Question 1

The production and cost information provided in the table above for Flaming Fernando's,a restaurant that sells Fiery Frijoles,is for the

Accepted Answer

A)  short run because there are no variable costs. 
B)  short run because there is a fixed cost. 
C)  long run because there are no variable costs. 
D)  long run because there are no fixed costs. 
E)  short run and long run because the total cost increases as production increases. 
A)  short run because there are no variable costs. 
B)  short run because there is a fixed cost. 
C)  long run because there are no variable costs. 
D)  long run because there are no fixed costs. 
E)  short run and long run because the total cost increases as production increases.

Question 2

The long run is a time period that is

Accepted Answer

A)  five years or longer. 
B)  long enough to change the amount of labor employed. 
C)  long enough to change the size of the firm's plant and all other inputs. 
D)  long enough to change the amount of labor employed but not to change the size of the plant. 
E)  None of the above answers describes the long run. 
A)  five years or longer. 
B)  long enough to change the amount of labor employed. 
C)  long enough to change the size of the firm's plant and all other inputs. 
D)  long enough to change the amount of labor employed but not to change the size of the plant. 
E)  None of the above answers describes the long run.

Question 3

What does the average product of labor equal?

Accepted Answer

The average product of labor e

Question 4

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 5

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Accepted Answer

A)  increasing marginal returns 
B)  diseconomies of scale 
C)  economies of scale 
D)  random luck 
E)  decreasing cost of marginal returns 
A)  increasing marginal returns 
B)  diseconomies of scale 
C)  economies of scale 
D)  random luck 
E)  decreasing cost of marginal returns

Question 6

In economics,a "normal profit" is the return to

Accepted Answer

A)  labor. 
B)  capital. 
C)  land. 
D)  entrepreneurship. 
E)  Answers B and D are correct. 
A)  labor. 
B)  capital. 
C)  land. 
D)  entrepreneurship. 
E)  Answers B and D are correct.

Question 7

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average variable cost equals

Accepted Answer

A)  $2,400. 
B)  $300. 
C)  $7.50. 
D)  $10.00. 
E)  $1,800. 
A)  $2,400. 
B)  $300. 
C)  $7.50. 
D)  $10.00. 
E)  $1,800.

Question 8

Marginal cost

Accepted Answer

A)  is the difference between total cost and total fixed cost. 
B)  increases as the marginal product of labor increases. 
C)  decreases as the average product of labor increases. 
D)  is the change in total cost arising from a one-unit increase in output. 
E)  equals the change in variable cost divided by the change in fixed cost when output increases by one unit. 
A)  is the difference between total cost and total fixed cost. 
B)  increases as the marginal product of labor increases. 
C)  decreases as the average product of labor increases. 
D)  is the change in total cost arising from a one-unit increase in output. 
E)  equals the change in variable cost divided by the change in fixed cost when output increases by one unit.

Question 9

As we observe the cost curves graph,we see that the

Accepted Answer

A)  MC curve intersects the ATC curve at its maximum. 
B)  MC curve can not be U-shaped. 
C)  ATC curve always has a negative slope. 
D)  MC curve intersects the AVC curve and ATC curve at their minimums. 
E)  MC constantly falls as output increases. 
A)  MC curve intersects the ATC curve at its maximum. 
B)  MC curve can not be U-shaped. 
C)  ATC curve always has a negative slope. 
D)  MC curve intersects the AVC curve and ATC curve at their minimums. 
E)  MC constantly falls as output increases.

Question 10

The main source of economies of scale is

Accepted Answer

A)  better management. 
B)  constant returns to plant size. 
C)  specialization. 
D)  long-run cost curves eventually sloping downward. 
E)  increases in the labor force not matched by increases in the plant size. 
A)  better management. 
B)  constant returns to plant size. 
C)  specialization. 
D)  long-run cost curves eventually sloping downward. 
E)  increases in the labor force not matched by increases in the plant size.

Question 11

Rufus runs a skunk-skinning service in West Virginia.He employs skinners at a wage rate of $240 a week for each one.He leases the shack where his workers work for $200 per week.The rent is fixed for the next two years.Last week his 10 employees managed to skin a total of 300 skunks.
a.What is the average product of labor for Rufus's company?
b.What is Rufus' total variable cost per week?
c.What is the average variable cost for Rufus's company?
d.If Rufus adds his brother Jethro to his staff,at a wage rate of $240 a week,and his company can now skin 310 skunks per week,what is Rufus's new average variable cost?

Accepted Answer

a.The average product of labor is 30 sku

Question 12

John fishes for a living.Last year,he sold $100,000 of fish.Bait,nets and other fishing supplies cost John $10,000 and he paid $40,000 in salaries to his helpers.Depreciation on his boat and other equipment,as calculated using IRS rules,was $15,000.What was John's profit as would be calculated by an accountant?

Accepted Answer

A)  $165,000 
B)  $100,000 
C)  $65,000 
D)  $35,000 
E)  None of the above answers is correct. 
A)  $165,000 
B)  $100,000 
C)  $65,000 
D)  $35,000 
E)  None of the above answers is correct.

Question 13

Average product is equal to

Accepted Answer

A)  marginal product + total product. 
B)  total product ÷ marginal product. 
C)  total product ÷ quantity of labor. 
D)  total product × quantity of labor. 
E)  marginal product × quantity of labor. 
A)  marginal product + total product. 
B)  total product ÷ marginal product. 
C)  total product ÷ quantity of labor. 
D)  total product × quantity of labor. 
E)  marginal product × quantity of labor.

Question 14

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 15

The figure above shows some of a firm's cost curves.
-Curve C is the firm's

Accepted Answer

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

Question 16

When the average product is at its maximum,

Accepted Answer

A)  the marginal product is increasing as output increases. 
B)  the marginal product is negative. 
C)  it is equal to the marginal product. 
D)  total product is also at its maximum. 
E)  total product is at its minimum. 
A)  the marginal product is increasing as output increases. 
B)  the marginal product is negative. 
C)  it is equal to the marginal product. 
D)  total product is also at its maximum. 
E)  total product is at its minimum.

Question 17

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

Accepted Answer

When the average total cost is at its mi

Question 18

In the long run,the firm ________ change the number of workers it employs and ________ change the size of its plant.

Accepted Answer

A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  In order to answer the question more information is needed about how long is the long run. 
A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  In order to answer the question more information is needed about how long is the long run.

Question 19

Moving along the total product curve,which of the following is held constant?

Accepted Answer

A)  Quantity of labor 
B)  Total product 
C)  Technology 
D)  Total cost 
E)  None of the above answers is correct. 
A)  Quantity of labor 
B)  Total product 
C)  Technology 
D)  Total cost 
E)  None of the above answers is correct.

Question 20

The U-shape of the average variable,average total,and marginal cost curves reflects

Accepted Answer

A)  increasing marginal returns. 
B)  decreasing marginal returns. 
C)  both increasing and decreasing marginal returns. 
D)  decreasing marginal product. 
E)  the point that implicit costs become a smaller fraction of total cost as output increases. 
A)  increasing marginal returns. 
B)  decreasing marginal returns. 
C)  both increasing and decreasing marginal returns. 
D)  decreasing marginal product. 
E)  the point that implicit costs become a smaller fraction of total cost as output increases.

The production and cost information provided in the table above for Flaming Fernando's,a restaurant that sells Fiery Frijoles,is for the

The long run is a time period that is

What does the average product of labor equal?

Total cost is equal to the sum of

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

In economics,a "normal profit" is the return to

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average variable cost equals

Marginal cost

As we observe the cost curves graph,we see that the

The main source of economies of scale is

Average product is equal to

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.

The figure above shows some of a firm's cost curves. -Curve C is the firm's

When the average product is at its maximum,

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

In the long run,the firm change the number of workers it employs and change the size of its plant.

Moving along the total product curve,which of the following is held constant?

The U-shape of the average variable,average total,and marginal cost curves reflects

Getting Started

The Usand 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 production and cost information provided in the table above for Flaming Fernando's,a restaurant that sells Fiery Frijoles,is for the

The long run is a time period that is

What does the average product of labor equal?

Total cost is equal to the sum of

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

In economics,a "normal profit" is the return to

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average variable cost equals

Marginal cost

As we observe the cost curves graph,we see that the

The main source of economies of scale is

Average product is equal to

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.

The figure above shows some of a firm's cost curves. -Curve C is the firm's

When the average product is at its maximum,

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

In the long run,the firm ________ change the number of workers it employs and ________ change the size of its plant.

Moving along the total product curve,which of the following is held constant?

The U-shape of the average variable,average total,and marginal cost curves reflects

Getting Started

The Usand 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.

In the long run,the firm change the number of workers it employs and change the size of its plant.