Question 1

Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q.The average cost of the 5th T-shirt is

Accepted Answer

A)  2. 
B)  12. 
C)  52. 
D)  60. 
A)  2. 
B)  12. 
C)  52. 
D)  60.

Question 2

Fixed costs are

Accepted Answer

A)  a production expense that does not vary with output. 
B)  a production expense that changes with the quantity of output produced. 
C)  equal to total cost divided by the units of output produced. 
D)  the amount by which a firm's cost changes if the firm produces one more unit of output. 
A)  a production expense that does not vary with output. 
B)  a production expense that changes with the quantity of output produced. 
C)  equal to total cost divided by the units of output produced. 
D)  the amount by which a firm's cost changes if the firm produces one more unit of output.

Question 3

A firm's marginal cost can always be thought of as the change in total cost if

Accepted Answer

A)  the firm produces one more unit of output. 
B)  the firm buys one more unit of capital. 
C)  the firm's average cost increases by $1. 
D)  the firm moves to the next highest isoquant. 
A)  the firm produces one more unit of output. 
B)  the firm buys one more unit of capital. 
C)  the firm's average cost increases by $1. 
D)  the firm moves to the next highest isoquant.

Question 4

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AVC equals

Accepted Answer

A)  q. 
B)  q/10. 
C)  10/q. 
D)  1. 
A)  q. 
B)  q/10. 
C)  10/q. 
D)  1.

Question 5

The production of cigarettes is highly automated; however,a worker is required to monitor each machine.Machines and workers do not interact with one another.Given this information,there are most likely

Accepted Answer

A)  economies of scale. 
B)  economies of scope. 
C)  constant returns to scale. 
D)  increasing returns to scale. 
A)  economies of scale. 
B)  economies of scope. 
C)  constant returns to scale. 
D)  increasing returns to scale.

Question 6

Travel websites such as Travelocity tend to offer reservation services for multiple travel modes.This is because

Accepted Answer

A)  the firms have contractual obligations to offer reservations for airlines and railroads, for example. 
B)  the firms have statutory obligations to offer reservations for airlines and railroads, for example. 
C)  once the firm has the reservation technology for airlines, there are economies of scale in offering the same service for railroads. 
D)  once the firm has the reservation technology for airlines, there are economies of scope in offering the same service for railroads. 
A)  the firms have contractual obligations to offer reservations for airlines and railroads, for example. 
B)  the firms have statutory obligations to offer reservations for airlines and railroads, for example. 
C)  once the firm has the reservation technology for airlines, there are economies of scale in offering the same service for railroads. 
D)  once the firm has the reservation technology for airlines, there are economies of scope in offering the same service for railroads.

Question 7

Many universities have either a top football program OR a top basketball program.Very few have both.These results suggest the presence of

Accepted Answer

A)  economies of scope. 
B)  diseconomies of scope. 
C)  returns to scale. 
D)  the law of diminishing marginal returns. 
A)  economies of scope. 
B)  diseconomies of scope. 
C)  returns to scale. 
D)  the law of diminishing marginal returns.

Question 8

A firm can minimize cost by

Accepted Answer

A)  picking the bundle of inputs where the lowest isocost line touches the isoquant. 
B)  picking the bundle of inputs where the isoquant is tangent to the isocost line. 
C)  picking the bundle of inputs where the last dollar spent on one input gives as much extra output as the last dollar spent on any other input. 
D)  All of the above. 
A)  picking the bundle of inputs where the lowest isocost line touches the isoquant. 
B)  picking the bundle of inputs where the isoquant is tangent to the isocost line. 
C)  picking the bundle of inputs where the last dollar spent on one input gives as much extra output as the last dollar spent on any other input. 
D)  All of the above.

Question 9

In the short run,the expansion path is

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  diagonal. 
D)  indeterminate. 
A)  horizontal. 
B)  vertical. 
C)  diagonal. 
D)  indeterminate.

Question 10

Which of the following statements is NOT true?

Accepted Answer

A)  AC = AFC + AVC 
B)  C = F + VC 
C)  AVC = wage/MPL 
D)  AFC = AC - AVC 
A)  AC = AFC + AVC 
B)  C = F + VC 
C)  AVC = wage/MPL 
D)  AFC = AC - AVC

Question 11

Learning by doing is represented by

Accepted Answer

A)  a decrease in the average total cost curve. 
B)  an increase in the average total cost curve. 
C)  no change in the average total cost curve. 
D)  an increase in the average total cost curve and a decrease in the marginal cost curve. 
A)  a decrease in the average total cost curve. 
B)  an increase in the average total cost curve. 
C)  no change in the average total cost curve. 
D)  an increase in the average total cost curve and a decrease in the marginal cost curve.

Question 12

Which of the following will cause the marginal cost curve of making cigarettes to shift?

Accepted Answer

A)  a $5 million penalty charged to each cigarette maker 
B)  a $1 per pack tax on cigarettes 
C)  a $1 million advertising campaign by the American Cancer Society 
D)  All of the above. 
A)  a $5 million penalty charged to each cigarette maker 
B)  a $1 per pack tax on cigarettes 
C)  a $1 million advertising campaign by the American Cancer Society 
D)  All of the above.

Question 13

Suppose the production function is q = 12 L0.25K0.75.Determine the long-run capital-to-labor ratio (K/L)if the cost a unit of capital (r)is three times the cost of a unit of labor (w).

Accepted Answer

The firm minimizes costs by se

Question 14

Which of the following will cause the average fixed cost curve of making cigarettes to shift?

Accepted Answer

A)  a $5 million penalty charged to each cigarette maker 
B)  a $1 per pack tax on cigarettes 
C)  a $3 per hour wage increase 
D)  An increase in the demand for cigarettes. 
A)  a $5 million penalty charged to each cigarette maker 
B)  a $1 per pack tax on cigarettes 
C)  a $3 per hour wage increase 
D)  An increase in the demand for cigarettes.

Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q.The average cost of the 5th T-shirt is

Fixed costs are

A firm's marginal cost can always be thought of as the change in total cost if

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AVC equals

The production of cigarettes is highly automated; however,a worker is required to monitor each machine.Machines and workers do not interact with one another.Given this information,there are most likely

Travel websites such as Travelocity tend to offer reservation services for multiple travel modes.This is because

Many universities have either a top football program OR a top basketball program.Very few have both.These results suggest the presence of

A firm can minimize cost by

In the short run,the expansion path is

Which of the following statements is NOT true?

Learning by doing is represented by

Which of the following will cause the marginal cost curve of making cigarettes to shift?

Suppose the production function is q = 12 L^0.25K^0.75.Determine the long-run capital-to-labor ratio (K/L)if the cost a unit of capital (r)is three times the cost of a unit of labor (w).

Which of the following will cause the average fixed cost curve of making cigarettes to shift?

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 7: Costs

Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q.The average cost of the 5th T-shirt is

Fixed costs are

A firm's marginal cost can always be thought of as the change in total cost if

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AVC equals

The production of cigarettes is highly automated; however,a worker is required to monitor each machine.Machines and workers do not interact with one another.Given this information,there are most likely

Travel websites such as Travelocity tend to offer reservation services for multiple travel modes.This is because

Many universities have either a top football program OR a top basketball program.Very few have both.These results suggest the presence of

A firm can minimize cost by

In the short run,the expansion path is

Which of the following statements is NOT true?

Learning by doing is represented by

Which of the following will cause the marginal cost curve of making cigarettes to shift?

Suppose the production function is q = 12 L0.25K0.75.Determine the long-run capital-to-labor ratio (K/L)if the cost a unit of capital (r)is three times the cost of a unit of labor (w).

Which of the following will cause the average fixed cost curve of making cigarettes to shift?

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose the production function is q = 12 L^0.25K^0.75.Determine the long-run capital-to-labor ratio (K/L)if the cost a unit of capital (r)is three times the cost of a unit of labor (w).