Question 1

If marginal product is equal to average product, then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 2

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function. 
A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function.

Question 3

Which of the following is an implicit cost of production?

Accepted Answer

A) Interest paid on a loan to a bank 
B) Wages paid to labour plus the cost of carrying benefits for workers 
C) The utility bill paid to water, electricity, and natural gas companies 
D) Rent that could have been earned on a building owned and used by the firm 
A) Interest paid on a loan to a bank 
B) Wages paid to labour plus the cost of carrying benefits for workers 
C) The utility bill paid to water, electricity, and natural gas companies 
D) Rent that could have been earned on a building owned and used by the firm

Question 4

Figure 7.7   Figure 7.7 shows the cost structure for a firm.
-Refer to Figure 7.7.When output level is 100, the total cost of production is

Accepted Answer

A) $20 
B) $1000 
C) $1200 
D) $2000 
A) $20 
B) $1000 
C) $1200 
D) $2000

Question 5

What is an isoquant? What is the slope of an isoquant?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

An isoquant is curve that shows all the

Question 6

What are economies of scale? What are diseconomies of scale?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Economies of scale occur when

Question 7

A cost that is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books is

Accepted Answer

A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries 
A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries

Question 8

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A) economic; legal 
B) real; explicit 
C) total; economic 
D) explicit; accounting 
A) economic; legal 
B) real; explicit 
C) total; economic 
D) explicit; accounting

Question 9

Which of the following statements is false?

Accepted Answer

A) Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B) When marginal cost is less than average total cost, average total cost will fall. 
C) When marginal cost is greater than average total cost, average total cost will rise. 
D) Marginal cost will equal average total cost when average total cost is at its lowest point. 
A) Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B) When marginal cost is less than average total cost, average total cost will fall. 
C) When marginal cost is greater than average total cost, average total cost will rise. 
D) Marginal cost will equal average total cost when average total cost is at its lowest point.

Question 10

Figure 7.4  
-Refer to Figure 7.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost. 
A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost.

Question 11

Another name for the explicit cost of production is

Accepted Answer

A) variable cost. 
B) accounting cost. 
C) direct cost. 
D) overhead cost. 
A) variable cost. 
B) accounting cost. 
C) direct cost. 
D) overhead cost.

Question 12

A factor of production that is generally fixed in the short run is

Accepted Answer

A) raw materials 
B) labour 
C) a factory building 
D) water 
A) raw materials 
B) labour 
C) a factory building 
D) water

Question 13

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 14

What does the law of diminishing marginal return state?

Accepted Answer

A) That at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) That at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) That in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D) That average total costs of production initially fall and after some point start to rise at a decreasing rate as output increases. 
A) That at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) That at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) That in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D) That average total costs of production initially fall and after some point start to rise at a decreasing rate as output increases.

Question 15

Marginal cost is equal to the

Accepted Answer

A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output. 
A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output.

Question 16

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

Accepted Answer

A) True 
 B)False

Question 17

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a reason why firms experience economies of scale?

Accepted Answer

A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialised, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms. 
A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialised, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Question 19

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1000 per month for interest on the loan.He has 10 employees, each of whom is paid $4000 per month.Because his business has been successful, next month he will increase employee wages to $5000.If the revenue from his business remains at its current level, Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

Accepted Answer

A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The time and effort Stan spends on his software design business is an implicit cost. 
A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The time and effort Stan spends on his software design business is an implicit cost.

Question 20

When do diseconomies of scale occur?

Accepted Answer

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

If marginal product is equal to average product, then total product is at a maximum.

The shape of the average total cost curve is determined by the shape of

Which of the following is an implicit cost of production?

Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.When output level is 100, the total cost of production is

What is an isoquant? What is the slope of an isoquant? __________________________________________________________________________________________________________________________________________________________________________________________

What are economies of scale? What are diseconomies of scale? __________________________________________________________________________________________________________________________________________________________________________________________

A cost that is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books is

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.

Which of the following statements is false?

Figure 7.4 -Refer to Figure 7.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Another name for the explicit cost of production is

A factor of production that is generally fixed in the short run is

What does the law of diminishing marginal return state?

Marginal cost is equal to the

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Which of the following is not a reason why firms experience economies of scale?

When do diseconomies of scale occur?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 7: Technology Production and Costs

If marginal product is equal to average product, then total product is at a maximum.

The shape of the average total cost curve is determined by the shape of

Which of the following is an implicit cost of production?

Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.When output level is 100, the total cost of production is

What is an isoquant? What is the slope of an isoquant? __________________________________________________________________________________________________________________________________________________________________________________________

What are economies of scale? What are diseconomies of scale? __________________________________________________________________________________________________________________________________________________________________________________________

A cost that is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books is

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Which of the following statements is false?

Figure 7.4 -Refer to Figure 7.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Another name for the explicit cost of production is

A factor of production that is generally fixed in the short run is

What does the law of diminishing marginal return state?

Marginal cost is equal to the

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Which of the following is not a reason why firms experience economies of scale?

When do diseconomies of scale occur?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.