Question 1

Figure 8-1
  
-Refer to Figure 8-1.The marginal product of the 7th worker is

Accepted Answer

A)  66. 
B)  9.43. 
C)  2. 
D)  -2. 
A)  66. 
B)  9.43. 
C)  2. 
D)  -2.

Question 2

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." Based on this quote,what must be true of the plant's average cost of production curve?

Accepted Answer

A)  It is upward-sloping. 
B)  It is downward-sloping. 
C)  It is a ray from the origin. 
D)  It is U-shaped. 
A)  It is upward-sloping. 
B)  It is downward-sloping. 
C)  It is a ray from the origin. 
D)  It is U-shaped.

Question 3

A firm has successfully adopted a positive technological change when

Accepted Answer

A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity. 
A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity.

Question 4

Which of the following are implicit costs for a typical firm?

Accepted Answer

A)  the cost of labor 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee 
A)  the cost of labor 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee

Question 5

All of the following statements are true of the minimum efficient scale except one.Which one?

Accepted Answer

A)  All possible economies of scale have been exhausted. 
B)  The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point. 
C)  Any increase in the scale of operation will encounter either constant returns to scale or diseconomies of scale. 
D)  An increase in the output level will increase profit. 
A)  All possible economies of scale have been exhausted. 
B)  The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point. 
C)  Any increase in the scale of operation will encounter either constant returns to scale or diseconomies of scale. 
D)  An increase in the output level will increase profit.

Question 6

A characteristic of the long run is

Accepted Answer

A)  there are fixed inputs. 
B)  all inputs can be varied. 
C)  plant capacity cannot be increased or decreased. 
D)  there are both fixed and variable inputs. 
A)  there are fixed inputs. 
B)  all inputs can be varied. 
C)  plant capacity cannot be increased or decreased. 
D)  there are both fixed and variable inputs.

Question 7

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Accepted Answer

Yes.As long as the marginal co

Question 8

What is the marginal product of labor and what is the average product of labor.

Accepted Answer

The marginal product of labor is the add

Question 9

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 variable cost per day when she produces 50 gyros using two workers?

Accepted Answer

A)  $100 
B)  $124.40 
C)  $220 
D)  $240 
A)  $100 
B)  $124.40 
C)  $220 
D)  $240

Question 10

Which of the following explains why the marginal cost curve has a U shape?

Accepted Answer

A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls. 
A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls.

Question 11

Which of the following is the best example of a short-run adjustment?

Accepted Answer

A)  A local bakery purchases another commercial oven as part of its capacity expansion. 
B)  Your local Walmart hires two more associates. 
C)  Smith University completed negotiations to acquire a large piece of land to build its new library. 
D)  Toyota builds a new assembly plant in Texas. 
A)  A local bakery purchases another commercial oven as part of its capacity expansion. 
B)  Your local Walmart hires two more associates. 
C)  Smith University completed negotiations to acquire a large piece of land to build its new library. 
D)  Toyota builds a new assembly plant in Texas.

Question 12

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

Accepted Answer

A)  output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B)  output will first decrease at an increasing rate, then increase at a decreasing rate. 
C)  the marginal product of labor will first decrease, then increase at a decreasing rate. 
D)  the marginal product of labor will first be negative and then will be positive. 
A)  output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B)  output will first decrease at an increasing rate, then increase at a decreasing rate. 
C)  the marginal product of labor will first decrease, then increase at a decreasing rate. 
D)  the marginal product of labor will first be negative and then will be positive.

Question 13

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

Accepted Answer

A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs 
A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs

Question 14

Two stores-Lazy Guys and Ralph's Recliners-are located in the same city.Both stores buy recliner chairs from the same manufacturer at the same price and both stores are about the same size,so that the fixed costs of production for both stores are the same.Ralph's Recliners sells more recliners per month and Ralph's has a lower average total cost of production.Which of the following can explain why the average total cost of production is lower for Ralph's Recliners?

Accepted Answer

A)  Because Ralph's Recliners sells more output its average fixed costs are lower than Lazy Guys' average fixed costs. 
B)  The rent Lazy Guys pays for its building is greater than the rent paid by Ralph's Recliners. 
C)  Ralph's explicit costs are less because Ralph owns the land on which his building is located. Lazy Guys must make lease payments for the land on which its store is located. 
D)  The price of recliners charged by Ralph's is greater than the price charged by Lazy Guys. 
A)  Because Ralph's Recliners sells more output its average fixed costs are lower than Lazy Guys' average fixed costs. 
B)  The rent Lazy Guys pays for its building is greater than the rent paid by Ralph's Recliners. 
C)  Ralph's explicit costs are less because Ralph owns the land on which his building is located. Lazy Guys must make lease payments for the land on which its store is located. 
D)  The price of recliners charged by Ralph's is greater than the price charged by Lazy Guys.

Question 15

In the long run the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 16

The average total cost of production

Accepted Answer

A)  is the extra cost required to produce one more unit. 
B)  equals the explicit cost of production. 
C)  equals total cost of production divided by the level of output. 
D)  equals total cost of production multiplied by the level of output. 
A)  is the extra cost required to produce one more unit. 
B)  equals the explicit cost of production. 
C)  equals total cost of production divided by the level of output. 
D)  equals total cost of production multiplied by the level of output.

Question 17

If production displays increasing marginal returns,then

Accepted Answer

A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns. 
A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns.

Question 18

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

Accepted Answer

A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative. 
A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative.

Question 19

Table 8-7
 $\begin{array}{|c|c|c|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { Lanterns }
\end{array} & \begin{array}{c}
\text { Fixed Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Variable Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Total Cost } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Average Total } \
\text { Cost (dollars) }
\end{array} \
\hline 75 & 200 & 170 & 370 & 4.93 \
\hline 80 & 200 & 230 & 430 & 5.36 \
\hline 90 & 200 & & & 7.67 \
\hline 100 & 200 & 810 & & 11.8 \
\hline 115 & 200 & & & 12.5 \
\hline 117 & 200 & 1264 & 1464 & \
\hline 120 & 200 & 1480 & & \
\hline
\end{array}$ Table 8-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 8-7.What is the average total cost of production when the firm produces 120 lanterns?

Accepted Answer

A)  $1,680 
B)  $72 
C)  $14 
D)  $12.3 
A)  $1,680 
B)  $72 
C)  $14 
D)  $12.3

Question 20

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accepted Answer

A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145. 
A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145.

Figure 8-1 -Refer to Figure 8-1.The marginal product of the 7th worker is

A firm has successfully adopted a positive technological change when

Which of the following are implicit costs for a typical firm?

All of the following statements are true of the minimum efficient scale except one.Which one?

A characteristic of the long run is

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

What is the marginal product of labor and what is the average product of labor.

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 variable cost per day when she produces 50 gyros using two workers?

Which of the following explains why the marginal cost curve has a U shape?

Which of the following is the best example of a short-run adjustment?

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

In the long run the relevant cost is total cost.

The average total cost of production

If production displays increasing marginal returns,then

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

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

Figure 8-1 -Refer to Figure 8-1.The marginal product of the 7th worker is

A firm has successfully adopted a positive technological change when

Which of the following are implicit costs for a typical firm?

All of the following statements are true of the minimum efficient scale except one.Which one?

A characteristic of the long run is

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

What is the marginal product of labor and what is the average product of labor.

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 variable cost per day when she produces 50 gyros using two workers?

Which of the following explains why the marginal cost curve has a U shape?

Which of the following is the best example of a short-run adjustment?

Which of the following describes how output changes in the short run? Because of specialization and the division of labor,as more workers are hired

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

In the long run the relevant cost is total cost.

The average total cost of production

If production displays increasing marginal returns,then

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

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