Question 1

Which of the following explains why the marginal cost curve has a U shape?

Accepted Answer

A) Initially, the marginal product of labor falls, then rises. 
B) Initially, the average product of labor rises, then falls. 
C) Initially, the marginal product of labor rises, then falls. 
D) Initially, the average cost of production rises, then falls. 
A) Initially, the marginal product of labor falls, then rises. 
B) Initially, the average product of labor rises, then falls. 
C) Initially, the marginal product of labor rises, then falls. 
D) Initially, the average cost of production rises, then falls.

Question 2

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

Accepted Answer

A) True 
 B)False

Question 3

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.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 4

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 5

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 6

Figure 11-10
  
-Refer to Figure 11-10.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 7

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 8

Which of the following statements is true?

Accepted Answer

A) An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B) Economic costs include both explicit costs and implicit costs. 
C) An explicit cost is more important, dollar for dollar, than an implicit cost. 
D) Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs. 
A) An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B) Economic costs include both explicit costs and implicit costs. 
C) An explicit cost is more important, dollar for dollar, than an implicit cost. 
D) Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs.

Question 9

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

Accepted Answer

A) True 
 B)False

Question 10

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

Accepted Answer

A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor 
A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor

Question 11

The absolute value of the slope of an isocost line equals the ratio of

Accepted Answer

A) the marginal productivities of the two inputs. 
B)  the prices of the two inputs. 
C)  the marginal utilities of the two inputs. 
D) the quantities of the two inputs. 
A) the marginal productivities of the two inputs. 
B)  the prices of the two inputs. 
C)  the marginal utilities of the two inputs. 
D) the quantities of the two inputs.

Question 12

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.

Question 13

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 14

Figure 11-18
  
-Refer to Figure 11-18.A curve that connects points A, D, and E is called

Accepted Answer

A) an input-output curve. 
B) a total cost line. 
C) an expansion path. 
D) an indifference line. 
A) an input-output curve. 
B) a total cost line. 
C) an expansion path. 
D) an indifference line.

Question 15

Figure 11-13
  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

Accepted Answer

A) the movement from AF to BF 
B) the movement from BF to AF 
C) the movement from BF to BD 
D) the movement from BF to CE 
A) the movement from AF to BF 
B) the movement from BF to AF 
C) the movement from BF to BD 
D) the movement from BF to CE

Question 16

If average total cost is falling marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 17

To improve package delivery, one change UPS made involved taking better account of weather forecasts to avoid delays in flying packages.This is an example of

Accepted Answer

A) positive technological change. 
B) increasing marginal returns. 
C) a reduction in fixed costs. 
D) diseconomies of scale. 
A) positive technological change. 
B) increasing marginal returns. 
C) a reduction in fixed costs. 
D) diseconomies of scale.

Question 18

Figure 11-7
   
Figure 11-7 shows the cost structure for a firm.
-Refer to Figure 11-7.When output level is 100, what is the total cost of production?

Accepted Answer

A) $20 
B) $1,000 
C) $1,200 
D) $2,000 
A) $20 
B) $1,000 
C) $1,200 
D) $2,000

Question 19

Diminishing marginal product of labor occurs when adding another unit of labor

Accepted Answer

A) decreases output. 
B) changes output by an amount smaller than the output added by the previous unit of labor. 
C) increases output by an amount larger than the output added by the previous unit of labor. 
D) decreases output by an amount smaller than the output added by the previous unit of labor. 
A) decreases output. 
B) changes output by an amount smaller than the output added by the previous unit of labor. 
C) increases output by an amount larger than the output added by the previous unit of labor. 
D) decreases output by an amount smaller than the output added by the previous unit of labor.

Question 20

Figure 11-6
   
Figure 11-6 contains information about the short run cost structure of a firm.
-Refer to Figure 11-6.In the figure above which letter represents the marginal cost curve?

Accepted Answer

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

Which of the following explains why the marginal cost curve has a U shape?

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

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.Diminishing marginal returns sets in when the ________ worker is hired.

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

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

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

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

Which of the following statements is true?

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

The absolute value of the slope of an isocost line equals the ratio of

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

If production displays increasing marginal returns, then

Figure 11-18 -Refer to Figure 11-18.A curve that connects points A, D, and E is called

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

If average total cost is falling marginal cost must also be falling.

To improve package delivery, one change UPS made involved taking better account of weather forecasts to avoid delays in flying packages.This is an example of

Figure 11-7 Figure 11-7 shows the cost structure for a firm. -Refer to Figure 11-7.When output level is 100, what is the total cost of production?

Diminishing marginal product of labor occurs when adding another unit of labor

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the marginal cost curve?

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 More Realistic Setting

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

Which of the following explains why the marginal cost curve has a U shape?

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

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.Diminishing marginal returns sets in when the ________ worker is hired.

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

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

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

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

Which of the following statements is true?

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

The absolute value of the slope of an isocost line equals the ratio of

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

If production displays increasing marginal returns, then

Figure 11-18 -Refer to Figure 11-18.A curve that connects points A, D, and E is called

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

If average total cost is falling marginal cost must also be falling.

To improve package delivery, one change UPS made involved taking better account of weather forecasts to avoid delays in flying packages.This is an example of

Figure 11-7 Figure 11-7 shows the cost structure for a firm. -Refer to Figure 11-7.When output level is 100, what is the total cost of production?

Diminishing marginal product of labor occurs when adding another unit of labor

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the marginal cost curve?

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 More Realistic Setting

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