Question 1

If marginal cost is above the average variable cost,then average variable cost is decreasing.

Accepted Answer

A) True 
 B)False

Question 2

Table 8-2
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Apples per Day } \
\text { (bushels) }
\end{array} \
\hline 1 & 50 \
\hline 2 & 120 \
\hline 3 & 180 \
\hline 4 & 230 \
\hline 5 & 270 \
\hline 6 & 300 \
\hline
\end{array}$$ 
Table 8-2 summarizes production at the Crunchy Apple Orchard for the month of April 2005.
-Refer to Table 8-2.What is the marginal product of the 4th worker?

Accepted Answer

A) 230 bushels 
B) 57.4 bushels 
C) 50 bushels 
D) 12.4 bushels 
A) 230 bushels 
B) 57.4 bushels 
C) 50 bushels 
D) 12.4 bushels

Question 3

Average fixed cost can be calculated using any of the formulas below except

Accepted Answer

A) TFC/Q. 
B) (TC - V
C) /Q. 
C) Δ(TC - V
C) /ΔQ. 
D) (TC/Q)- AVC. 
A) TFC/Q. 
B) (TC - V
C) /Q. 
C) Δ(TC - V
C) /ΔQ. 
D) (TC/Q)- AVC.

Question 4

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Accepted Answer

A) at the same level of output as the minimum point of the average variable cost. 
B) at a larger level of output than the minimum point of the average variable cost. 
C) at a lower level of output than the minimum point of the average variable cost. 
D) at the same level of output as the maximum of the total product curve. 
A) at the same level of output as the minimum point of the average variable cost. 
B) at a larger level of output than the minimum point of the average variable cost. 
C) at a lower level of output than the minimum point of the average variable cost. 
D) at the same level of output as the maximum of the total product curve.

Question 5

Table 8-1
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Mushrooms per } \
\text { Day (pounds) }
\end{array} \
\hline 1 & 12 \
\hline 2 & 30 \
\hline 3 & 45 \
\hline 4 & 50 \
\hline 5 & 54 \
\hline 6 & 56 \
\hline
\end{array}$$ 
Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 8-1.What is the marginal product of the 4th worker?

Accepted Answer

A) 137 pounds 
B) 50 pounds 
C) 12.5 pounds 
D) 5 pounds 
A) 137 pounds 
B) 50 pounds 
C) 12.5 pounds 
D) 5 pounds

Question 6

Implicit costs can be defined as

Accepted Answer

A) accounting profit minus explicit cost. 
B) the non-monetary opportunity cost of using the firm's own resources. 
C) the deferred cost of production. 
D) total cost minus fixed costs. 
A) accounting profit minus explicit cost. 
B) the non-monetary opportunity cost of using the firm's own resources. 
C) the deferred cost of production. 
D) total cost minus fixed costs.

Question 7

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 8

Table 8-1
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Mushrooms per } \
\text { Day (pounds) }
\end{array} \
\hline 1 & 12 \
\hline 2 & 30 \
\hline 3 & 45 \
\hline 4 & 50 \
\hline 5 & 54 \
\hline 6 & 56 \
\hline
\end{array}$$ 
Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

Accepted Answer

A) 2nd 
B) 3rd 
C) 4th 
D) None of the above; the production function displays increasing marginal returns. 
A) 2nd 
B) 3rd 
C) 4th 
D) None of the above; the production function displays increasing marginal returns.

Question 9

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.In the short run,if the firm sells fewer than 5,000 picture frames per month

Accepted Answer

A) it should produce with the scale of operation associated with ATCₐ. 
B) it should produce with the scale of operation associated with ATCb. 
C) it should produce with the scale of operation associated with ATCc. 
D) it will experience constant returns to scale. 
A) it should produce with the scale of operation associated with ATCₐ. 
B) it should produce with the scale of operation associated with ATCb. 
C) it should produce with the scale of operation associated with ATCc. 
D) it will experience constant returns to scale.

Question 10

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

Accepted Answer

A) output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B) output will first decrease at an increasing rate, then increase at a decreasing rate. 
C) the marginal product of labor will first decrease, then increase at a decreasing rate. 
D) the marginal product of labor will first be negative and then will be positive. 
A) output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B) output will first decrease at an increasing rate, then increase at a decreasing rate. 
C) the marginal product of labor will first decrease, then increase at a decreasing rate. 
D) the marginal product of labor will first be negative and then will be positive.

Question 11

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor.
a.The payment he makes to buy tattoo ink.
b.The wages he pays his employees.
c.The $500-per-month payment he makes to advertise his shop on highway billboards.
d.The lease payment he makes to the landlord who owns the building where his shop is located.
e.The payment he makes on his liability insurance policy.

Accepted Answer

c.,d.,and e.are fixed costs because they

Question 12

The law of diminishing marginal returns

Accepted Answer

A) sets in because not all workers are equally productive. 
B) applies only in the short run. 
C) holds even when there are no fixed factors. 
D) ultimately explains why production displays diseconomies of scale. 
A) sets in because not all workers are equally productive. 
B) applies only in the short run. 
C) holds even when there are no fixed factors. 
D) ultimately explains why production displays diseconomies of scale.

Question 13

What is the difference between total cost and variable cost in the long run?

Accepted Answer

In the short run,total cost =

Question 14

Figure 8-6
   
Figure 8-6 contains information about the short run cost structure of a firm.
-Refer to Figure 8-6.In the figure above which letter represents the average fixed cost curve?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 15

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accepted Answer

A) $41.43. 
B)  $134.29. 
C) $135. 
D) $145. 
A) $41.43. 
B)  $134.29. 
C) $135. 
D) $145.

Question 16

Figure 8-7
   
Figure 8-7 shows the cost structure for a firm.
-Refer to Figure 8-7.If output is 100 units what is the fixed cost of production?

Accepted Answer

A) $8 
B) $800 
C) $1,000 
D) This cannot be determined from the diagram. 
A) $8 
B) $800 
C) $1,000 
D) This cannot be determined from the diagram.

Question 17

Figure 8-5
  
-Refer to Figure 8-5.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 18

In the short run,if marginal product is at its maximum,then

Accepted Answer

A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum. 
A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum.

Question 19

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 20

When the marginal product of labor rises

Accepted Answer

A) the marginal cost of production will exceed the average total cost. 
B) the marginal cost of production also rises. 
C) the marginal cost of production falls. 
D) the average total cost of production also rises. 
A) the marginal cost of production will exceed the average total cost. 
B) the marginal cost of production also rises. 
C) the marginal cost of production falls. 
D) the average total cost of production also rises.

If marginal cost is above the average variable cost,then average variable cost is decreasing.

Table 8-2 Number of Workers Apples per Day (bushels) 1 50 2 120 3 180 4 230 5 270 6 300 Table 8-2 summarizes production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 8-2.What is the marginal product of the 4th worker?

Average fixed cost can be calculated using any of the formulas below except

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.What is the marginal product of the 4th worker?

Implicit costs can be defined as

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

The law of diminishing marginal returns

What is the difference between total cost and variable cost in the long run?

Figure 8-6 Figure 8-6 contains information about the short run cost structure of a firm. -Refer to Figure 8-6.In the figure above which letter represents the average fixed cost curve?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.If output is 100 units what is the fixed cost of production?

Figure 8-5 -Refer to Figure 8-5.Curve G approaches curve F because

In the short run,if marginal product is at its maximum,then

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?

When the marginal product of labor rises

Economics: Foundations and Models

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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

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Money, banks, and the Federal Reserve System

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Exam 8: Technology, production, and Costs

If marginal cost is above the average variable cost,then average variable cost is decreasing.

Table 8-2 Number of Workers Apples per Day (bushels) 1 50 2 120 3 180 4 230 5 270 6 300 Table 8-2 summarizes production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 8-2.What is the marginal product of the 4th worker?

Average fixed cost can be calculated using any of the formulas below except

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.What is the marginal product of the 4th worker?

Implicit costs can be defined as

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

The law of diminishing marginal returns

What is the difference between total cost and variable cost in the long run?

Figure 8-6 Figure 8-6 contains information about the short run cost structure of a firm. -Refer to Figure 8-6.In the figure above which letter represents the average fixed cost curve?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.If output is 100 units what is the fixed cost of production?

Figure 8-5 -Refer to Figure 8-5.Curve G approaches curve F because

In the short run,if marginal product is at its maximum,then

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?

When the marginal product of labor rises

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