Question 1

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Accepted Answer

A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries 
A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries

Question 2

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Accepted Answer

A) Diminishing returns are the result of changes in explicit costs. Diseconomies of scale are the result of changes in explicit costs and implicit costs. 
B) Diminishing returns refer to production while diseconomies of scale refer to costs. 
C) Diminishing returns cause a firm's marginal cost curve to rise; diseconomies of scale cause a firm's marginal cost curve to fall. 
D) Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run. 
A) Diminishing returns are the result of changes in explicit costs. Diseconomies of scale are the result of changes in explicit costs and implicit costs. 
B) Diminishing returns refer to production while diseconomies of scale refer to costs. 
C) Diminishing returns cause a firm's marginal cost curve to rise; diseconomies of scale cause a firm's marginal cost curve to fall. 
D) Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run.

Question 3

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Accepted Answer

A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) greater than the marginal product of labor. 
A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) greater than the marginal product of labor.

Question 4

If, when a firm doubles all its inputs, its average cost of production increases, 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 5

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

Accepted Answer

A) marginal costs must be decreasing. 
B) average variable costs must be increasing. 
C) marginal costs must be increasing. 
D) marginal costs can be either increasing or decreasing. 
A) marginal costs must be decreasing. 
B) average variable costs must be increasing. 
C) marginal costs must be increasing. 
D) marginal costs can be either increasing or decreasing.

Question 6

If a firm experiences diminishing returns its marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 7

Table 11-8
   
Elegant Settings manufactures stainless steel cutlery.Table 11-8 shows the company's cost data.
-Refer to Table 11-8.What is the minimum efficient scale of production?

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units

Question 8

Describe how UPS has used positive technological change to improve its package handling and delivery schedule.

Accepted Answer

Some of the new technology took the form

Question 9

Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication.Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year.The salaries and benefits of people in these job categories will be included in

Accepted Answer

A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost. 
A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost.

Question 10

Describe the relationship between marginal cost and average total cost.

Accepted Answer

If marginal cost for a given output is b

Question 11

Figure 11-5
  
-Refer to Figure 11-5.Identify the curves in the diagram.

Accepted Answer

A) E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B) E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C) E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D) E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve. 
A) E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B) E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C) E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D) E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.

Question 12

Higher isocost lines correspond to higher

Accepted Answer

A) profits. 
B) total costs of production. 
C)  input prices. 
D) sales revenue. 
A) profits. 
B) total costs of production. 
C)  input prices. 
D) sales revenue.

Question 13

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following equations is correct?

Accepted Answer

A) AVC - ATC = AFC 
B) AVC + ATC = AFC 
C) AFC + AVC = ATC 
D) ATC + AVC = AFC 
A) AVC - ATC = AFC 
B) AVC + ATC = AFC 
C) AFC + AVC = ATC 
D) ATC + AVC = AFC

Question 15

If a firm's long-run average total curve shows that it can produce 5,000 DVDs at an average cost of $2.00 and 15,000 DVDs at an average cost of $1.50, this is evidence of

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) the law of supply. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) the law of supply.

Question 16

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function. 
A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function.

Question 17

Suppose you have just opened a store to sell espresso machines.Both you and a competing store buy this machine from a manufacturer for $130 each.Your competitor who has a store of the same size as yours is currently selling about 10 machines a month at a price of $200 per machine.You expect to sell about 6 machines a month at a price of $220 per machine.If you lower your price, you expect to make a loss.Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you?

Accepted Answer

A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximize revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases. 
A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximize revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases.

Question 18

Costs that change as output changes are called incremental costs.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Figure 11-1
  
-Refer to Figure 11-1.Diminishing marginal productivity sets in after

Accepted Answer

A) the 2nd worker is hired. 
B) the 3rd worker is hired. 
C) the 4th worker is hired. 
D) the 5th worker is hired. 
A) the 2nd worker is hired. 
B) the 3rd worker is hired. 
C) the 4th worker is hired. 
D) the 5th worker is hired.

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

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

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

If a firm experiences diminishing returns its marginal product must be negative.

Table 11-8 Elegant Settings manufactures stainless steel cutlery.Table 11-8 shows the company's cost data. -Refer to Table 11-8.What is the minimum efficient scale of production?

Describe how UPS has used positive technological change to improve its package handling and delivery schedule.

Describe the relationship between marginal cost and average total cost.

Figure 11-5 -Refer to Figure 11-5.Identify the curves in the diagram.

Higher isocost lines correspond to higher

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

Which of the following equations is correct?

If a firm's long-run average total curve shows that it can produce 5,000 DVDs at an average cost of $2.00 and 15,000 DVDs at an average cost of $1.50, this is evidence of

The shape of the average total cost curve is determined by the shape of

Costs that change as output changes are called incremental costs.

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

Figure 11-1 -Refer to Figure 11-1.Diminishing marginal productivity sets in after

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 is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

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

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

If a firm experiences diminishing returns its marginal product must be negative.

Table 11-8 Elegant Settings manufactures stainless steel cutlery.Table 11-8 shows the company's cost data. -Refer to Table 11-8.What is the minimum efficient scale of production?

Describe how UPS has used positive technological change to improve its package handling and delivery schedule.

Describe the relationship between marginal cost and average total cost.

Figure 11-5 -Refer to Figure 11-5.Identify the curves in the diagram.

Higher isocost lines correspond to higher

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

Which of the following equations is correct?

If a firm's long-run average total curve shows that it can produce 5,000 DVDs at an average cost of $2.00 and 15,000 DVDs at an average cost of $1.50, this is evidence of

The shape of the average total cost curve is determined by the shape of

Costs that change as output changes are called incremental costs.

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

Figure 11-1 -Refer to Figure 11-1.Diminishing marginal productivity sets in after

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