Question 1

Which of the following is a reason why a firm would experience diseconomies of scale?

Accepted Answer

A) To finance an increase in the size of its plant, a firm must borrow more money or sell more shares of stock. 
B) As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C) As the size of the firm increases, it becomes more difficult to coordinate the operations of its manufacturing plants. 
D) As the size of the firm increases, it must operate in other countries where differences in language, customs, and laws increase its average costs. 
A) To finance an increase in the size of its plant, a firm must borrow more money or sell more shares of stock. 
B) As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C) As the size of the firm increases, it becomes more difficult to coordinate the operations of its manufacturing plants. 
D) As the size of the firm increases, it must operate in other countries where differences in language, customs, and laws increase its average costs.

Question 2

Sam Lewis owns a firm in New York City's Garment District.If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way.At this point

Accepted Answer

A) the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B) Sam should encourage his workers to share their sewing machines. 
C) Sam's business will be in violation of safety rules that have been established by the New York City government. 
D) Sam should begin using a division of labor in his business. 
A) the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B) Sam should encourage his workers to share their sewing machines. 
C) Sam's business will be in violation of safety rules that have been established by the New York City government. 
D) Sam should begin using a division of labor in his business.

Question 3

Table 11-8
   
Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data.
-Refer to Table 11-8.Elegant Settings experiences

Accepted Answer

A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400. 
A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400.

Question 4

The marginal product of labor is defined as

Accepted Answer

A) the change in total revenue that results when an additional unit of a labor is hired. 
B) the additional labor required to produce one more unit of output. 
C) the additional labor cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker. 
A) the change in total revenue that results when an additional unit of a labor is hired. 
B) the additional labor required to produce one more unit of output. 
C) the additional labor cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker.

Question 5

If production displays increasing marginal returns, then

Accepted Answer

A) total product rises by a constant amount throughout. 
B) each new worker hired adds more to output than previous hires. 
C) the firm must be adding new capital to keep boosting productivity. 
D) total product reaches a maximum sooner than if production displayed decreasing returns. 
A) total product rises by a constant amount throughout. 
B) each new worker hired adds more to output than previous hires. 
C) the firm must be adding new capital to keep boosting productivity. 
D) total product reaches a maximum sooner than if production displayed decreasing returns.

Question 6

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

Question 7

Which of the following is not a reason why firms experience economies of scale?

Accepted Answer

A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialized, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms. 
A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialized, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Question 8

Figure 11-2
  
-Refer to Figure 11-2.The curve labeled "F" is

Accepted Answer

A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve. 
A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve.

Question 9

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Accepted Answer

A) David Ricardo 
B) Arthur C. Pigou 
C) Ronald Coase 
D) Adam Smith 
A) David Ricardo 
B) Arthur C. Pigou 
C) Ronald Coase 
D) Adam Smith

Question 12

Ford Motor Company started producing the Model A at plants scattered around the United States

Accepted Answer

A) to save on transport costs. 
B) because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C) to locate its production centers closer to its customers. 
D) because it was not able to attract skilled workers in Michigan (where its first plant was located). 
A) to save on transport costs. 
B) because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C) to locate its production centers closer to its customers. 
D) because it was not able to attract skilled workers in Michigan (where its first plant was located).

Question 13

Table 11-1
   
Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Accepted Answer

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

Question 14

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

Accepted Answer

A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero. 
A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero.

Question 15

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 16

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs.

Question 17

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A) economic; legal 
B) real; explicit 
C) total; economic 
D) explicit; accounting 
A) economic; legal 
B) real; explicit 
C) total; economic 
D) explicit; accounting

Question 18

Figure 11-11
   
Figure 11-11 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 11-11.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 19

If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

Accepted Answer

A) $1,000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information. 
A) $1,000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information.

Question 20

Figure 11-13
  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.If the price of labor is $50 per unit, then along the isocost AF, the total cost

Accepted Answer

A) is $500. 
B) is $750. 
C) is $1,250. 
D) cannot be determined without the price of capital. 
A) is $500. 
B) is $750. 
C) is $1,250. 
D) cannot be determined without the price of capital.

Which of the following is a reason why a firm would experience diseconomies of scale?

Sam Lewis owns a firm in New York City's Garment District.If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way.At this point

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.Elegant Settings experiences

The marginal product of labor is defined as

If production displays increasing marginal returns, then

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

Which of the following is not a reason why firms experience economies of scale?

Figure 11-2 -Refer to Figure 11-2.The curve labeled "F" is

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

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?

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Ford Motor Company started producing the Model A at plants scattered around the United States

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

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, when a firm doubles all its inputs, its average cost of production decreases, then production displays

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.

If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.If the price of labor is $50 per unit, then along the isocost AF, the 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

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

Exam 11: Technology, Production, and Costs

Which of the following is a reason why a firm would experience diseconomies of scale?

Sam Lewis owns a firm in New York City's Garment District.If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way.At this point

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.Elegant Settings experiences

The marginal product of labor is defined as

If production displays increasing marginal returns, then

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

Which of the following is not a reason why firms experience economies of scale?

Figure 11-2 -Refer to Figure 11-2.The curve labeled "F" is

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

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?

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Ford Motor Company started producing the Model A at plants scattered around the United States

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

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, when a firm doubles all its inputs, its average cost of production decreases, then production displays

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.If the price of labor is $50 per unit, then along the isocost AF, the 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

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

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.