Question 1

If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is

Accepted Answer

A) ¼. 
B) 1/10. 
C) 15. 
D) none of the statements associated with this question are correct. 
A) ¼. 
B) 1/10. 
C) 15. 
D) none of the statements associated with this question are correct.

Question 2

Average fixed cost

Accepted Answer

A) initially declines, reaches a minimum and then begins to increase as output increases. 
B) increases continuously as output increases. 
C) declines continuously as output is expanded. 
D) keeps constant as output is expanded. 
A) initially declines, reaches a minimum and then begins to increase as output increases. 
B) increases continuously as output increases. 
C) declines continuously as output is expanded. 
D) keeps constant as output is expanded.

Question 3

It is profitable to hire labor so long as the

Accepted Answer

A) MPL is greater than wage. 
B) MPL is less than wage. 
C) VMPL is less than wage. 
D) VMPL is greater than wage. 
A) MPL is greater than wage. 
B) MPL is less than wage. 
C) VMPL is less than wage. 
D) VMPL is greater than wage.

Question 4

Given a cost function C(Q) = 200 + 14Q + 8Q2, what is the marginal cost function?

Accepted Answer

A) 14 + 16Q. 
B) 14Q + 8Q2. 
C) 200 + 8Q2. 
D) 14 + 16Q2. 
A) 14 + 16Q. 
B) 14Q + 8Q2. 
C) 200 + 8Q2. 
D) 14 + 16Q2.

Question 5

The long-run is defined as

Accepted Answer

A) the horizon in which the manager can adjust all factors of production. 
B) the horizon in which there are only fixed factors of production. 
C) the horizon in which there are both fixed and variable factors of production. 
D) greater than one year. 
A) the horizon in which the manager can adjust all factors of production. 
B) the horizon in which there are only fixed factors of production. 
C) the horizon in which there are both fixed and variable factors of production. 
D) greater than one year.

Question 6

What is the total cost of producing 125 units of output?

Accepted Answer

A) 1000. 
B) 2050. 
C) 1400. 
D) 2400. 
A) 1000. 
B) 2050. 
C) 1400. 
D) 2400.

Question 7

Fixed costs exist only in:

Accepted Answer

A) The long run. 
B) Capital intensive markets. 
C) The short run. 
D) Labor intensive markets. 
A) The long run. 
B) Capital intensive markets. 
C) The short run. 
D) Labor intensive markets.

Question 8

Constant returns to scale exist when long-run average costs

Accepted Answer

A) increase as output is increased. 
B) decrease as output is increased. 
C) remain constant as output is increased. 
D) none of the statements associated with this question are correct. 
A) increase as output is increased. 
B) decrease as output is increased. 
C) remain constant as output is increased. 
D) none of the statements associated with this question are correct.

Question 9

The marginal cost curve

Accepted Answer

A) lies always below the average total cost curve (AT
C) . 
B) lies always above the average variable cost curve (AV
C) . 
C) intersects the ATC and AVC at their maximum points. 
D) intersects the ATC and AVC at their minimum points. 
A) lies always below the average total cost curve (AT
C) . 
B) lies always above the average variable cost curve (AV
C) . 
C) intersects the ATC and AVC at their maximum points. 
D) intersects the ATC and AVC at their minimum points.

Question 10

You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs.The firm produces and sells a given output.If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:

Accepted Answer

A) is cost minimizing. 
B) should use less L and more K to cost minimize. 
C) should use more L and less K to cost minimize. 
D) is profit maximizing but not cost minimizing. 
A) is cost minimizing. 
B) should use less L and more K to cost minimize. 
C) should use more L and less K to cost minimize. 
D) is profit maximizing but not cost minimizing.

Question 11

The production function for a competitive firm is Q = K.5L.5.The firm sells its output at a price of $10, and can hire labor at a wage of $5.Capital is fixed at one unit.The maximum profits are

Accepted Answer

A) 5. 
B) 10. 
C) 15. 
D) none of the statements associated with this question are correct. 
A) 5. 
B) 10. 
C) 15. 
D) none of the statements associated with this question are correct.

Question 12

Economies of scope exist when

Accepted Answer

A) C(Q1) + C(Q2) 1,Q2). 
B) C(Q1) - C(Q2) 1,Q2). 
C) C(Q1) + C(Q2) > C(Q1,Q2). 
D) C(Q1) - C(Q2) > C(Q1,Q2). 
A) C(Q1) + C(Q2) 1,Q2). 
B) C(Q1) - C(Q2) 1,Q2). 
C) C(Q1) + C(Q2) > C(Q1,Q2). 
D) C(Q1) - C(Q2) > C(Q1,Q2).

Question 13

In the text, we showed that the multiproduct cost function

Accepted Answer

@#IMG-DLM& exhibits cost complementarity whenever

Question 14

There are over 5,000 banks in the United States - more than 10 times the number per person than in other industrialized countries.A recent study suggests that the long-run average cost curve for an individual bank is relatively flat.If Congress took steps to consolidate banks, thereby reducing the total number to 2,500, what would you expect to happen to costs within the banking industry? Explain.

Accepted Answer

With a flat long-run average cost curve,

Question 15

The production function for good X in the above table exhibits increasing marginal returns to capital over what output range?

Accepted Answer

A) Between 0 and 1,524. 
B) Between 0 and 2,991. 
C) Between 2,391 and 3,048. 
D) Between 3,016 and 2,945. 
A) Between 0 and 1,524. 
B) Between 0 and 2,991. 
C) Between 2,391 and 3,048. 
D) Between 3,016 and 2,945.

Question 16

What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately?

Accepted Answer

A) Economies of scale. 
B) Diminishing average fixed costs. 
C) Cost complementarity. 
D) Economies of scope. 
A) Economies of scale. 
B) Diminishing average fixed costs. 
C) Cost complementarity. 
D) Economies of scope.

Question 17

Suppose the production function is given by Q = 3K + 4L.What is the average product of capital when 5 units of capital and 10 units of labor are employed?

Accepted Answer

A) 3. 
B) 4. 
C) 11. 
D) 45. 
A) 3. 
B) 4. 
C) 11. 
D) 45.

Question 18

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What is the total cost of producing 10 units?

Accepted Answer

A) $2,060. 
B) $1,060. 
C) $560. 
D) $1,010. 
A) $2,060. 
B) $1,060. 
C) $560. 
D) $1,010.

Question 19

Suppose you are a manager of a factory.You purchase five (5) new machines at one million dollars each.If you can resell two of the machines for $500,000 and three of the machines for $200,000, what are the sunk costs of purchasing the machines?

Accepted Answer

A) $5 million. 
B) $500,000. 
C) $3.4 million. 
D) $1.6 million. 
A) $5 million. 
B) $500,000. 
C) $3.4 million. 
D) $1.6 million.

Question 20

For a cost function C = 100 + 10Q + Q2, the marginal cost of producing 10 units of output is

Accepted Answer

A) 10. 
B) 200. 
C) 210. 
D) none of the statements associated with this question are correct. 
A) 10. 
B) 200. 
C) 210. 
D) none of the statements associated with this question are correct.

If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is

Average fixed cost

It is profitable to hire labor so long as the

Given a cost function C(Q) = 200 + 14Q + 8Q², what is the marginal cost function?

The long-run is defined as

What is the total cost of producing 125 units of output?

Fixed costs exist only in:

Constant returns to scale exist when long-run average costs

The marginal cost curve

You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs.The firm produces and sells a given output.If w = $40, r = $100, MP_L = 20, and MP_K = 40 the firm:

The production function for a competitive firm is Q = K^.5L^.5.The firm sells its output at a price of $10, and can hire labor at a wage of $5.Capital is fixed at one unit.The maximum profits are

Economies of scope exist when

In the text, we showed that the multiproduct cost function

The production function for good X in the above table exhibits increasing marginal returns to capital over what output range?

What is implied when the total cost of producing Q₁ and Q₂ together is less than the total cost of producing Q₁ and Q₂ separately?

Suppose the production function is given by Q = 3K + 4L.What is the average product of capital when 5 units of capital and 10 units of labor are employed?

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What is the total cost of producing 10 units?

Suppose you are a manager of a factory.You purchase five (5) new machines at one million dollars each.If you can resell two of the machines for $500,000 and three of the machines for $200,000, what are the sunk costs of purchasing the machines?

For a cost function C = 100 + 10Q + Q², the marginal cost of producing 10 units of output is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 5: The Production Process and Costs

If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is

Average fixed cost

It is profitable to hire labor so long as the

Given a cost function C(Q) = 200 + 14Q + 8Q2, what is the marginal cost function?

The long-run is defined as

What is the total cost of producing 125 units of output?

Fixed costs exist only in:

Constant returns to scale exist when long-run average costs

The marginal cost curve

You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs.The firm produces and sells a given output.If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:

The production function for a competitive firm is Q = K.5L.5.The firm sells its output at a price of $10, and can hire labor at a wage of $5.Capital is fixed at one unit.The maximum profits are

Economies of scope exist when

In the text, we showed that the multiproduct cost function

The production function for good X in the above table exhibits increasing marginal returns to capital over what output range?

What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately?

Suppose the production function is given by Q = 3K + 4L.What is the average product of capital when 5 units of capital and 10 units of labor are employed?

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What is the total cost of producing 10 units?

Suppose you are a manager of a factory.You purchase five (5) new machines at one million dollars each.If you can resell two of the machines for $500,000 and three of the machines for $200,000, what are the sunk costs of purchasing the machines?

For a cost function C = 100 + 10Q + Q2, the marginal cost of producing 10 units of output is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Given a cost function C(Q) = 200 + 14Q + 8Q², what is the marginal cost function?

You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs.The firm produces and sells a given output.If w = $40, r = $100, MP_L = 20, and MP_K = 40 the firm:

The production function for a competitive firm is Q = K^.5L^.5.The firm sells its output at a price of $10, and can hire labor at a wage of $5.Capital is fixed at one unit.The maximum profits are

What is implied when the total cost of producing Q₁ and Q₂ together is less than the total cost of producing Q₁ and Q₂ separately?

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What is the total cost of producing 10 units?

For a cost function C = 100 + 10Q + Q², the marginal cost of producing 10 units of output is