Question 1

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Accepted Answer

A)  David Ricardo 
B)  Arthur C. Pigou 
C)  Ronald Coase 
D)  Adam Smith 
A)  David Ricardo 
B)  Arthur C. Pigou 
C)  Ronald Coase 
D)  Adam Smith

Question 2

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Accepted Answer

A)  at the same level of output as the minimum point of the average variable cost. 
B)  at a larger level of output than the minimum point of the average variable cost. 
C)  at a lower level of output than the minimum point of the average variable cost. 
D)  at the same level of output as the maximum of the total product curve. 
A)  at the same level of output as the minimum point of the average variable cost. 
B)  at a larger level of output than the minimum point of the average variable cost. 
C)  at a lower level of output than the minimum point of the average variable cost. 
D)  at the same level of output as the maximum of the total product curve.

Question 3

The short run is the time period during which a firm has at least one input constraint.

Accepted Answer

A) True 
 B)False

Question 4

If marginal product is greater than average product,then

Accepted Answer

A)  average product must be decreasing. 
B)  marginal product must be decreasing. 
C)  marginal product must be increasing. 
D)  marginal product could either be increasing or decreasing. 
A)  average product must be decreasing. 
B)  marginal product must be decreasing. 
C)  marginal product must be increasing. 
D)  marginal product could either be increasing or decreasing.

Question 5

Table 8-1
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Number of } \
\text { Workers }
\end{array} & \begin{array}{c}
\text { Mushrooms per } \
\text { Day (pounds) }
\end{array} \
\hline 1 & 12 \
\hline 2 & 30 \
\hline 3 & 45 \
\hline 4 & 50 \
\hline 5 & 54 \
\hline 6 & 56 \
\hline
\end{array}$ Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 8-1.What is the marginal product of the 4th worker?

Accepted Answer

A)  137 pounds 
B)  50 pounds 
C)  12.5 pounds 
D)  5 pounds 
A)  137 pounds 
B)  50 pounds 
C)  12.5 pounds 
D)  5 pounds

Question 6

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 greater number of employees. 
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 greater number of employees. 
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 7

Jayanthi moves her yoga studio from her home to a space she rents in Oakland,California.Holding everything else constant,as a result of this move

Accepted Answer

A)  her explicit cost falls and her implicit cost rises. 
B)  her implicit cost falls and her explicit cost rises. 
C)  her economic cost rises. 
D)  her opportunity cost rises. 
A)  her explicit cost falls and her implicit cost rises. 
B)  her implicit cost falls and her explicit cost rises. 
C)  her economic cost rises. 
D)  her opportunity cost rises.

Question 8

Which of the following is an example of positive technological change?

Accepted Answer

A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards. 
B)  A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. 
A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards. 
B)  A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Question 9

Figure 8-7
   Figure 8-7 shows the cost structure for a firm.
-Refer to Figure 8-7.When the output level is 100 units average fixed cost is

Accepted Answer

A)  $12. 
B)  $8. 
C)  $4. 
D)  This cannot be determined from the diagram. 
A)  $12. 
B)  $8. 
C)  $4. 
D)  This cannot be determined from the diagram.

Question 10

Average total cost is equal to average variable cost minus average fixed cost.

Accepted Answer

A) True 
 B)False

Question 11

The basic activity of a firm is

Accepted Answer

A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services. 
A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services.

Question 12

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

Accepted Answer

A)  Jennifer's explicit costs fall and her implicit costs rise. 
B)  Jennifer's total costs fall. 
C)  Jennifer's implicit costs fall. 
D)  Jennifer's opportunity costs fall. 
A)  Jennifer's explicit costs fall and her implicit costs rise. 
B)  Jennifer's total costs fall. 
C)  Jennifer's implicit costs fall. 
D)  Jennifer's opportunity costs fall.

Question 13

If average total cost is falling,marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 14

Diseconomies of scale occur when

Accepted Answer

A)  long-run average costs rise as a firm increases its output. 
B)  long-run average costs fall as a firm expands its plant size. 
C)  short-run average costs rise as a firm expands its plant size. 
D)  long-run labor costs rise as a firm increases its output. 
A)  long-run average costs rise as a firm increases its output. 
B)  long-run average costs fall as a firm expands its plant size. 
C)  short-run average costs rise as a firm expands its plant size. 
D)  long-run labor costs rise as a firm increases its output.

Question 15

Figure 8-9
  
-Refer to Figure 8-9 above to solve the following problems.
a.Calculate the fixed cost of production.
b.Calculate the average total cost of production when the firm produces 20 units of output.
c.Calculate the average variable cost of production when the firm produces 20 units of output.
d.Calculate the average fixed cost of production when the firm produces 20 units of output.
e.Calculate the average fixed cost of production when the firm produces 15 units of output.
f.If the firm increases output from 15 to 20 units,what is the marginal cost of output?

Accepted Answer

a∙$100
b∙$

Question 16

Figure 8-2
  
-Refer to Figure 8-2.The average product of labor declines after L₂ because

Accepted Answer

A)  the marginal product of labor is below the average product of labor. 
B)  the marginal product of labor is falling. 
C)  the marginal product of labor is negative. 
D)  the marginal product of labor is positive. 
A)  the marginal product of labor is below the average product of labor. 
B)  the marginal product of labor is falling. 
C)  the marginal product of labor is negative. 
D)  the marginal product of labor is positive.

Question 17

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 18

The difference between technology and technological change is that

Accepted Answer

A)  technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. 
C)  technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D)  technology involves the use of capital equipment while technological change requires the use of brain power. 
A)  technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. 
C)  technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D)  technology involves the use of capital equipment while technological change requires the use of brain power.

Question 19

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.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Accepted Answer

A)  $100 
B)  $124.40 
C)  $220 
D)  $340 
A)  $100 
B)  $124.40 
C)  $220 
D)  $340

Question 20

Diminishing marginal product of labor occurs when adding another unit of labor

Accepted Answer

A)  decreases output. 
B)  changes output by an amount smaller than the output added by the previous unit of labor. 
C)  increases output by an amount larger than the output added by the previous unit of labor. 
D)  decreases output by an amount smaller than the output added by the previous unit of labor. 
A)  decreases output. 
B)  changes output by an amount smaller than the output added by the previous unit of labor. 
C)  increases output by an amount larger than the output added by the previous unit of labor. 
D)  decreases output by an amount smaller than the output added by the previous unit of labor.

Who was the economist who first analyzed the advantages of specialization and the division of labor?

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

The short run is the time period during which a firm has at least one input constraint.

If marginal product is greater than average product,then

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.What is the marginal product of the 4th worker?

Jayanthi moves her yoga studio from her home to a space she rents in Oakland,California.Holding everything else constant,as a result of this move

Which of the following is an example of positive technological change?

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.When the output level is 100 units average fixed cost is

Average total cost is equal to average variable cost minus average fixed cost.

The basic activity of a firm is

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

If average total cost is falling,marginal cost must also be falling.

Diseconomies of scale occur when

Figure 8-2 -Refer to Figure 8-2.The average product of labor declines after L₂ because

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

The difference between technology and technological change is that

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.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Diminishing marginal product of labor occurs when adding another unit of labor

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

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Exam 8: Technology,Production,and Costs

Who was the economist who first analyzed the advantages of specialization and the division of labor?

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

The short run is the time period during which a firm has at least one input constraint.

If marginal product is greater than average product,then

Table 8-1 Number of Workers Mushrooms per Day (pounds) 1 12 2 30 3 45 4 50 5 54 6 56 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 8-1.What is the marginal product of the 4th worker?

Jayanthi moves her yoga studio from her home to a space she rents in Oakland,California.Holding everything else constant,as a result of this move

Which of the following is an example of positive technological change?

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.When the output level is 100 units average fixed cost is

Average total cost is equal to average variable cost minus average fixed cost.

The basic activity of a firm is

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

If average total cost is falling,marginal cost must also be falling.

Diseconomies of scale occur when

Figure 8-2 -Refer to Figure 8-2.The average product of labor declines after L₂ because

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

The difference between technology and technological change is that

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.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Diminishing marginal product of labor occurs when adding another unit of labor

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