit of labour. 
A) 1 unit of output. 
B) output of 100 units. 
C) a firm's plant size. 
D) 1 unit of labour.

Question 10

When the cost curves have U-shapes,at the point where marginal cost equals average total cost:

Accepted Answer

A) average variable cost is constant. 
B) fixed cost is declining. 
C) average total cost is at its maximum and the marginal cost is falling. 
D) average total cost is at its minimum and the marginal cost is rising. 
A) average variable cost is constant. 
B) fixed cost is declining. 
C) average total cost is at its maximum and the marginal cost is falling. 
D) average total cost is at its minimum and the marginal cost is rising.

Question 11

The main reason why the slope of the production function decreases is because of:

Accepted Answer

A) increasing returns to the variable factor. 
B) constant returns to an increasing factor. 
C) diminishing returns to the variable factor. 
D) diseconomies of scale. 
E) the fact that all factors are variable. 
A) increasing returns to the variable factor. 
B) constant returns to an increasing factor. 
C) diminishing returns to the variable factor. 
D) diseconomies of scale. 
E) the fact that all factors are variable.

Question 12

Exhibit 6-11 Long-run average cost curves
  
-Which firm in Exhibit 6-11 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Accepted Answer

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

Question 13

Implicit costs are:

Accepted Answer

A) labour costs to the firm. 
B) the opportunity costs of using someone else's resources. 
C) payments from owners of a firm for labour. 
D) the opportunity costs of using resources owned by the firm. 
E) payments to non-owners of a firm for their resources. 
A) labour costs to the firm. 
B) the opportunity costs of using someone else's resources. 
C) payments from owners of a firm for labour. 
D) the opportunity costs of using resources owned by the firm. 
E) payments to non-owners of a firm for their resources.

Question 14

Exhibit 6-2 Production of pizza data
  
-Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the second employee equals:

Accepted Answer

A) 4. 
B) 10. 
C) 14. 
D) 6. 
E) 15. 
A) 4. 
B) 10. 
C) 14. 
D) 6. 
E) 15.

Question 15

Marginal cost is:

Accepted Answer

A) change in total cost divided by change in quantity. 
B) change in total fixed cost divided by change in quantity. 
C) change in average variable cost divided by change in quantity. 
D) change in average fixed cost divided by change in quantity. 
A) change in total cost divided by change in quantity. 
B) change in total fixed cost divided by change in quantity. 
C) change in average variable cost divided by change in quantity. 
D) change in average fixed cost divided by change in quantity.

Question 16

The long-run average cost curve traces the lowest points of the AVC and ATC for all firms.

Accepted Answer

A) True 
 B)False

Question 17

A fixed input is any resource for which the quantity can:

Accepted Answer

A) change any time. 
B) change during a specific time. 
C) not change at all. 
D) not change during a specific time. 
A) change any time. 
B) change during a specific time. 
C) not change at all. 
D) not change during a specific time.

Question 18

The short run is a period of time:

Accepted Answer

A) in which a firm uses at least one fixed input. 
B) that is long enough to permit changes in the firm's plant size. 
C) in which production occurs within one year. 
D) in which production occurs within six months. 
A) in which a firm uses at least one fixed input. 
B) that is long enough to permit changes in the firm's plant size. 
C) in which production occurs within one year. 
D) in which production occurs within six months.

Question 19

Exhibit 6-3 A marginal product curve
  
-As shown in Exhibit 6-3,the marginal product of labour when 5 additional workers are employed per day is (points from B to C):

Accepted Answer

A) 50. 
B) 100. 
C) 150. 
D) 175. 
A) 50. 
B) 100. 
C) 150. 
D) 175.

Question 20

Which of the following is not a source of economies of scale?

Accepted Answer

A) Division and specialisation of labour. 
B) Increase in output. 
C) More efficient use of capital. 
D) All of these. 
A) Division and specialisation of labour. 
B) Increase in output. 
C) More efficient use of capital. 
D) All of these.

Exhibit 6-5 Cost schedule for a firm -In Exhibit 6-5,by filling in the blanks it can be determined that the total cost of the second unit of output is:

Which of the following are implicit costs for a typical firm?

The marginal cost is the change in:

The law of diminishing returns explains why:

When marginal product = 0,marginal cost equals:

If a firm increases output and its average total cost declines,then the firm is experiencing economies of scale.

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AFC of 4 pizzas is shown to be equal to:

The law of diminishing marginal returns explains:

Marginal cost is defined as the increase in total cost resulting from an increase in:

When the cost curves have U-shapes,at the point where marginal cost equals average total cost:

The main reason why the slope of the production function decreases is because of:

Exhibit 6-11 Long-run average cost curves -Which firm in Exhibit 6-11 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Implicit costs are:

Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the second employee equals:

Marginal cost is:

The long-run average cost curve traces the lowest points of the AVC and ATC for all firms.

A fixed input is any resource for which the quantity can:

The short run is a period of time:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,the marginal product of labour when 5 additional workers are employed per day is (points from B to C):

Which of the following is not a source of economies of scale?

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

Exam 6: Production costs

Exhibit 6-5 Cost schedule for a firm -In Exhibit 6-5,by filling in the blanks it can be determined that the total cost of the second unit of output is:

Which of the following are implicit costs for a typical firm?

The marginal cost is the change in:

The law of diminishing returns explains why:

When marginal product = 0,marginal cost equals:

If a firm increases output and its average total cost declines,then the firm is experiencing economies of scale.

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AFC of 4 pizzas is shown to be equal to:

The law of diminishing marginal returns explains:

Marginal cost is defined as the increase in total cost resulting from an increase in:

When the cost curves have U-shapes,at the point where marginal cost equals average total cost:

The main reason why the slope of the production function decreases is because of:

Exhibit 6-11 Long-run average cost curves -Which firm in Exhibit 6-11 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Implicit costs are:

Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the second employee equals:

Marginal cost is:

The long-run average cost curve traces the lowest points of the AVC and ATC for all firms.

A fixed input is any resource for which the quantity can:

The short run is a period of time:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,the marginal product of labour when 5 additional workers are employed per day is (points from B to C):

Which of the following is not a source of economies of scale?

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