Question 1

If production displays economies of scale, the long-run average cost curve is

Accepted Answer

A) above the short-run average total cost curve. 
B) downward-sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve. 
A) above the short-run average total cost curve. 
B) downward-sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve.

Question 2

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 variable cost per day when she produces 50 gyros using two workers?

Accepted Answer

A) $100 
B) $124.40 
C) $220 
D) $240 
A) $100 
B) $124.40 
C) $220 
D) $240

Question 3

Table 9.3
 $\begin{array}{|c|c|c|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { Lanterns }
\end{array} & \begin{array}{c}
\text { Fixed Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Variable Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Total Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Average Total Cost } \
\text { (dollars) }
\end{array} \
\hline 75 & 200 & 170 & 370 & 4.93 \
\hline 80 & 200 & 230 & 430 & 5.36 \
\hline 90 & 200 & & & 7.67 \
\hline 100 & 200 & 810 & &  \
\hline 115 & 200 & & & 11.8 \
\hline 117 & 200 & 1264 & 1464 &12.5 \
\hline 120 & 200 & 1480 & & \
\hline
\end{array}$ 
Table 9.3 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 9.3.What is the average variable cost per unit of production when the firm produces 90 lanterns?

Accepted Answer

A) $490 
B) $33.67 
C) $7.67 
D) $5.44 
A) $490 
B) $33.67 
C) $7.67 
D) $5.44

Question 4

Figure 9.5
  
-Refer to Figure 9.5.Identify the minimum efficient scale of production.

Accepted Answer

A) Qₐ 
B) Qb 
C) Qc 
D) Qd 
A) Qₐ 
B) Qb 
C) Qc 
D) Qd

Question 5

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

Accepted Answer

A) the first workers hired get to use the best equipment. 
B) specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point, a firm has hired too many workers. 
A) the first workers hired get to use the best equipment. 
B) specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point, a firm has hired too many workers.

Question 6

If production displays diseconomies of scale, the long run average cost curve is

Accepted Answer

A) above the short run average total cost curve. 
B) above the long run marginal cost curve. 
C) upward sloping. 
D) downward sloping. 
A) above the short run average total cost curve. 
B) above the long run marginal cost curve. 
C) upward sloping. 
D) downward sloping.

Question 7

Figure 9.4
  
-Refer to Figure 9.4.Curve G approaches curve F because

Accepted Answer

A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced. 
A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced.

Question 8

The marginal rate of technical substitution is

Accepted Answer

A) the rate at which a firm is able to substitute one input for another, while keeping total cost constant. 
B) the rate at which a firm is able to substitute one input for another, while keeping the level of output constant. 
C) the rate at which a firm is able to institute positive technological changes to its production process. 
D) the rate at which a firm is able to increase its output by replacing labour with technology. 
A) the rate at which a firm is able to substitute one input for another, while keeping total cost constant. 
B) the rate at which a firm is able to substitute one input for another, while keeping the level of output constant. 
C) the rate at which a firm is able to institute positive technological changes to its production process. 
D) the rate at which a firm is able to increase its output by replacing labour with technology.

Question 9

Describe the relationship between marginal cost and average total cost.

Accepted Answer

If marginal cost for a given output is b

If production displays economies of scale, the long-run average cost curve is

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 variable cost per day when she produces 50 gyros using two workers?

Figure 9.5 -Refer to Figure 9.5.Identify the minimum efficient scale of production.

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

If production displays diseconomies of scale, the long run average cost curve is

Figure 9.4 -Refer to Figure 9.4.Curve G approaches curve F because

The marginal rate of technical substitution is

Describe the relationship between marginal cost and average total cost.

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 production displays economies of scale, the long-run average cost curve is

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 variable cost per day when she produces 50 gyros using two workers?

Figure 9.5 -Refer to Figure 9.5.Identify the minimum efficient scale of production.

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

If production displays diseconomies of scale, the long run average cost curve is

Figure 9.4 -Refer to Figure 9.4.Curve G approaches curve F because

The marginal rate of technical substitution is

Describe the relationship between marginal cost and average total cost.

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