Question 1

When the average total cost is $16 and the total cost is $800, how many units is the firm producing?

Accepted Answer

A) Impossible to determine with the information given. 
B) 12 800. 
C) 784. 
D) 50. 
A) Impossible to determine with the information given. 
B) 12 800. 
C) 784. 
D) 50.

Question 2

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

Accepted Answer

A) Average cost increases as more is produced. 
B) Average cost will fall. 
C) Average cost could increase or decrease depending on what happens to variable cost. 
D) Average cost could increase or decrease depending on what happens to fixed cost. 
A) Average cost increases as more is produced. 
B) Average cost will fall. 
C) Average cost could increase or decrease depending on what happens to variable cost. 
D) Average cost could increase or decrease depending on what happens to fixed cost.

Question 3

A change in the slope of an isocost line is due to a change in

Accepted Answer

A) the output price. 
B) the price of one or both inputs. 
C) total cost. 
D) quantity of output. 
A) the output price. 
B) the price of one or both inputs. 
C) total cost. 
D) quantity of output.

Question 4

Accounting costs exclude implicit costs.

Accepted Answer

A) True 
 B)False

Question 5

Average total cost is equal to

Accepted Answer

A) average fixed cost minus average variable cost. 
B) total cost divided by the level of output. 
C) marginal cost plus variable cost. 
D) total cost divided by the number of workers. 
A) average fixed cost minus average variable cost. 
B) total cost divided by the level of output. 
C) marginal cost plus variable cost. 
D) total cost divided by the number of workers.

Question 6

Suppose two countries use different combinations of inputs, such as labour and capital, to produce the same product.This implies all of the following except that

Accepted Answer

A) the two countries use different technologies to produce the product. 
B) the inputs are not equally productive in the two countries. 
C) the prices of the inputs are not the same in the countries. 
D) one country is more efficient in the production of the good than the other. 
A) the two countries use different technologies to produce the product. 
B) the inputs are not equally productive in the two countries. 
C) the prices of the inputs are not the same in the countries. 
D) one country is more efficient in the production of the good than the other.

Question 7

If a firm produces 20 units of output and incurs a total cost of $1000, and the variable cost is $700, what is the firm's average fixed cost of production if it expands output to 25 units?

Accepted Answer

A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information. 
A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information.

Question 8

Which of the following is a fixed cost?

Accepted Answer

A) Payment to hire a security worker to guard the gate to the factory around the clock 
B) Wages to hire assembly line workers 
C) Payments to an electric utility 
D) Costs of raw materials 
A) Payment to hire a security worker to guard the gate to the factory around the clock 
B) Wages to hire assembly line workers 
C) Payments to an electric utility 
D) Costs of raw materials

Question 9

Figure 7.11   Figure 7.11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCS1U1B1aS1U1B0, ATCS1U1B1bS1U1B0 and ATCS1U1B1cS1U1B0.
-Refer to Figure 7.11.For output rates greater than 20 000 picture frames per month,

Accepted Answer

A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production. 
A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production.

Question 10

On an isoquant/isocost graph, the least cost input combination of producing a given output is

Accepted Answer

A) any point on the isoquant curve. 
B) any point on the isocost curve. 
C) given by the tangency between the isoquant curve and the isocost line. 
D) one of the intercept values on the graph. 
A) any point on the isoquant curve. 
B) any point on the isocost curve. 
C) given by the tangency between the isoquant curve and the isocost line. 
D) one of the intercept values on the graph.

Question 11

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

Accepted Answer

A) the first workers hired get to use the best equipment. 
B) specialisation allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skilful. 
D) beyond some point, a firm has hired too many workers. 
A) the first workers hired get to use the best equipment. 
B) specialisation allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skilful. 
D) beyond some point, a firm has hired too many workers.

Question 12

Table 7.1   Table 7.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 7.1.The marginal product of the 4th worker is

Accepted Answer

A) 137 metrics 
B) 50 metrics 
C) 12.5 metrics 
D) 5 metrics 
A) 137 metrics 
B) 50 metrics 
C) 12.5 metrics 
D) 5 metrics

Question 13

If marginal cost is above the average variable cost, then average variable cost is decreasing.

Accepted Answer

A) True 
 B)False

Question 14

Table 7.3  
-Refer to Table 7.3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.The highest value of the average product of labour is ________ when Manny hires ________ workers.

Accepted Answer

A) 80; 3 
B) 100; 3 
C) 100; 2 
D) 80; 4 
A) 80; 3 
B) 100; 3 
C) 100; 2 
D) 80; 4

Question 15

Figure 7.2  
-Refer to Figure 7.2.The curve labelled 'F' is

Accepted Answer

A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve. 
A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve.

Question 16

Average total cost is equal to average variable cost minus average fixed cost.

Accepted Answer

A) True 
 B)False

Question 17

What is true at the minimum efficient scale?

Accepted Answer

A) All possible economies of scale have not been exhausted. 
B) The firm has achieved the lowest possible average cost of production. 
C) Any increases in the scale of operation will encounter further economies of scale. 
D) Marginal cost is at its minimum. 
A) All possible economies of scale have not been exhausted. 
B) The firm has achieved the lowest possible average cost of production. 
C) Any increases in the scale of operation will encounter further economies of scale. 
D) Marginal cost is at its minimum.

Question 18

How do economic costs of production differ from accounting costs?

Accepted Answer

A) Economic costs include expenditures for hired resources while accounting costs do not. 
B) Economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C) Accounting costs include expenditures for hired resources while economic costs do not. 
D) Accounting costs are always larger than economic costs. 
A) Economic costs include expenditures for hired resources while accounting costs do not. 
B) Economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C) Accounting costs include expenditures for hired resources while economic costs do not. 
D) Accounting costs are always larger than economic costs.

Question 19

The slope of an isocost line determines the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 20

Figure 7.6   Figure 7.6 contains information about the short-run cost structure of a firm.
-Refer to Figure 7.6.In the figure above, which letter represents the average variable cost curve?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

When the average total cost is $16 and the total cost is $800, how many units is the firm producing?

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

A change in the slope of an isocost line is due to a change in

Accounting costs exclude implicit costs.

Average total cost is equal to

Suppose two countries use different combinations of inputs, such as labour and capital, to produce the same product.This implies all of the following except that

If a firm produces 20 units of output and incurs a total cost of $1000, and the variable cost is $700, what is the firm's average fixed cost of production if it expands output to 25 units?

Which of the following is a fixed cost?

Figure 7.11 Figure 7.11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATC_a, ATC_b and ATC_c. -Refer to Figure 7.11.For output rates greater than 20 000 picture frames per month,

On an isoquant/isocost graph, the least cost input combination of producing a given output is

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

Table 7.1 Table 7.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 7.1.The marginal product of the 4^th worker is

If marginal cost is above the average variable cost, then average variable cost is decreasing.

Figure 7.2 -Refer to Figure 7.2.The curve labelled 'F' is

Average total cost is equal to average variable cost minus average fixed cost.

What is true at the minimum efficient scale?

How do economic costs of production differ from accounting costs?

The slope of an isocost line determines the marginal rate of substitution.

Figure 7.6 Figure 7.6 contains information about the short-run cost structure of a firm. -Refer to Figure 7.6.In the figure above, which letter represents the average variable cost curve?

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

When the average total cost is $16 and the total cost is $800, how many units is the firm producing?

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

A change in the slope of an isocost line is due to a change in

Accounting costs exclude implicit costs.

Average total cost is equal to

Suppose two countries use different combinations of inputs, such as labour and capital, to produce the same product.This implies all of the following except that

If a firm produces 20 units of output and incurs a total cost of $1000, and the variable cost is $700, what is the firm's average fixed cost of production if it expands output to 25 units?

Which of the following is a fixed cost?

Figure 7.11 Figure 7.11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc. -Refer to Figure 7.11.For output rates greater than 20 000 picture frames per month,

On an isoquant/isocost graph, the least cost input combination of producing a given output is

One reason why, in the short run, the marginal product of labour might increase initially as more workers are hired is that

Table 7.1 Table 7.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 7.1.The marginal product of the 4th worker is

If marginal cost is above the average variable cost, then average variable cost is decreasing.

Figure 7.2 -Refer to Figure 7.2.The curve labelled 'F' is

Average total cost is equal to average variable cost minus average fixed cost.

What is true at the minimum efficient scale?

How do economic costs of production differ from accounting costs?

The slope of an isocost line determines the marginal rate of substitution.

Figure 7.6 Figure 7.6 contains information about the short-run cost structure of a firm. -Refer to Figure 7.6.In the figure above, which letter represents the average variable cost curve?

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

Figure 7.11 Figure 7.11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATC_a, ATC_b and ATC_c. -Refer to Figure 7.11.For output rates greater than 20 000 picture frames per month,

Table 7.1 Table 7.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 7.1.The marginal product of the 4^th worker is