Question 1

Is it possible for technological change to be negative? If so,give an example.

Accepted Answer

Technological change could be negative,f

Question 2

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production 
A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production

Question 3

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

Accepted Answer

A) 0.16 
B) 3 
C) 4.67 
D) 36 
A) 0.16 
B) 3 
C) 4.67 
D) 36

Question 4

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 5

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Accepted Answer

A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve. 
A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve.

Question 6

In the world oil market,oil is supplied up to the point where

Accepted Answer

A) the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B) the marginal cost of the last barrel is zero. 
C) the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D) the marginal cost of the last barrel is at a maximum. 
A) the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B) the marginal cost of the last barrel is zero. 
C) the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D) the marginal cost of the last barrel is at a maximum.

Question 7

Suppose the total cost of producing 40,000 flash drives is $120,000,and the fixed cost is $30,000.
a.What is the variable cost?
b.When output is 40,000,what are the average variable cost and the average fixed cost?
c.Assuming the cost curves have the usual shape,is the dollar difference between the average total cost and the average variable cost greater when the output is 40,000 flash drives or when the output is 60,000 flash drives? Explain.

Accepted Answer

a.Variable cost = total cost - fixed cos

Question 8

In the short run,why does a production function eventually display diminishing returns to labor?

Accepted Answer

A) As the number of workers increases it becomes difficult to monitor them. 
B) As a firm hires more workers the skills and the work ethic of the additional workers will eventually decline. 
C) As the number of workers increases eventually the gains from the division of labor and specialization are used up. 
D) The opportunity cost of hiring additional workers must eventually rise. 
A) As the number of workers increases it becomes difficult to monitor them. 
B) As a firm hires more workers the skills and the work ethic of the additional workers will eventually decline. 
C) As the number of workers increases eventually the gains from the division of labor and specialization are used up. 
D) The opportunity cost of hiring additional workers must eventually rise.

Question 9

The basic activity of a firm is

Accepted Answer

A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services. 
A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services.

Question 10

Suppose you have just opened a store to sell espresso machines.Both you and a competing store buy this machine from a manufacturer for $130 each.Your competitor who has a store of the same size as yours is currently selling about 10 machines a month at a price of $200 per machine.You expect to sell about 6 machines a month at a price of $220 per machine.If you lower your price,you expect to make a loss.Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you?

Accepted Answer

A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximize revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases. 
A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximize revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases.

Question 11

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

Accepted Answer

A) the cost of labor 
B) the opportunity cost of capital owned and used by the firm 
C) the cost of energy used in production 
D) a business licensing fee 
A) the cost of labor 
B) the opportunity cost of capital owned and used by the firm 
C) the cost of energy used in production 
D) a business licensing fee

Question 12

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees,each of whom is paid $4,000 per month.Because his business has been successful,next month he will increase employee wages to $5,000.If the revenue from his business remains at its current level,Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

Accepted Answer

A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The time and effort Stan spends on his software design business is an implicit cost. 
A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The time and effort Stan spends on his software design business is an implicit cost.

Question 13

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

Question 14

Which of the following equations is incorrect?

Accepted Answer

A) ATC - AFC = AVC 
B) AVC + AFC = ATC 
C) AFC = ATC - AVC 
D) ATC = AVC - AFC 
A) ATC - AFC = AVC 
B) AVC + AFC = ATC 
C) AFC = ATC - AVC 
D) ATC = AVC - AFC

Question 15

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 16

Suppose a chain of convenience stores reorganized its system of supplying its stores with food.This led to a sharp reduction in the number of trucks that the company had to use and increased the amount of fresh food on store shelves.Which of the following statements best describes the chain stores' actions?

Accepted Answer

A) The change implemented is not an example of technological change because it did not require the use of new machinery of equipment. 
B) Technological change refers only to the introduction of new products or improvements to existing product.As such, the scenario described in the question is not technological change. 
C) The firm is able to produce more output (increase its sales)using fewer inputs (less trucks).Therefore, the chain of convenience stores has implemented a positive technological change. 
D) The scenario described is an example of management efficiency and not technological change.Essentially, the chain changes its way of operating its business. 
A) The change implemented is not an example of technological change because it did not require the use of new machinery of equipment. 
B) Technological change refers only to the introduction of new products or improvements to existing product.As such, the scenario described in the question is not technological change. 
C) The firm is able to produce more output (increase its sales)using fewer inputs (less trucks).Therefore, the chain of convenience stores has implemented a positive technological change. 
D) The scenario described is an example of management efficiency and not technological change.Essentially, the chain changes its way of operating its business.

Question 17

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

Accepted Answer

A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing. 
A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing.

Question 18

Fill in the missing values in the following table.Draw one graph showing how total output increases with the quantity of workers hired,and another graph showing the marginal product of labor and the average product of labor.
 $$\begin{array} { | l | r | l | l | } 
\hline \begin{array} { l } 
\text { Quantity of } \
\text { Workers }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Output }
\end{array} & \begin{array} { l } 
\text { Marginal } \
\text { Product of } \
\text { Labor }
\end{array} & \begin{array} { l } 
\text { Average } \
\text { Product of } \
\text { Labor }
\end{array} \
\hline 0 & 0 & & \
\hline 1 & 200 & & \
\hline 2 & 500 & & \
\hline 3 & 900 & & \
\hline 4 & 1,150 & & \
\hline 5 & 1,300 & & \
\hline
\end{array}$$ 
a.Complete the Marginal Product column in Table 8-4.
b.Characterize the production function,i.e.,does the production function display increasing marginal returns,diminishing marginal returns,etc.
c.Using the data above,graph Juan's marginal product curve.Be sure to label the horizontal and vertical axes.Is your graph consistent with your answer to part (b)? Explain.
d.Juan uses the following inputs for fishing-a small wooden boat (B),a fishing pole (P)and of course,his labor (L).Treating the boat and the fishing pole as fixed inputs and using the data above,graph Juan's Total Product of Labor curve.Be sure to label the horizontal and vertical axes.
e.(Extra Credit)The opportunity cost of Juan's time is $8 per hour.If Juan receives $2 per pound for his fish,what is the optimal number of hours he should spend fishing? Explain how you arrived at your answer.Hint: Recall marginal benefit and marginal cost analysis.

Accepted Answer

\[\begin{array} { | l | r | c | c | } 
\

Question 19

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Accepted Answer

A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries 
A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries

Question 20

Figure 8-11
   
Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc.
-Refer to Figure 8-11.Constant returns to scale

Accepted Answer

A) occur for output rates greater than 5,000 picture frames. 
B) occur between 5,000 and 20,000 picture frames per month. 
C) occur between 10,000 and 20,000 pictures frames per month. 
D) will shift the long-run average cost curve downward. 
A) occur for output rates greater than 5,000 picture frames. 
B) occur between 5,000 and 20,000 picture frames per month. 
C) occur between 10,000 and 20,000 pictures frames per month. 
D) will shift the long-run average cost curve downward.

Is it possible for technological change to be negative? If so,give an example.

Which of the following is not a source of technological advancement for a producer?

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

Which of the following is a fixed cost?

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

In the world oil market,oil is supplied up to the point where

In the short run,why does a production function eventually display diminishing returns to labor?

The basic activity of a firm is

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

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

Which of the following equations is incorrect?

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

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

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Figure 8-11 Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 8-11.Constant returns to scale

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 8: Technology, production, and Costs

Is it possible for technological change to be negative? If so,give an example.

Which of the following is not a source of technological advancement for a producer?

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

Which of the following is a fixed cost?

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

In the world oil market,oil is supplied up to the point where

In the short run,why does a production function eventually display diminishing returns to labor?

The basic activity of a firm is

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

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

Which of the following equations is incorrect?

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

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

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Figure 8-11 Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 8-11.Constant returns to scale

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters