Question 1

Which of the following is a reason why the marginal product increases as output increases?

Accepted Answer

A)  decreasing repetition 
B)  increasing continuity 
C)  Both A and B are correct. 
D)  Neither A nor B is correct. 
A)  decreasing repetition 
B)  increasing continuity 
C)  Both A and B are correct. 
D)  Neither A nor B is correct.

Question 2

When indivisible inputs are being used,the average cost of production increases as output decreases.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements about fixed costs is correct?

Accepted Answer

A)  Fixed costs are not opportunity costs. 
B)  Fixed costs must be paid even if the firm's output is zero. 
C)  Fixed costs are always the largest portion of total costs. 
D)  none of the above 
A)  Fixed costs are not opportunity costs. 
B)  Fixed costs must be paid even if the firm's output is zero. 
C)  Fixed costs are always the largest portion of total costs. 
D)  none of the above

Question 4

When the long-run cost curve is negatively sloped,the firm is experiencing diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 5

If a car manufacturer enjoys economies of scale,then an increase in the number of cars manufactured will lead to a(n)

Accepted Answer

A)  decrease in average cost. 
B)  increase in average cost. 
C)  constant average cost. 
D)  decrease in total cost. 
A)  decrease in average cost. 
B)  increase in average cost. 
C)  constant average cost. 
D)  decrease in total cost.

Question 6

A firm will begin to experience diminishing returns at the point where

Accepted Answer

A)  marginal cost increases. 
B)  marginal cost decreases. 
C)  marginal product increases. 
D)  Both B and C are correct. 
A)  marginal cost increases. 
B)  marginal cost decreases. 
C)  marginal product increases. 
D)  Both B and C are correct.

Question 7

If the first copy cost of producing a R&B music video is $350,000 and the marginal cost is $0,how much total cost would the firm incur if it produces 5 million copies?

Accepted Answer

A)  zero 
B)  $350,000 
C)  $5,000,000 
D)  $5,350,000 
A)  zero 
B)  $350,000 
C)  $5,000,000 
D)  $5,350,000

Question 8

Comment on the following statement: "The shape of the long-run average cost curve is determined by diminishing returns."

Accepted Answer

The statement is false.Diminishing retur

Question 9

Table 8.3
-Refer to Table 8.3.If four workers are hired,then

Accepted Answer

A)  diminishing marginal returns have started. 
B)  marginal product equals five. 
C)  total product is maximized on the table. 
D)  all of the above 
A)  diminishing marginal returns have started. 
B)  marginal product equals five. 
C)  total product is maximized on the table. 
D)  all of the above

Question 10

-Refer to Figure 8.9.Which point of the LAC represents minimum efficient scale?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  e 
A)  a 
B)  b 
C)  c 
D)  e

Question 11

Table 8.1
-Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.If Mr.B is excited about his $45,000 profit,an economist would

Accepted Answer

A)  celebrate with him. 
B)  mention the $90,000 he has given up. 
C)  tell him his economic profit is indeed positive but not as big as $45,000. 
D)  tell him he made zero economic profit. 
A)  celebrate with him. 
B)  mention the $90,000 he has given up. 
C)  tell him his economic profit is indeed positive but not as big as $45,000. 
D)  tell him he made zero economic profit.

Question 12

If a firm is operating in the long run,the firm has flexibility in

Accepted Answer

A)  altering all inputs. 
B)  building a new production facility. 
C)  modifying an existing facility. 
D)  all of the above 
A)  altering all inputs. 
B)  building a new production facility. 
C)  modifying an existing facility. 
D)  all of the above

Question 13

Short-run costs that depend on the level of output are

Accepted Answer

A)  total fixed cost only. 
B)  total variable costs only. 
C)  total costs only. 
D)  both total variable costs and total costs. 
A)  total fixed cost only. 
B)  total variable costs only. 
C)  total costs only. 
D)  both total variable costs and total costs.

Question 14

-Refer to Figure 8.8.The vertical distance AB is Outdoor Equipment's

Accepted Answer

A)  marginal cost. 
B)  average fixed cost. 
C)  total fixed cost. 
D)  total cost. 
A)  marginal cost. 
B)  average fixed cost. 
C)  total fixed cost. 
D)  total cost.

Question 15

Diseconomies of scale can occur for

Accepted Answer

A)  coordination problems. 
B)  minimum efficient scale problems. 
C)  increasing input costs. 
D)  Both A and C are correct. 
A)  coordination problems. 
B)  minimum efficient scale problems. 
C)  increasing input costs. 
D)  Both A and C are correct.

Question 16

Total variable cost

Accepted Answer

A)  increases as output increases. 
B)  is constant as output increases. 
C)  decreases as output increases. 
D)  is lowest for labor-intensive technologies. 
A)  increases as output increases. 
B)  is constant as output increases. 
C)  decreases as output increases. 
D)  is lowest for labor-intensive technologies.

Question 17

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

Accepted Answer

Jimmy is giving up $30,000 in

Question 18

Recall the Application about the manufacture of fake killer whales used to scare sea lions off the Washington coast to answer the following question(s).
-Recall the Application.If fake killer whales are to be used to scare sea lions away from steelhead and other threatened and commercially valuable species,and the cost is $11,000 for the mold and $5,000 for materials for each fake killer whale made,then the average or per unit cost of producing 10 fake killer whales would be

Accepted Answer

A)  $5,000. 
B)  $6,100. 
C)  $11,000. 
D)  $61,000. 
A)  $5,000. 
B)  $6,100. 
C)  $11,000. 
D)  $61,000.

Question 19

You are the owner and only employee of a company that repairs computers.Last year,you earned total revenues of $75,000.Your costs for equipment,rent,and supplies were $10,000.To start this business you quit a job at a computer software firm that paid $40,000 a year.During the year,your economic costs were

Accepted Answer

A)  $10,000. 
B)  $40,000. 
C)  $50,000. 
D)  $75,000. 
A)  $10,000. 
B)  $40,000. 
C)  $50,000. 
D)  $75,000.

Question 20

-Refer to Figure 8.7.If six microwave ovens are produced,Micro Oven's average total costs are

Accepted Answer

A)  $116.67. 
B)  $200.00. 
C)  $700.00. 
D)  $1,200.00. 
A)  $116.67. 
B)  $200.00. 
C)  $700.00. 
D)  $1,200.00.

Which of the following is a reason why the marginal product increases as output increases?

When indivisible inputs are being used,the average cost of production increases as output decreases.

Which of the following statements about fixed costs is correct?

When the long-run cost curve is negatively sloped,the firm is experiencing diseconomies of scale.

If a car manufacturer enjoys economies of scale,then an increase in the number of cars manufactured will lead to a(n)

A firm will begin to experience diminishing returns at the point where

If the first copy cost of producing a R&B music video is $350,000 and the marginal cost is $0,how much total cost would the firm incur if it produces 5 million copies?

Comment on the following statement: "The shape of the long-run average cost curve is determined by diminishing returns."

Table 8.3 -Refer to Table 8.3.If four workers are hired,then

-Refer to Figure 8.9.Which point of the LAC represents minimum efficient scale?

Table 8.1 -Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.If Mr.B is excited about his $45,000 profit,an economist would

If a firm is operating in the long run,the firm has flexibility in

Short-run costs that depend on the level of output are

-Refer to Figure 8.8.The vertical distance AB is Outdoor Equipment's

Diseconomies of scale can occur for

Total variable cost

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

-Refer to Figure 8.7.If six microwave ovens are produced,Micro Oven's average total costs are

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

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Exam 8: Production Technology and Cost

Which of the following is a reason why the marginal product increases as output increases?

When indivisible inputs are being used,the average cost of production increases as output decreases.

Which of the following statements about fixed costs is correct?

When the long-run cost curve is negatively sloped,the firm is experiencing diseconomies of scale.

If a car manufacturer enjoys economies of scale,then an increase in the number of cars manufactured will lead to a(n)

A firm will begin to experience diminishing returns at the point where

If the first copy cost of producing a R&B music video is $350,000 and the marginal cost is $0,how much total cost would the firm incur if it produces 5 million copies?

Comment on the following statement: "The shape of the long-run average cost curve is determined by diminishing returns."

Table 8.3 -Refer to Table 8.3.If four workers are hired,then

-Refer to Figure 8.9.Which point of the LAC represents minimum efficient scale?

Table 8.1 -Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.If Mr.B is excited about his $45,000 profit,an economist would

If a firm is operating in the long run,the firm has flexibility in

Short-run costs that depend on the level of output are

-Refer to Figure 8.8.The vertical distance AB is Outdoor Equipment's

Diseconomies of scale can occur for

Total variable cost

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

-Refer to Figure 8.7.If six microwave ovens are produced,Micro Oven's average total costs are

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

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