Question 1

Figure 11-12
  
-Refer to Figure 11-12.The movement from isoquant T to isoquant U depicts

Accepted Answer

A) a change in preferences with regards to input usage. 
B) an increase in the cost of production. 
C) an increase in output. 
D) an increase in labor usage holding capital and output constant. 
A) a change in preferences with regards to input usage. 
B) an increase in the cost of production. 
C) an increase in output. 
D) an increase in labor usage holding capital and output constant.

Question 2

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 3

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 4

An explicit cost is defined as

Accepted Answer

A) a cost that does not change as output changes. 
B) a nonmonetary opportunity cost. 
C) a cost that involves spending money. 
D) a nonmonetary accounting cost. 
A) a cost that does not change as output changes. 
B) a nonmonetary opportunity cost. 
C) a cost that involves spending money. 
D) a nonmonetary accounting cost.

Question 5

Which of the following is an implicit cost of production?

Accepted Answer

A) the loss in the value of capital equipment due to wear and tear 
B) the salary you pay yourself for running your business 
C) the utility bill paid to water, electricity, and natural gas companies 
D) the interest you pay your mother for the money she loaned you to start your business 
A) the loss in the value of capital equipment due to wear and tear 
B) the salary you pay yourself for running your business 
C) the utility bill paid to water, electricity, and natural gas companies 
D) the interest you pay your mother for the money she loaned you to start your business

Question 6

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labor is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labor for these three tattoo artists?

Accepted Answer

The average product of labor i

Question 7

Figure 11-1
  
-Refer to Figure 11-1.The marginal product of the 3rd worker is

Accepted Answer

A) 57. 
B) 19. 
C) 15. 
D) 11. 
A) 57. 
B) 19. 
C) 15. 
D) 11.

Question 8

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 9

Which of the following is the best example of a short-run adjustment?

Accepted Answer

A) A local bakery purchases another commercial oven as part of its capacity expansion. 
B) Your local Walmart hires two more associates. 
C) Smith University completed negotiations to acquire a large piece of land to build its new library. 
D) Toyota builds a new assembly plant in Texas. 
A) A local bakery purchases another commercial oven as part of its capacity expansion. 
B) Your local Walmart hires two more associates. 
C) Smith University completed negotiations to acquire a large piece of land to build its new library. 
D) Toyota builds a new assembly plant in Texas.

Question 10

Describe the difference between technology and positive technological change.

Accepted Answer

a firm's technology refers to the proces

Question 11

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 12

Economies of scale occur when

Accepted Answer

A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases. 
A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases.

Question 13

Table 11-2
   
Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April.
-Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

Accepted Answer

A) 270 bushels 
B) 54 bushels 
C) 40 bushels 
D) 8 bushels 
A) 270 bushels 
B) 54 bushels 
C) 40 bushels 
D) 8 bushels

Question 14

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labor if the

Accepted Answer

A) price of capital increases. 
B) price of labor decreases. 
C) price of labor increases. 
D) marginal product of labor increases. 
A) price of capital increases. 
B) price of labor decreases. 
C) price of labor increases. 
D) marginal product of labor increases.

Question 15

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.For output rates greater than 20,000 picture frames per month

Accepted Answer

A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production. 
A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production.

Question 16

Figure 11-4
  
-Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost. 
A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost.

Question 17

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 18

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Accepted Answer

A) the marginal product of labor. 
B) the division of labor. 
C) the average product of labor. 
D) the average cost of production. 
A) the marginal product of labor. 
B) the division of labor. 
C) the average product of labor. 
D) the average cost of production.

Question 19

Maximizing the level of output for a given total cost of production

Accepted Answer

A) is equivalent to producing the profit maximizing output level. 
B) is equivalent to minimizing cost for a given level of output. 
C) necessitates using only relatively low-priced inputs. 
D) will maximize total revenue. 
A) is equivalent to producing the profit maximizing output level. 
B) is equivalent to minimizing cost for a given level of output. 
C) necessitates using only relatively low-priced inputs. 
D) will maximize total revenue.

Question 20

When a firm experiences negative technological change it can produce the same output with fewer inputs.

Accepted Answer

A) True 
 B)False

Figure 11-12 -Refer to Figure 11-12.The movement from isoquant T to isoquant U depicts

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

An explicit cost is defined as

Which of the following is an implicit cost of production?

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labor is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labor for these three tattoo artists?

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

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

Which of the following is the best example of a short-run adjustment?

Describe the difference between technology and positive technological change.

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

Economies of scale occur when

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labor if the

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.For output rates greater than 20,000 picture frames per month

Figure 11-4 -Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Maximizing the level of output for a given total cost of production

When a firm experiences negative technological change it can produce the same output with fewer inputs.

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

Exam 11: Technology, Production, and Costs

Figure 11-12 -Refer to Figure 11-12.The movement from isoquant T to isoquant U depicts

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

An explicit cost is defined as

Which of the following is an implicit cost of production?

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labor is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labor for these three tattoo artists?

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

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

Which of the following is the best example of a short-run adjustment?

Describe the difference between technology and positive technological change.

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

Economies of scale occur when

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labor if the

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.For output rates greater than 20,000 picture frames per month

Figure 11-4 -Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Maximizing the level of output for a given total cost of production

When a firm experiences negative technological change it can produce the same output with fewer inputs.

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