Question 1

Average variable cost can be calculated using any of the formulas below except

Accepted Answer

A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC. 
A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC. C

Question 2

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A)  all economies of scale are exhausted. 
B)  diminishing returns affect average total cost. 
C)  the firm's long-run average total cost starts falling. 
D)  the maximum output is produced. 
A)  all economies of scale are exhausted. 
B)  diminishing returns affect average total cost. 
C)  the firm's long-run average total cost starts falling. 
D)  the maximum output is produced. A

Question 3

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

Accepted Answer

A)  the first workers hired get to use the best equipment. 
B)  specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C)  the best workers are hired first and later hires are not as skillful. 
D)  beyond some point, a firm has hired too many workers. 
A)  the first workers hired get to use the best equipment. 
B)  specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C)  the best workers are hired first and later hires are not as skillful. 
D)  beyond some point, a firm has hired too many workers. B

Question 4

What is the difference between total cost and variable cost in the long run?

Accepted Answer

In the short run,total cost =

Question 5

Which of the following statements is true?

Accepted Answer

A)  The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. 
B)  The average product of labor is at its minimum when the average product of labor equals the marginal product of labor. 
C)  The average product of labor tells us how much output changes as the quantity of workers hired changes. 
D)  Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing. 
A)  The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. 
B)  The average product of labor is at its minimum when the average product of labor equals the marginal product of labor. 
C)  The average product of labor tells us how much output changes as the quantity of workers hired changes. 
D)  Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing.

Question 6

Describe the relationship between marginal cost and average total cost.

Accepted Answer

If marginal cost for a given output is b

Question 7

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 8

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting 
A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting

Question 9

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can

Question 10

If the marginal product of labor is decreasing,then marginal cost of production must be rising.

Accepted Answer

A) True 
 B)False

Question 11

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

Accepted Answer

A)  $0 
B)  $2 
C)  $60 
D)  $120 
A)  $0 
B)  $2 
C)  $60 
D)  $120

Question 12

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 13

The marginal product of labor is defined as

Accepted Answer

A)  the additional sales revenue that results when one more worker is hired. 
B)  the additional output that results when one more worker is hired, holding all other resources constant. 
C)  the additional number of workers required to produce one more unit of output. 
D)  the cost of hiring one more worker. 
A)  the additional sales revenue that results when one more worker is hired. 
B)  the additional output that results when one more worker is hired, holding all other resources constant. 
C)  the additional number of workers required to produce one more unit of output. 
D)  the cost of hiring one more worker.

Question 14

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

Accepted Answer

A)  experiences an increase in demand. 
B)  experiences positive technological change. 
C)  will hire more workers in order to produce more output. 
D)  is operating in the short run. 
A)  experiences an increase in demand. 
B)  experiences positive technological change. 
C)  will hire more workers in order to produce more output. 
D)  is operating in the short run.

Question 15

Table 8-8
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Quantity } \
\text { (sets) }
\end{array} & \begin{array}{c}
\text { Long-Run } \
\text { Average Cost }
\end{array} \
\hline 100 & \$ 40 \
\hline 200 & 35 \
\hline 300 & 30 \
\hline 400 & 30 \
\hline 500 & 35 \
\hline
\end{array}$ Elegant Settings manufactures stainless steel cutlery. Table 8-8 shows the company's cost data.
-Refer to Table 8-8.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 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

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material.Based on this information,what is the amount of her explicit costs for the first year?

Accepted Answer

A)  $45,000 
B)  $45,500 
C)  $47,000 
D)  $87,000 
A)  $45,000 
B)  $45,500 
C)  $47,000 
D)  $87,000

Question 18

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Accepted Answer

A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. 
A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

Question 19

Figure 8-10
  
-Refer to Figure 8-10.Identify the minimum efficient scale of production.

Accepted Answer

A)  Qₐ 
B)  Qb 
C)  Qc 
D)  Qd 
A)  Qₐ 
B)  Qb 
C)  Qc 
D)  Qd

Question 20

To improve the work environment for its engineers,Segment.com rearranged its work areas to move the engineers to the quietest area of its building,and moved its sales and marketing force to to the loudest area.The result was an increase in output equivalent to hiring 10 to 15 additional workers.Which of the following statements best describes this change at Segment.com?

Accepted Answer

A)  The change implemented is not an example of technological change because it did not require the use of new machinery or equipment. 
B)  Technological change refers only to the introduction of new products or improvements to existing products. As such, the scenario described in the question is not technological change. 
C)  The firm is able to produce more output using the same number of inputs. Therefore, Segment.com has implemented a positive technological change. 
D)  The scenario described is an example of management efficiency and not technological change. Essentially, the firm changed its way of operating its business. 
A)  The change implemented is not an example of technological change because it did not require the use of new machinery or equipment. 
B)  Technological change refers only to the introduction of new products or improvements to existing products. As such, the scenario described in the question is not technological change. 
C)  The firm is able to produce more output using the same number of inputs. Therefore, Segment.com has implemented a positive technological change. 
D)  The scenario described is an example of management efficiency and not technological change. Essentially, the firm changed its way of operating its business.

Average variable cost can be calculated using any of the formulas below except

Minimum efficient scale is defined as the level of output at which

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

What is the difference between total cost and variable cost in the long run?

Which of the following statements is true?

Describe the relationship between marginal cost and average total cost.

Which of the following equations is correct?

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

If the marginal product of labor is decreasing,then marginal cost of production must be rising.

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

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

The marginal product of labor is defined as

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

Table 8-8 Quantity (sets) Long-Run Average Cost 100 \ 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery. Table 8-8 shows the company's cost data. -Refer to Table 8-8.What is the minimum efficient scale of production?

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

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Figure 8-10 -Refer to Figure 8-10.Identify the minimum efficient scale of production.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 8: Technology,Production,and Costs

Average variable cost can be calculated using any of the formulas below except

Minimum efficient scale is defined as the level of output at which

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

What is the difference between total cost and variable cost in the long run?

Which of the following statements is true?

Describe the relationship between marginal cost and average total cost.

Which of the following equations is correct?

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

If the marginal product of labor is decreasing,then marginal cost of production must be rising.

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

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

The marginal product of labor is defined as

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

Table 8-8 Quantity (sets) Long-Run Average Cost 100 \ 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery. Table 8-8 shows the company's cost data. -Refer to Table 8-8.What is the minimum efficient scale of production?

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

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Figure 8-10 -Refer to Figure 8-10.Identify the minimum efficient scale of production.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.