Question 1

The long run is defined as

Accepted Answer

A) any time after six months. 
B) any time after one year. 
C) the period of time when all resources are fixed. 
D) the period of time when most (more than 50 percent)resources are variable. 
E) the period of time when all resources are variable. 
A) any time after six months. 
B) any time after one year. 
C) the period of time when all resources are fixed. 
D) the period of time when most (more than 50 percent)resources are variable. 
E) the period of time when all resources are variable.

Question 2

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the average product of 10 workers is

Accepted Answer

A) 1,700 units. 
B) 1,550 units. 
C) 170 units. 
D) 150 units. 
E) 155 units. 
A) 1,700 units. 
B) 1,550 units. 
C) 170 units. 
D) 150 units. 
E) 155 units.

Question 3

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 28
\end{array}$$
-The table above shows the total product schedule for Rick's Lawn Service, a yard care company. When the ________ worker is hired, the average product of labor ________ the marginal product of labor.

Accepted Answer

A) 4th; exceeds 
B) 5th; exceeds 
C) 6th; exceeds 
D) 7th; is less than 
E) 7th; equals 
A) 4th; exceeds 
B) 5th; exceeds 
C) 6th; exceeds 
D) 7th; is less than 
E) 7th; equals

Question 4

What is the difference between decreasing marginal returns and negative marginal returns?

Accepted Answer

Decreasing marginal returns occur when t

Question 5

The main source of economies of scale is

Accepted Answer

A) better management. 
B) constant returns to plant size. 
C) specialization. 
D) long-run cost curves eventually sloping downward. 
E) increases in the labor force not matched by increases in the plant size. 
A) better management. 
B) constant returns to plant size. 
C) specialization. 
D) long-run cost curves eventually sloping downward. 
E) increases in the labor force not matched by increases in the plant size.

Question 6

Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill his dream of catering barbecues. During his year of barbecuing he earned total revenue of $60,000. He spent $30,000 on food and supplies. He also paid his wife $10,000 to help serve food. The normal profit for an entrepreneur running a barbecue business is $3,000. Bill also rented an industrial grill/fry truck for $12,000. Bill had an economic

Accepted Answer

A) profit of $20,000. 
B) loss of -$32,000. 
C) loss of -$42,000. 
D) profit of $28,000. 
E) profit of zero. 
A) profit of $20,000. 
B) loss of -$32,000. 
C) loss of -$42,000. 
D) profit of $28,000. 
E) profit of zero.

Question 7

Jill runs a factory that makes lie detectors in Little Rock, Arkansas. This month, Jill's 34 workers produced 680 machines. Jill's average product of labor equaled ________ lie detectors per worker.

Accepted Answer

A) 680 
B) 34 
C) 23 
D) 20 
E) None of the above answers is correct. 
A) 680 
B) 34 
C) 23 
D) 20 
E) None of the above answers is correct.

Question 8

A firm decreases its scale of operation and discovers that its long-run average costs decrease. Which of the following does this indicate?

Accepted Answer

A) Labor's marginal product has increased. 
B) Diseconomies of scale were absent in the larger plant. 
C) The firm's scale initially was so large that it experienced diseconomies of scale. 
D) The firm's scale initially was too small to experience economies of scale. 
E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant. 
A) Labor's marginal product has increased. 
B) Diseconomies of scale were absent in the larger plant. 
C) The firm's scale initially was so large that it experienced diseconomies of scale. 
D) The firm's scale initially was too small to experience economies of scale. 
E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant.

Question 9

The marginal cost curve intersects the ________ curves at their ________ points.

Accepted Answer

A) average total cost and average fixed cost; minimum 
B) average product and marginal product; maximum 
C) average variable cost and total variable cost; maximum 
D) average total cost and average variable cost; minimum 
E) average product and marginal product; minimum 
A) average total cost and average fixed cost; minimum 
B) average product and marginal product; maximum 
C) average variable cost and total variable cost; maximum 
D) average total cost and average variable cost; minimum 
E) average product and marginal product; minimum

Question 10

What is a normal profit?
 Is it part of the firm's opportunity costs, total revenue, or neither?

Accepted Answer

The normal profit is

Question 11

If we know the amount of total cost, average total cost, average variable cost, and marginal cost for each level of output, how can we find the level of output where the marginal product is the greatest?

Accepted Answer

A) It is the output for which the marginal cost equals average variable cost. 
B) It is the output for which the total cost is maximized. 
C) It is the output for which the marginal cost is minimized. 
D) It is the output for which the marginal cost equals average total cost. 
E) There is no way to find where marginal product is the greatest knowing only cost data. 
A) It is the output for which the marginal cost equals average variable cost. 
B) It is the output for which the total cost is maximized. 
C) It is the output for which the marginal cost is minimized. 
D) It is the output for which the marginal cost equals average total cost. 
E) There is no way to find where marginal product is the greatest knowing only cost data.

Question 12

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the marginal product of the 10th worker is

Accepted Answer

A) 1,700 units. 
B) 1,550 units. 
C) 150 units. 
D) 170 units. 
E) 155 units. 
A) 1,700 units. 
B) 1,550 units. 
C) 150 units. 
D) 170 units. 
E) 155 units.

Question 13

Increasing marginal returns occur when the

Accepted Answer

A) average product of an additional worker is less than the average product of the previous worker. 
B) marginal product of an additional worker exceeds the marginal product of the previous worker. 
C) marginal product of labor is less than the average product of labor. 
D) total output of the firm is at its maximum. 
E) total product curve is horizontal. 
A) average product of an additional worker is less than the average product of the previous worker. 
B) marginal product of an additional worker exceeds the marginal product of the previous worker. 
C) marginal product of labor is less than the average product of labor. 
D) total output of the firm is at its maximum. 
E) total product curve is horizontal.

Question 14

If the average product of labor curve is rising, i) the average variable cost curve is falling.
Ii) the marginal cost curve is definitely falling.
Iii) the marginal product curve has reached its maximum.

Accepted Answer

A) i and iii 
B) i only 
C) ii and iii 
D) i, ii, and iii 
E) ii only 
A) i and iii 
B) i only 
C) ii and iii 
D) i, ii, and iii 
E) ii only

Question 15

This month, the local widget factory produced 100 widgets. The total variable cost of production was $500 and the average total cost of production was $8.
a. What is the total cost?
b. What is the total fixed cost?
c. What is the average fixed cost?
d. What is the average variable cost?

Accepted Answer

a. Total cost can be calculated as avera

Question 16

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70 \
\hline
\end{array}$$
-The average product is the greatest in the short run when the

Accepted Answer

A) total product is maximized. 
B) marginal product is equal to zero. 
C) marginal product is maximized. 
D) marginal product is equal to the average product. 
E) marginal product is greater than the average product. 
A) total product is maximized. 
B) marginal product is equal to zero. 
C) marginal product is maximized. 
D) marginal product is equal to the average product. 
E) marginal product is greater than the average product.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (frijoles) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 1,000 \
\hline 5 & 1,000 & 3,000 \
\hline 10 & 3,000 & 5,000 \
\hline 15 & 4,000 & 7,000 \
\hline 20 & 4,500 & 9,000 \
\hline
\end{array}$$
-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the total fixed cost of producing 4,500 frijoles?

Accepted Answer

A) $1000 
B) $8000 
C) $9000 
D) $2,000 
E) More information is needed to determine the answer. 
A) $1000 
B) $8000 
C) $9000 
D) $2,000 
E) More information is needed to determine the answer.

Question 18

The change in cost that results from a one-unit increase in output is called the

Accepted Answer

A) average fixed cost. 
B) per-unit variable cost. 
C) per-unit total cost. 
D) marginal cost. 
E) average cost change. 
A) average fixed cost. 
B) per-unit variable cost. 
C) per-unit total cost. 
D) marginal cost. 
E) average cost change.

Question 19

Jay set up his hot dog stand near the business district. His total variable cost includes the

Accepted Answer

A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day. 
A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day.

Question 20

The portion of the long-run average cost curve in which economies of scale are experienced shows that as output increases, the

Accepted Answer

A) average total cost decreases. 
B) average total cost increases. 
C) marginal cost increases. 
D) marginal cost decreases. 
E) average variable cost is constant and the average fixed cost decreases. 
A) average total cost decreases. 
B) average total cost increases. 
C) marginal cost increases. 
D) marginal cost decreases. 
E) average variable cost is constant and the average fixed cost decreases.

The long run is defined as

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the average product of 10 workers is

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service, a yard care company. When the worker is hired, the average product of labor the marginal product of labor.

What is the difference between decreasing marginal returns and negative marginal returns?

The main source of economies of scale is

Jill runs a factory that makes lie detectors in Little Rock, Arkansas. This month, Jill's 34 workers produced 680 machines. Jill's average product of labor equaled ________ lie detectors per worker.

A firm decreases its scale of operation and discovers that its long-run average costs decrease. Which of the following does this indicate?

The marginal cost curve intersects the curves at their points.

What is a normal profit? Is it part of the firm's opportunity costs, total revenue, or neither?

If we know the amount of total cost, average total cost, average variable cost, and marginal cost for each level of output, how can we find the level of output where the marginal product is the greatest?

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the marginal product of the 10th worker is

Increasing marginal returns occur when the

If the average product of labor curve is rising, i) the average variable cost curve is falling. Ii) the marginal cost curve is definitely falling. Iii) the marginal product curve has reached its maximum.

This month, the local widget factory produced 100 widgets. The total variable cost of production was $500 and the average total cost of production was $8. a. What is the total cost? b. What is the total fixed cost? c. What is the average fixed cost? d. What is the average variable cost?

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The average product is the greatest in the short run when the

The change in cost that results from a one-unit increase in output is called the

Jay set up his hot dog stand near the business district. His total variable cost includes the

The portion of the long-run average cost curve in which economies of scale are experienced shows that as output increases, the

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 10: Production and Cost

The long run is defined as

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the average product of 10 workers is

What is the difference between decreasing marginal returns and negative marginal returns?

The main source of economies of scale is

Jill runs a factory that makes lie detectors in Little Rock, Arkansas. This month, Jill's 34 workers produced 680 machines. Jill's average product of labor equaled ________ lie detectors per worker.

A firm decreases its scale of operation and discovers that its long-run average costs decrease. Which of the following does this indicate?

The marginal cost curve intersects the ________ curves at their ________ points.

What is a normal profit? Is it part of the firm's opportunity costs, total revenue, or neither?

If we know the amount of total cost, average total cost, average variable cost, and marginal cost for each level of output, how can we find the level of output where the marginal product is the greatest?

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the marginal product of the 10th worker is

Increasing marginal returns occur when the

If the average product of labor curve is rising, i) the average variable cost curve is falling. Ii) the marginal cost curve is definitely falling. Iii) the marginal product curve has reached its maximum.

This month, the local widget factory produced 100 widgets. The total variable cost of production was $500 and the average total cost of production was $8. a. What is the total cost? b. What is the total fixed cost? c. What is the average fixed cost? d. What is the average variable cost?

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The average product is the greatest in the short run when the

The change in cost that results from a one-unit increase in output is called the

Jay set up his hot dog stand near the business district. His total variable cost includes the

The portion of the long-run average cost curve in which economies of scale are experienced shows that as output increases, the

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The marginal cost curve intersects the curves at their points.