Question 1

Which of the following represents a long-run adjustment?

Accepted Answer

A) the hiring of four additional cashiers by a supermarket 
B) a cutback on purchases of coke and iron ore by a steel manufacturer 
C) construction of a new assembly-line plant by a car manufacturer 
D) the extra dose of fertilizer used by a farmer on his wheat crop 
A) the hiring of four additional cashiers by a supermarket 
B) a cutback on purchases of coke and iron ore by a steel manufacturer 
C) construction of a new assembly-line plant by a car manufacturer 
D) the extra dose of fertilizer used by a farmer on his wheat crop

Question 2

Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent

Accepted Answer

A) only marginal cost will shift up. 
B) only marginal cost and average total cost will shift up. 
C) marginal cost,average variable cost,and average total cost will shift up. 
D) marginal cost,average total cost,and average fixed cost will shift up. 
A) only marginal cost will shift up. 
B) only marginal cost and average total cost will shift up. 
C) marginal cost,average variable cost,and average total cost will shift up. 
D) marginal cost,average total cost,and average fixed cost will shift up.

Question 3

Which of the following provides the best explanation for diseconomies of scale?

Accepted Answer

A) the firm is too small to take advantage of specialization. 
B) large management structures may be bureaucratic and inefficient. 
C) if there are too many employees,the work place becomes crowded and people become less productive. 
D) average fixed costs are rising. 
A) the firm is too small to take advantage of specialization. 
B) large management structures may be bureaucratic and inefficient. 
C) if there are too many employees,the work place becomes crowded and people become less productive. 
D) average fixed costs are rising.

Question 4

If the firm's fixed costs double while variable costs are unchanged,then

Accepted Answer

A) marginal cost more than doubles. 
B) marginal cost doubles. 
C) marginal cost remains unchanged. 
D) average total cost remains unchanged. 
E) average variable cost doubles. 
A) marginal cost more than doubles. 
B) marginal cost doubles. 
C) marginal cost remains unchanged. 
D) average total cost remains unchanged. 
E) average variable cost doubles.

Question 5

The optimal plant size depends on

Accepted Answer

A) whether the firm confronts diminishing returns on its fixed factors of production. 
B) the output the firm expects to produce. 
C) whether the plant uses capital-intensive or labor-intensive production techniques. 
D) the preferences of the individual firm owners. 
A) whether the firm confronts diminishing returns on its fixed factors of production. 
B) the output the firm expects to produce. 
C) whether the plant uses capital-intensive or labor-intensive production techniques. 
D) the preferences of the individual firm owners.

Question 6

The short run is the time period during which

Accepted Answer

A) all of the firm's costs are fixed. 
B) the value of the firm's assets starts to decay. 
C) the firm can adjust all inputs freely. 
D) some of the firm's input decisions are constrained by previous commitments. 
A) all of the firm's costs are fixed. 
B) the value of the firm's assets starts to decay. 
C) the firm can adjust all inputs freely. 
D) some of the firm's input decisions are constrained by previous commitments.

Question 7

Before entry into an industry,a profit-maximizing decision maker will compare the expected market price with the expected

Accepted Answer

A) long-run average total cost. 
B) short-run marginal cost. 
C) long-run average variable cost. 
D) short-run average total cost. 
A) long-run average total cost. 
B) short-run marginal cost. 
C) long-run average variable cost. 
D) short-run average total cost.

Question 8

Approximately three-fourths of all U.S.firms are

Accepted Answer

A) corporations. 
B) proprietorships. 
C) partnerships. 
D) consumer cooperatives. 
A) corporations. 
B) proprietorships. 
C) partnerships. 
D) consumer cooperatives.

Question 9

Which of the following reflects diseconomies of scale?

Accepted Answer

A) Marginal product decreases as output increases. 
B) Short-run marginal cost increases as output increases. 
C) Long-run marginal cost increases as output increases. 
D) Short-run average cost increases as output increases. 
E) As output doubles,long-run total cost more than doubles. 
A) Marginal product decreases as output increases. 
B) Short-run marginal cost increases as output increases. 
C) Long-run marginal cost increases as output increases. 
D) Short-run average cost increases as output increases. 
E) As output doubles,long-run total cost more than doubles.

Question 10

Figure 8-14
The following question(s)refer(s)to the below cost curves for one very small firm in a large market.
  
-Refer to Figure 8-14.Diminishing returns to the variable factor of production for this firm set in at

Accepted Answer

A) Q = 6. 
B) Q = 10. 
C) Q = 15. 
D) none of the above. 
A) Q = 6. 
B) Q = 10. 
C) Q = 15. 
D) none of the above.

Question 11

The minimum points of the average variable cost and average total cost curves occur where

Accepted Answer

A) the marginal cost curve lies below the average variable cost and average total cost curves. 
B) the marginal cost curve intersects those curves. 
C) the average variable cost and average total cost curves intersect. 
D) the slope of total cost is the smallest. 
A) the marginal cost curve lies below the average variable cost and average total cost curves. 
B) the marginal cost curve intersects those curves. 
C) the average variable cost and average total cost curves intersect. 
D) the slope of total cost is the smallest.

Question 12

Economists refer to historical costs (irreversible costs already incurred)as

Accepted Answer

A) implicit costs. 
B) sunk costs. 
C) opportunity costs. 
D) variable costs. 
A) implicit costs. 
B) sunk costs. 
C) opportunity costs. 
D) variable costs.

Question 13

Which of the following is true?

Accepted Answer

A) under the partnership form of business organization,the owners are not personally liable for the debts of the business. 
B) when employees also own a business,their incentive to shirk is removed. 
C) the limited liability of stockholders under the corporate business structure makes it easier to raise equity capital. 
D) under the corporate form of business organization,the owners of the firm are personally liable for its debts. 
A) under the partnership form of business organization,the owners are not personally liable for the debts of the business. 
B) when employees also own a business,their incentive to shirk is removed. 
C) the limited liability of stockholders under the corporate business structure makes it easier to raise equity capital. 
D) under the corporate form of business organization,the owners of the firm are personally liable for its debts.

Question 14

If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ,what does this tell us about the view ABC holds of XYZ?

Accepted Answer

ABC must believe that the XYZ stock unde

Question 15

Use the table below to answer the following question.
 
What is the average total cost at an output level of four units?

Accepted Answer

A) $1,200 
B) $1,400 
C) $1,500 
D) $2,000 
A) $1,200 
B) $1,400 
C) $1,500 
D) $2,000

Question 16

Which of the following provides the strongest evidence that the corporate form of business structure is relatively cost efficient in many industries?

Accepted Answer

A) the ability of the corporate business structure to compete effectively in most industries with other forms of business structure 
B) the fact that nearly three of every four businesses in the United States is an individual proprietorship 
C) the fact that economic theory indicates corporate managers have some leeway to pursue their own interests at the expense of greedy capitalists 
D) the ability of some corporate managers to achieve high salaries even though the firms they are directing are not earning economic profit 
A) the ability of the corporate business structure to compete effectively in most industries with other forms of business structure 
B) the fact that nearly three of every four businesses in the United States is an individual proprietorship 
C) the fact that economic theory indicates corporate managers have some leeway to pursue their own interests at the expense of greedy capitalists 
D) the ability of some corporate managers to achieve high salaries even though the firms they are directing are not earning economic profit

Question 17

Figure 8-14
The following question(s)refer(s)to the below cost curves for one very small firm in a large market.
  
-Refer to Figure 8-14.If the firm produces 10 units of output,its total fixed cost is

Accepted Answer

A) 6. 
B) 60. 
C) 70. 
D) 130. 
A) 6. 
B) 60. 
C) 70. 
D) 130.

Question 18

If two workers can produce 22 units of output,and the addition of a third worker increases output to 30 units,the marginal product of the third worker is

Accepted Answer

A) 8 units. 
B) 10 units. 
C) 22 units. 
D) 30 units. 
A) 8 units. 
B) 10 units. 
C) 22 units. 
D) 30 units.

Question 19

The law of diminishing marginal returns explains the general shape of the firm's

Accepted Answer

A) long-run cost curves. 
B) short-run cost curves. 
C) both short-run and long-run cost curves. 
D) The law of diminishing returns has nothing to do with cost curves. 
A) long-run cost curves. 
B) short-run cost curves. 
C) both short-run and long-run cost curves. 
D) The law of diminishing returns has nothing to do with cost curves.

Question 20

The law of diminishing returns indicates why

Accepted Answer

A) beyond some point,the extra utility derived from additional units of a product will yield the consumer smaller and smaller amounts of additional satisfaction. 
B) the firm's total fixed costs do not change with output in the short run. 
C) a firm's long-run average total cost curve is U-shaped. 
D) a firm's marginal costs will eventually increase as the firm expands output in the short run. 
A) beyond some point,the extra utility derived from additional units of a product will yield the consumer smaller and smaller amounts of additional satisfaction. 
B) the firm's total fixed costs do not change with output in the short run. 
C) a firm's long-run average total cost curve is U-shaped. 
D) a firm's marginal costs will eventually increase as the firm expands output in the short run.

Exam 21: Acosts and the Supply of Goods

Which of the following represents a long-run adjustment?

Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent

Which of the following provides the best explanation for diseconomies of scale?

If the firm's fixed costs double while variable costs are unchanged,then

The optimal plant size depends on

The short run is the time period during which

Before entry into an industry,a profit-maximizing decision maker will compare the expected market price with the expected

Approximately three-fourths of all U.S.firms are

Which of the following reflects diseconomies of scale?

Figure 8-14 The following question(s)refer(s)to the below cost curves for one very small firm in a large market. -Refer to Figure 8-14.Diminishing returns to the variable factor of production for this firm set in at

The minimum points of the average variable cost and average total cost curves occur where

Economists refer to historical costs (irreversible costs already incurred)as

Which of the following is true?

If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ,what does this tell us about the view ABC holds of XYZ?

Use the table below to answer the following question. What is the average total cost at an output level of four units?

Which of the following provides the strongest evidence that the corporate form of business structure is relatively cost efficient in many industries?

Figure 8-14 The following question(s)refer(s)to the below cost curves for one very small firm in a large market. -Refer to Figure 8-14.If the firm produces 10 units of output,its total fixed cost is

If two workers can produce 22 units of output,and the addition of a third worker increases output to 30 units,the marginal product of the third worker is

The law of diminishing marginal returns explains the general shape of the firm's

The law of diminishing returns indicates why

The Economic Approach

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Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

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Economic Fluctuations, unemployment, and Inflation

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Great Debates in Economics: Keynes Versus Hayek

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