Question 1

Maximizing the level of output for a given total cost of production

Accepted Answer

A) is equivalent to producing the profit maximizing output level. 
B) is equivalent to minimizing cost for a given level of output. 
C) necessitates using only relatively low-priced inputs. 
D) will maximize total revenue. 
A) is equivalent to producing the profit maximizing output level. 
B) is equivalent to minimizing cost for a given level of output. 
C) necessitates using only relatively low-priced inputs. 
D) will maximize total revenue.

Question 2

Table 9.1
   
Table 9.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011.
-Refer to Table 9.1.What is the average product of labour when the farm hires 5 workers?

Accepted Answer

A) 4 pounds 
B) 10.8 bushels 
C) 38.2 pounds 
D) 54 pounds 
A) 4 pounds 
B) 10.8 bushels 
C) 38.2 pounds 
D) 54 pounds

Question 3

Jayanthi moves her yoga studio from her home to a space she rents in Woodstock, Ontario.Holding everything else constant, as a result of this move,

Accepted Answer

A) her explicit cost falls and her implicit cost rises. 
B) her implicit cost falls and her explicit cost rises. 
C) her economic cost rises. 
D) her opportunity cost rises. 
A) her explicit cost falls and her implicit cost rises. 
B) her implicit cost falls and her explicit cost rises. 
C) her economic cost rises. 
D) her opportunity cost rises.

Question 4

Vipsana's Gyros House sells gyros.The cost of ingredients (pita, meat, spices, etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Accepted Answer

A) $100 
B) $124.40 
C) $220 
D) $340 
A) $100 
B) $124.40 
C) $220 
D) $340

Question 5

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

Accepted Answer

A) opportunity costs of capital owned and used by the firm 
B) the cost of labour hired by the firm 
C) utilities cost 
D) a business licensing fee 
A) opportunity costs of capital owned and used by the firm 
B) the cost of labour hired by the firm 
C) utilities cost 
D) a business licensing fee

Question 6

Figure 9.5
  
-Refer to Figure 9.5.Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC₄.Now, following a permanent change in demand, it plans to cut production to Qc units.What will happen to its average cost of production?

Accepted Answer

A) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37. 
B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41. 
C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41. 
D) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37. 
A) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37. 
B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41. 
C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41. 
D) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37.

Question 7

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is

Accepted Answer

A) 2 chairs. 
B) 3 chairs. 
C) 4 chairs. 
D) 38 chairs. 
A) 2 chairs. 
B) 3 chairs. 
C) 4 chairs. 
D) 38 chairs.

Question 8

If we have information about workers' marginal products, then total and average product can be found by

Accepted Answer

A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average. 
A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average.

Question 9

Consider a manufacturing operation that uses specialized machinery and labour to produce its output.In this case, the input that is not fixed in the short run is labour.

Accepted Answer

A) True 
 B)False

Question 10

A Toyota plant president was quoted as saying, "Demand for high volumes saps your energy.Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

Accepted Answer

A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity, it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design. 
A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity, it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design.

Question 11

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays

Accepted Answer

A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs. 
A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs.

Question 12

All of the following statements are true of the minimum efficient scale except one.Which one?

Accepted Answer

A) All possible economies of scale have been exhausted. 
B) The short-run average total cost curve's minimum point is equal to the long run average cost curve's minimum point. 
C) Any increase in the scale of operation will encounter diseconomies of scale. 
D) An increase in the output level will increase profit. 
A) All possible economies of scale have been exhausted. 
B) The short-run average total cost curve's minimum point is equal to the long run average cost curve's minimum point. 
C) Any increase in the scale of operation will encounter diseconomies of scale. 
D) An increase in the output level will increase profit.

Question 13

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

Accepted Answer

A) $65 
B) $50 
C) $15 
D) It is impossible to determine without additional information. 
A) $65 
B) $50 
C) $15 
D) It is impossible to determine without additional information.

Question 14

Which of the following is a fixed cost?

Accepted Answer

A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials 
A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials

Question 15

If the average variable cost curve is above the marginal cost curve, then

Accepted Answer

A) marginal costs must be decreasing. 
B) average variable costs must be increasing. 
C) marginal costs must be increasing. 
D) marginal costs can be either increasing or decreasing. 
A) marginal costs must be decreasing. 
B) average variable costs must be increasing. 
C) marginal costs must be increasing. 
D) marginal costs can be either increasing or decreasing.

Question 16

Which of the following would be categorized as an opportunity cost?
a)not being able to spend your $10,000 savings if you sink the money in your business
b)the cost of purchasing supplies for your house-cleaning business
c)the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A) a only 
B) a and c only 
C) b and c only 
D) all of the above 
A) a only 
B) a and c only 
C) b and c only 
D) all of the above

Question 17

If the marginal product of labour is decreasing, then marginal cost of production must be rising.

Accepted Answer

A) True 
 B)False

Question 18

Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations.Which of the following best explains this trend?

Accepted Answer

A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labour in farming 
D) declining productivity 
A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labour in farming 
D) declining productivity

Question 19

When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is

Accepted Answer

A) 12,800. 
B) 784. 
C) 50. 
D) impossible to determine with the information given. 
A) 12,800. 
B) 784. 
C) 50. 
D) impossible to determine with the information given.

Question 20

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labour is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labour for these three tattoo artists?

Accepted Answer

The average product of labour

Maximizing the level of output for a given total cost of production

Table 9.1 Table 9.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011. -Refer to Table 9.1.What is the average product of labour when the farm hires 5 workers?

Jayanthi moves her yoga studio from her home to a space she rents in Woodstock, Ontario.Holding everything else constant, as a result of this move,

Vipsana's Gyros House sells gyros.The cost of ingredients (pita, meat, spices, etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

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

Figure 9.5 -Refer to Figure 9.5.Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC₄.Now, following a permanent change in demand, it plans to cut production to Qc units.What will happen to its average cost of production?

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is

If we have information about workers' marginal products, then total and average product can be found by

Consider a manufacturing operation that uses specialized machinery and labour to produce its output.In this case, the input that is not fixed in the short run is labour.

A Toyota plant president was quoted as saying, "Demand for high volumes saps your energy.Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays

All of the following statements are true of the minimum efficient scale except one.Which one?

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

Which of the following is a fixed cost?

If the average variable cost curve is above the marginal cost curve, then

Which of the following would be categorized as an opportunity cost? a)not being able to spend your $10,000 savings if you sink the money in your business b)the cost of purchasing supplies for your house-cleaning business c)the cost of purchasing auto insurance for your dry-cleaning delivery business

If the marginal product of labour is decreasing, then marginal cost of production must be rising.

Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations.Which of the following best explains this trend?

When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labour is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labour for these three tattoo artists?

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

Maximizing the level of output for a given total cost of production

Table 9.1 Table 9.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011. -Refer to Table 9.1.What is the average product of labour when the farm hires 5 workers?

Jayanthi moves her yoga studio from her home to a space she rents in Woodstock, Ontario.Holding everything else constant, as a result of this move,

Vipsana's Gyros House sells gyros.The cost of ingredients (pita, meat, spices, etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

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

Figure 9.5 -Refer to Figure 9.5.Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC₄.Now, following a permanent change in demand, it plans to cut production to Qc units.What will happen to its average cost of production?

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is

If we have information about workers' marginal products, then total and average product can be found by

Consider a manufacturing operation that uses specialized machinery and labour to produce its output.In this case, the input that is not fixed in the short run is labour.

A Toyota plant president was quoted as saying, "Demand for high volumes saps your energy.Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays

All of the following statements are true of the minimum efficient scale except one.Which one?

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

Which of the following is a fixed cost?

If the average variable cost curve is above the marginal cost curve, then

If the marginal product of labour is decreasing, then marginal cost of production must be rising.

Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations.Which of the following best explains this trend?

When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labour is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labour for these three tattoo artists?

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