Question 1

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

Accepted Answer

A) 10. 
B) 5. 
C) 1. 
D) none of the statements associated with this question are correct. 
A) 10. 
B) 5. 
C) 1. 
D) none of the statements associated with this question are correct.

Question 2

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use

Accepted Answer

A) less capital and more labor. 
B) less labor and more capital. 
C) less labor and less capital. 
D) more labor and more capital. 
A) less capital and more labor. 
B) less labor and more capital. 
C) less labor and less capital. 
D) more labor and more capital.

Question 3

The marginal product of an input is defined as the change in

Accepted Answer

A) average output attributable to the last unit of an input. 
B) total output attributable to the last unit of an input. 
C) total input attributable to the last unit of an output. 
D) average output attributable to the last unit of an output. 
A) average output attributable to the last unit of an input. 
B) total output attributable to the last unit of an input. 
C) total input attributable to the last unit of an output. 
D) average output attributable to the last unit of an output.

Question 4

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 = 4, 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 K and less L 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 K and less L to cost minimize. 
D) is profit maximizing but not cost minimizing.

Question 5

The manager of a meat-packing plant can use either butchers (labor) or meat saws (capital) to prepare packages of sirloin steak.Based on estimates provided by an efficiency expert, the firm's production function for sirloin steak is given by

Accepted Answer

@#IMG-DLM& a.Graph the isoquant corresponding to 5

Question 6

Economies of scale exist whenever 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 7

Changes in the price of an input cause

Accepted Answer

A) isoquants to become steeper. 
B) slope changes in the isocost line. 
C) parallel shifts of the isocost lines. 
D) changes in both the isoquants and isocosts of equal magnitude. 
A) isoquants to become steeper. 
B) slope changes in the isocost line. 
C) parallel shifts of the isocost lines. 
D) changes in both the isoquants and isocosts of equal magnitude.

Question 8

An accountant for a car rental company was recently asked to report the firm's costs of producing various levels of output.The accountant knows that the most recent estimate available of the firm's cost function is

Accepted Answer

@#IMG-DLM& , where costs are measured in thousands

Question 9

The demand for an input is

Accepted Answer

A) sloping upward. 
B) the VMP of the input. 
C) determined by MPL = W. 
D) derived from input owner's profit maximizing condition. 
A) sloping upward. 
B) the VMP of the input. 
C) determined by MPL = W. 
D) derived from input owner's profit maximizing condition.

Question 10

Costs that are forever lost after they have been paid are:

Accepted Answer

A) Production costs. 
B) Fixed costs. 
C) Sunk costs. 
D) Variable costs. 
A) Production costs. 
B) Fixed costs. 
C) Sunk costs. 
D) Variable costs.

Question 11

What is the value marginal product of labor if: P = $10, MPL = $25, and APL = 40?

Accepted Answer

A) $10,000. 
B) $1,000. 
C) $400. 
D) $250. 
A) $10,000. 
B) $1,000. 
C) $400. 
D) $250.

Question 12

Which of the following "costs" could a firm that wants to remain in business avoid if it halted current production?

Accepted Answer

A) Fixed costs. 
B) Variable costs. 
C) Sunk costs. 
D) Opportunity costs. 
A) Fixed costs. 
B) Variable costs. 
C) Sunk costs. 
D) Opportunity costs.

Question 13

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What are the fixed costs?

Accepted Answer

A) $50. 
B) $10. 
C) $1. 
D) $2. 
A) $50. 
B) $10. 
C) $1. 
D) $2.

Question 14

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run.If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the variable cost of using 81 units of capital and 9 units of labor is

Accepted Answer

A) $2,160. 
B) $2,025. 
C) $135. 
D) there is insufficient information to determine the variable costs. 
A) $2,160. 
B) $2,025. 
C) $135. 
D) there is insufficient information to determine the variable costs.

Question 15

The minimum average cost of producing alternate levels of output, allowing for optimal selection of all variables of production is defined by the:

Accepted Answer

A) Long run average total cost curve. 
B) Short run average fixed cost curve. 
C) Short run marginal cost curve. 
D) Long run marginal cost curve. 
A) Long run average total cost curve. 
B) Short run average fixed cost curve. 
C) Short run marginal cost curve. 
D) Long run marginal cost curve.

Question 16

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run.If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the average fixed cost of using 81 units of capital and 9 units of labor is

Accepted Answer

A) $5. 
B) $75. 
C) $80. 
D) there is insufficient information to determine the average fixed costs. 
A) $5. 
B) $75. 
C) $80. 
D) there is insufficient information to determine the average fixed costs.

Question 17

Sunk costs are those costs that

Accepted Answer

A) do not vary without output. 
B) are forever lost after they have been paid. 
C) can be collected even after they have been paid. 
D) do vary with output. 
A) do not vary without output. 
B) are forever lost after they have been paid. 
C) can be collected even after they have been paid. 
D) do vary with output.

Question 18

Inputs a manager may adjust in order to alter production are:

Accepted Answer

A) All factors. 
B) Variable factors. 
C) Long-run factors. 
D) Fixed factors. 
A) All factors. 
B) Variable factors. 
C) Long-run factors. 
D) Fixed factors.

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

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use

The marginal product of an input is defined as the change in

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 = 4, and MP_K = 40 the firm:

The manager of a meat-packing plant can use either butchers (labor) or meat saws (capital) to prepare packages of sirloin steak.Based on estimates provided by an efficiency expert, the firm's production function for sirloin steak is given by

Economies of scale exist whenever long-run average costs

Changes in the price of an input cause

An accountant for a car rental company was recently asked to report the firm's costs of producing various levels of output.The accountant knows that the most recent estimate available of the firm's cost function is

The demand for an input is

Costs that are forever lost after they have been paid are:

What is the value marginal product of labor if: P = $10, MP_L = $25, and AP_L = 40?

Which of the following "costs" could a firm that wants to remain in business avoid if it halted current production?

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What are the fixed costs?

The minimum average cost of producing alternate levels of output, allowing for optimal selection of all variables of production is defined by the:

Sunk costs are those costs that

Inputs a manager may adjust in order to alter production are:

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

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

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use

The marginal product of an input is defined as the change in

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 = 4, and MPK = 40 the firm:

The manager of a meat-packing plant can use either butchers (labor) or meat saws (capital) to prepare packages of sirloin steak.Based on estimates provided by an efficiency expert, the firm's production function for sirloin steak is given by

Economies of scale exist whenever long-run average costs

Changes in the price of an input cause

An accountant for a car rental company was recently asked to report the firm's costs of producing various levels of output.The accountant knows that the most recent estimate available of the firm's cost function is

The demand for an input is

Costs that are forever lost after they have been paid are:

What is the value marginal product of labor if: P = $10, MPL = $25, and APL = 40?

Which of the following "costs" could a firm that wants to remain in business avoid if it halted current production?

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What are the fixed costs?

The minimum average cost of producing alternate levels of output, allowing for optimal selection of all variables of production is defined by the:

Sunk costs are those costs that

Inputs a manager may adjust in order to alter production are:

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

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

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 = 4, and MP_K = 40 the firm:

What is the value marginal product of labor if: P = $10, MP_L = $25, and AP_L = 40?

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What are the fixed costs?