Question 1

If fixed costs do not change, then marginal cost

Accepted Answer

A) also remains constant. 
B) equals the change in variable cost divided by the change in output. 
C) equals the change in average variable cost divided by the change in output. 
D) equals the change in average fixed cost divided by the change in output. 
A) also remains constant. 
B) equals the change in variable cost divided by the change in output. 
C) equals the change in average variable cost divided by the change in output. 
D) equals the change in average fixed cost divided by the change in output.

Question 2

If a producer is not able to expand its plant capacity immediately, it is

Accepted Answer

A) bankrupt. 
B) operating in the long run. 
C) operating in the short run. 
D) losing money. 
A) bankrupt. 
B) operating in the long run. 
C) operating in the short run. 
D) losing money.

Question 3

Figure 9.1
  
-Refer to Figure 9.1.The marginal product of the 7th worker is

Accepted Answer

A) 66. 
B) 9.43. 
C) 2. 
D) -2. 
A) 66. 
B) 9.43. 
C) 2. 
D) -2.

Question 4

If production displays constant returns to scale, then all economies of scale have been exhausted.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9.1
  
-Refer to Figure 9.1.The marginal product of the 3rd worker is

Accepted Answer

A) 57. 
B) 19. 
C) 15. 
D) 11. 
A) 57. 
B) 19. 
C) 15. 
D) 11.

Question 6

Which of the following is an example of a long run adjustment?

Accepted Answer

A) Your university offers Saturday morning classes next fall. 
B) Ford Motor Company of Canada lays off 2,000 assembly line workers. 
C) A soybean farmer turns on the irrigation system after a month long dry spell. 
D) Rona builds another store. 
A) Your university offers Saturday morning classes next fall. 
B) Ford Motor Company of Canada lays off 2,000 assembly line workers. 
C) A soybean farmer turns on the irrigation system after a month long dry spell. 
D) Rona builds another store.

Question 7

If, when a firm doubles all its inputs, its average cost of production increases, then production displays

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs.

Question 8

Figure 9.2
  
-Refer to Figure 9.2.The curve labeled "F" is

Accepted Answer

A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve. 
A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve.

Question 9

Which of the following costs will not change as output changes?

Accepted Answer

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

Question 10

Marginal cost is equal to the

Accepted Answer

A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output. 
A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output.

Question 11

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 12

The average total cost of production

Accepted Answer

A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output. 
A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output.

Question 13

Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open.Which of the following is true?

Accepted Answer

A) The fixed cost of running the studio is $22,000. 
B) The variable cost of running the studio is $22,000. 
C) The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost. 
D) The $10,000 Adam spent on equipment is the total cost of starting the business and the $12,000 he'll need to continue operations is a marginal cost. 
A) The fixed cost of running the studio is $22,000. 
B) The variable cost of running the studio is $22,000. 
C) The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost. 
D) The $10,000 Adam spent on equipment is the total cost of starting the business and the $12,000 he'll need to continue operations is a marginal cost.

Question 14

Economic costs of production differ from accounting costs in that

Accepted Answer

A) economic costs include expenditures for hired resources while accounting costs do not. 
B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C) accounting costs include expenditures for hired resources while economic costs do not. 
D) accounting costs are always larger than economic cost. 
A) economic costs include expenditures for hired resources while accounting costs do not. 
B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C) accounting costs include expenditures for hired resources while economic costs do not. 
D) accounting costs are always larger than economic cost.

Question 15

The law of diminishing marginal returns states

Accepted Answer

A) that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) that in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. 
A) that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) that in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

Question 16

Figure 9.2
  
-Refer to Figure 9.2.Diminishing returns to labour set in

Accepted Answer

A) after L₁. 
B) after L₂. 
C) after L₃. 
D) immediately. 
A) after L₁. 
B) after L₂. 
C) after L₃. 
D) immediately.

Question 17

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

Question 18

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

Accepted Answer

A) price of capital increases. 
B) price of labour decreases. 
C) price of labour increases. 
D) marginal product of labour increases. 
A) price of capital increases. 
B) price of labour decreases. 
C) price of labour increases. 
D) marginal product of labour increases.

Question 19

The minimum efficient scale is

Accepted Answer

A) the level of output where diminishing returns have not set in yet. 
B) the plant size that yields the most profit. 
C) level of operation where long-run average costs are lowest. 
D) the smallest output level where the firm finally reaches productive efficiency. 
A) the level of output where diminishing returns have not set in yet. 
B) the plant size that yields the most profit. 
C) level of operation where long-run average costs are lowest. 
D) the smallest output level where the firm finally reaches productive efficiency.

Question 20

Improvements in inventory control represent a positive technological change because they allow firms to produce the same output with fewer inputs.In recent years, many firms have adopted an inventory system in which firms accept shipments from suppliers as close as possible to the time they will be needed.Magna International has been a pioneer in using inventory control systems to adopt this in its stores.This type of inventory system is called a ________ inventory system.

Accepted Answer

A) first-in-first-out 
B) cash-and-carry 
C) just-in-time 
D) buy-now-pay-later 
A) first-in-first-out 
B) cash-and-carry 
C) just-in-time 
D) buy-now-pay-later

If fixed costs do not change, then marginal cost

If a producer is not able to expand its plant capacity immediately, it is

Figure 9.1 -Refer to Figure 9.1.The marginal product of the 7th worker is

If production displays constant returns to scale, then all economies of scale have been exhausted.

Figure 9.1 -Refer to Figure 9.1.The marginal product of the 3rd worker is

Which of the following is an example of a long run adjustment?

If, when a firm doubles all its inputs, its average cost of production increases, then production displays

Figure 9.2 -Refer to Figure 9.2.The curve labeled "F" is

Which of the following costs will not change as output changes?

Marginal cost is equal to the

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

The average total cost of production

Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open.Which of the following is true?

Economic costs of production differ from accounting costs in that

The law of diminishing marginal returns states

Figure 9.2 -Refer to Figure 9.2.Diminishing returns to labour set in

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

The minimum efficient scale is

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 9: Technology, Production, and Costs

If fixed costs do not change, then marginal cost

If a producer is not able to expand its plant capacity immediately, it is

Figure 9.1 -Refer to Figure 9.1.The marginal product of the 7th worker is

If production displays constant returns to scale, then all economies of scale have been exhausted.

Figure 9.1 -Refer to Figure 9.1.The marginal product of the 3rd worker is

Which of the following is an example of a long run adjustment?

If, when a firm doubles all its inputs, its average cost of production increases, then production displays

Figure 9.2 -Refer to Figure 9.2.The curve labeled "F" is

Which of the following costs will not change as output changes?

Marginal cost is equal to the

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

The average total cost of production

Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open.Which of the following is true?

Economic costs of production differ from accounting costs in that

The law of diminishing marginal returns states

Figure 9.2 -Refer to Figure 9.2.Diminishing returns to labour set in

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

The minimum efficient scale is

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters