Question 1

Average product is equal to

Accepted Answer

A) marginal product + total product. 
B) total product ÷ marginal product. 
C) total product ÷ quantity of labor. 
D) total product × quantity of labor. 
E) marginal product × quantity of labor. 
A) marginal product + total product. 
B) total product ÷ marginal product. 
C) total product ÷ quantity of labor. 
D) total product × quantity of labor. 
E) marginal product × quantity of labor.

Question 2

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per week) }
\end{array} \
\hline 0 & 0 \
1 & 30 \
2 & 55 \
3 & 75 \
4 & 80 \
5 & 82
\end{array}$$
-Kenya owns a lawn mowing company. His total product schedule is in the above table. Decreasing marginal returns first occur with the

Accepted Answer

A) first worker. 
B) second worker. 
C) third worker. 
D) fourth worker. 
E) fifth worker. 
A) first worker. 
B) second worker. 
C) third worker. 
D) fourth worker. 
E) fifth worker.

Question 3

Which of the following contributes to increasing marginal returns?

Accepted Answer

A) decreasing implicit costs 
B) increasing explicit costs 
C) specialization of labor 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) decreasing implicit costs 
B) increasing explicit costs 
C) specialization of labor 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 4

A firm's utility bill is a variable cost. If the cost of utilities increases, then in the figure above ________ upward.

Accepted Answer

A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift 
A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift

Question 5

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70 \
\hline
\end{array}$$
-Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Accepted Answer

A) Total product increases as more labor is hired. 
B) The marginal product is equal to the average product. 
C) The marginal product is positive. 
D) The marginal product is greater than the average product. 
E) The marginal product is less than the average product. 
A) Total product increases as more labor is hired. 
B) The marginal product is equal to the average product. 
C) The marginal product is positive. 
D) The marginal product is greater than the average product. 
E) The marginal product is less than the average product.

Question 6

In the long run,

Accepted Answer

A) some resources are fixed. 
B) all resources are variable. 
C) output cannot be varied. 
D) all resources are fixed. 
E) Both answers B and C are correct. 
A) some resources are fixed. 
B) all resources are variable. 
C) output cannot be varied. 
D) all resources are fixed. 
E) Both answers B and C are correct.

Question 7

Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000.

Accepted Answer

A) His accounting profit is $350,000. 
B) His economic profit is $150,000. 
C) His economic profit is zero. 
D) His accounting profit is zero. 
E) None of the above answers are correct. 
A) His accounting profit is $350,000. 
B) His economic profit is $150,000. 
C) His economic profit is zero. 
D) His accounting profit is zero. 
E) None of the above answers are correct.

Question 8

Total cost is equal to the sum of

Accepted Answer

A) total revenue and total cost. 
B) total variable cost and total product. 
C) total variable cost and total fixed cost. 
D) total fixed cost and total product. 
E) the marginal cost plus the total fixed cost plus the total variable cost. 
A) total revenue and total cost. 
B) total variable cost and total product. 
C) total variable cost and total fixed cost. 
D) total fixed cost and total product. 
E) the marginal cost plus the total fixed cost plus the total variable cost.

Question 9

Which of the following costs can be positive when output is zero?

Accepted Answer

A) average variable cost 
B) total variable cost 
C) marginal cost 
D) total fixed cost 
E) None of the above because when output is zero there are no costs. 
A) average variable cost 
B) total variable cost 
C) marginal cost 
D) total fixed cost 
E) None of the above because when output is zero there are no costs.

Question 10

The U-shape of the average variable, average total, and marginal cost curves reflects

Accepted Answer

A) increasing marginal returns. 
B) decreasing marginal returns. 
C) both increasing and decreasing marginal returns. 
D) decreasing marginal product. 
E) the point that implicit costs become a smaller fraction of total cost as output increases. 
A) increasing marginal returns. 
B) decreasing marginal returns. 
C) both increasing and decreasing marginal returns. 
D) decreasing marginal product. 
E) the point that implicit costs become a smaller fraction of total cost as output increases.

Question 11

When the long-run average cost curve is downward sloping,

Accepted Answer

A) economies of scale are present. 
B) diseconomies of scale are present. 
C) the firm experiences constant returns to scale. 
D) the average fixed cost curve must be upward sloping. 
E) The premise of the question is wrong because long-run average cost curves never slope downward. 
A) economies of scale are present. 
B) diseconomies of scale are present. 
C) the firm experiences constant returns to scale. 
D) the average fixed cost curve must be upward sloping. 
E) The premise of the question is wrong because long-run average cost curves never slope downward.

Question 12

Economies of scale and diseconomies of scale explain

Accepted Answer

A) cost behavior in the short run. 
B) profit maximization in the long run. 
C) the U-shape of the long-run average cost curve. 
D) the U-shape of the short-run average total cost curve. 
E) the U-shape of the marginal cost curves. 
A) cost behavior in the short run. 
B) profit maximization in the long run. 
C) the U-shape of the long-run average cost curve. 
D) the U-shape of the short-run average total cost curve. 
E) the U-shape of the marginal cost curves.

Question 13

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (dogs groomed per week) }
\end{array} \
\hline 0 & 0 \
1 & 40 \
2 & 100 \
3 & 150 \
4 & 190 \
5 & 220 \
6 & 240
\end{array}$$
-Anna owns a dog grooming salon in Brunswick, Georgia. The above table has Anna's total product schedule. Anna pays each worker $300 per week and she pays rent of $600 a week for her salon. These are her only costs. When Anna has a staff of 6 workers, her average variable cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $1,800. 
A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $1,800.

Question 14

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (dogs groomed per week) }
\end{array} \
\hline 0 & 0 \
1 & 40 \
2 & 100 \
3 & 150 \
4 & 190 \
5 & 220 \
6 & 240
\end{array}$$
-Anna owns a dog grooming salon in Brunswick, Georgia. The above table has Anna's total product schedule. Anna pays each worker $300 per week and she pays rent of $600 a week for her salon. These are her only costs. When Anna has a staff of 6 workers, her average total cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $4,200. 
A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $4,200.

Question 15

Costs paid in money to hire a resource is

Accepted Answer

A) normal profit. 
B) an implicit cost. 
C) an explicit cost. 
D) an alternative-use cost. 
E) economic profit. 
A) normal profit. 
B) an implicit cost. 
C) an explicit cost. 
D) an alternative-use cost. 
E) economic profit.

Question 16

Which of the following always decreases when output increases?

Accepted Answer

A) total fixed cost 
B) marginal cost 
C) average variable cost 
D) average fixed cost 
E) total cost 
A) total fixed cost 
B) marginal cost 
C) average variable cost 
D) average fixed cost 
E) total cost

Question 17

The long-run average cost curve

Accepted Answer

A) is an upside down U-shape. 
B) is constructed using the short-run marginal cost curves. 
C) shows economies and diseconomies of scale. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) is an upside down U-shape. 
B) is constructed using the short-run marginal cost curves. 
C) shows economies and diseconomies of scale. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 18

What does the average product of labor equal?

Accepted Answer

The average product of labor e

Question 19

Marginal cost

Accepted Answer

A) is the difference between total cost and total fixed cost. 
B) increases as the marginal product of labor increases. 
C) decreases as the average product of labor increases. 
D) is the change in total cost arising from a one-unit increase in output. 
E) equals the change in variable cost divided by the change in fixed cost when output increases by one unit. 
A) is the difference between total cost and total fixed cost. 
B) increases as the marginal product of labor increases. 
C) decreases as the average product of labor increases. 
D) is the change in total cost arising from a one-unit increase in output. 
E) equals the change in variable cost divided by the change in fixed cost when output increases by one unit.

Question 20

Economic depreciation is the

Accepted Answer

A) fall in value of the firm's capital, calculating using IRS rules. 
B) opportunity cost of owning and using the firm's capital, measured as the change in market value. 
C) decrease in the value of finished goods and services that are held in inventories prior to being sold. 
D) term given to a fall in a company's stock price. 
E) name given to how accountants calculate the depreciation of the company's capital. 
A) fall in value of the firm's capital, calculating using IRS rules. 
B) opportunity cost of owning and using the firm's capital, measured as the change in market value. 
C) decrease in the value of finished goods and services that are held in inventories prior to being sold. 
D) term given to a fall in a company's stock price. 
E) name given to how accountants calculate the depreciation of the company's capital.

Average product is equal to

Quantity of labor (workers) Total product (lawns mowed per week) 0 0 1 30 2 55 3 75 4 80 5 82 -Kenya owns a lawn mowing company. His total product schedule is in the above table. Decreasing marginal returns first occur with the

Which of the following contributes to increasing marginal returns?

A firm's utility bill is a variable cost. If the cost of utilities increases, then in the figure above ________ upward.

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

In the long run,

Total cost is equal to the sum of

Which of the following costs can be positive when output is zero?

The U-shape of the average variable, average total, and marginal cost curves reflects

When the long-run average cost curve is downward sloping,

Economies of scale and diseconomies of scale explain

Costs paid in money to hire a resource is

Which of the following always decreases when output increases?

The long-run average cost curve

What does the average product of labor equal?

Marginal cost

Economic depreciation is 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

Average product is equal to

Quantity of labor (workers) Total product (lawns mowed per week) 0 0 1 30 2 55 3 75 4 80 5 82 -Kenya owns a lawn mowing company. His total product schedule is in the above table. Decreasing marginal returns first occur with the

Which of the following contributes to increasing marginal returns?

A firm's utility bill is a variable cost. If the cost of utilities increases, then in the figure above ________ upward.

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

In the long run,

Total cost is equal to the sum of

Which of the following costs can be positive when output is zero?

The U-shape of the average variable, average total, and marginal cost curves reflects

When the long-run average cost curve is downward sloping,

Economies of scale and diseconomies of scale explain

Costs paid in money to hire a resource is

Which of the following always decreases when output increases?

The long-run average cost curve

What does the average product of labor equal?

Marginal cost

Economic depreciation is 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