Question 1

The level of output at which all economies of scale have been exhausted is known as

Accepted Answer

A) constant returns to scale. 
B) minimum efficient scale. 
C) the economically efficient output level. 
D) optimal economic size. 
A) constant returns to scale. 
B) minimum efficient scale. 
C) the economically efficient output level. 
D) optimal economic size.

Question 2

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 3

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 4

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

Accepted Answer

A) True 
 B)False

Question 5

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 labor 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 labor with technology.

Question 6

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 7

Which of the following are examples of a firm experiencing a positive technological change?
a.A firm is able to reduce its inputs by 15 percent and still produce the same level of output.
b.A seminar attended by the firm's workers makes them more productive.
c.A firm adds 5 percent to its workforce and is able to maintain its initial level of output.
d.A firm restructures its distribution system and is able to save on its shipping times.
e.A firm rearranges its warehouse and finds that it can use fewer workers to maintain its productivity level.

Accepted Answer

Examples a, b, d, and e are examples of

Question 8

The marginal product of labor is calculated using the formula

Accepted Answer

A) L/Q. 
B) ΔL/ΔQ. 
C) ΔQ/ΔL. 
D) Q/L. 
A) L/Q. 
B) ΔL/ΔQ. 
C) ΔQ/ΔL. 
D) Q/L.

Question 9

Figure 11-15
  
-Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Accepted Answer

A) $3,600 
B) $1,120 
C) $592 
D) $560 
A) $3,600 
B) $1,120 
C) $592 
D) $560

Question 10

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced. 
A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced.

Question 11

When Segment.com implemented changes which allowed it to increase productivity with the same number of workers, this represented a positive technological change.

Accepted Answer

A) True 
 B)False

Question 12

Figure 11-2
  
-Refer to Figure 11-2.Diminishing returns to labor 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 13

Use the following graph to answer the following questions.
   
a.If the wage rate and the rental price of machines are both $50 and total cost is $800, is the cost-minimizing point A, B, or C?
b.If the wage rate is $40, the rental price of equipment is $120, and total cost is $1,200, is the cost-minimizing point A, B, or C?
c.If the wage rate is $60, the rental price of equipment is $90, and total cost is $1,800, is the cost-minimizing point A, B, or C?

Accepted Answer

a.If total cost is $800 and the wage rat

Question 14

A firm has successfully adopted a positive technological change when

Accepted Answer

A) it can produce more output using the same inputs. 
B) it produces less pollution in its production process. 
C) it can pay its workers less yet increase its output. 
D) it sees an increase in worker productivity. 
A) it can produce more output using the same inputs. 
B) it produces less pollution in its production process. 
C) it can pay its workers less yet increase its output. 
D) it sees an increase in worker productivity.

Question 15

Figure 11-2
  
-Refer to Figure 11-2.Short run output is maximized at

Accepted Answer

A) L₁. 
B) L₂. 
C) L₃. 
D) insufficient information to determine 
A) L₁. 
B) L₂. 
C) L₃. 
D) insufficient information to determine

Question 16

The typical shape of an isoquant is

Accepted Answer

A) convex towards the origin. 
B) concave towards the origin. 
C) linear and downward sloping. 
D) linear and upward sloping. 
A) convex towards the origin. 
B) concave towards the origin. 
C) linear and downward sloping. 
D) linear and upward sloping.

Question 17

Figure 11-18
  
-Refer to Figure 11-18.Starting from point D, a movement along isoquant₂ to point F

Accepted Answer

A) increases the total cost of production with no change in output. 
B) increases output but not the total cost of production. 
C) increases the total cost of production and decreases output. 
D) increases both the total cost of production and output. 
A) increases the total cost of production with no change in output. 
B) increases output but not the total cost of production. 
C) increases the total cost of production and decreases output. 
D) increases both the total cost of production and output.

Question 18

An expansion path shows

Accepted Answer

A) the level of sales necessary for a firm if it wants to expand. 
B) the level of long-run average cost at different scales of operation. 
C) the least-cost combination of inputs for each level of output. 
D) the returns to scale at each level of output. 
A) the level of sales necessary for a firm if it wants to expand. 
B) the level of long-run average cost at different scales of operation. 
C) the least-cost combination of inputs for each level of output. 
D) the returns to scale at each level of output.

Question 19

Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain.

Accepted Answer

For many firms, the cost of utilities ca

Question 20

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Accepted Answer

A) opportunity cost of inputs. 
B) marginal rate of technical substitution. 
C) input trade-off rate. 
D) isoquant substitution rate. 
A) opportunity cost of inputs. 
B) marginal rate of technical substitution. 
C) input trade-off rate. 
D) isoquant substitution rate.

The level of output at which all economies of scale have been exhausted is known as

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

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

The marginal rate of technical substitution is

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

The marginal product of labor is calculated using the formula

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Minimum efficient scale is defined as the level of output at which

When Segment.com implemented changes which allowed it to increase productivity with the same number of workers, this represented a positive technological change.

Figure 11-2 -Refer to Figure 11-2.Diminishing returns to labor set in

A firm has successfully adopted a positive technological change when

Figure 11-2 -Refer to Figure 11-2.Short run output is maximized at

The typical shape of an isoquant is

Figure 11-18 -Refer to Figure 11-18.Starting from point D, a movement along isoquant₂ to point F

An expansion path shows

Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain.

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 11: Technology, Production, and Costs

The level of output at which all economies of scale have been exhausted is known as

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

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

The marginal rate of technical substitution is

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

The marginal product of labor is calculated using the formula

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Minimum efficient scale is defined as the level of output at which

When Segment.com implemented changes which allowed it to increase productivity with the same number of workers, this represented a positive technological change.

Figure 11-2 -Refer to Figure 11-2.Diminishing returns to labor set in

A firm has successfully adopted a positive technological change when

Figure 11-2 -Refer to Figure 11-2.Short run output is maximized at

The typical shape of an isoquant is

Figure 11-18 -Refer to Figure 11-18.Starting from point D, a movement along isoquant₂ to point F

An expansion path shows

Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain.

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters