Question 1

In the long run, all of a firm's inputs are variable.

Accepted Answer

A) True 
 B)False

Question 2

A curve that shows all the combinations of two inputs, such as labour and capital, which will produce the same level of output is called

Accepted Answer

A) an isoquant. 
B) an isocost line. 
C) a budget line. 
D) an optimal input combination curve. 
A) an isoquant. 
B) an isocost line. 
C) a budget line. 
D) an optimal input combination curve.

Question 3

What are the processes called that a firm uses to turn inputs into outputs of goods and services?

Accepted Answer

A) Technology. 
B) Technological change. 
C) Marginal analysis. 
D) Positive economic analysis. 
A) Technology. 
B) Technological change. 
C) Marginal analysis. 
D) Positive economic analysis.

Question 4

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 average product of labour will equal 60 boxes when Manny hires

Accepted Answer

A) the second worker. 
B) the third worker. 
C) the fourth worker. 
D) the fifth worker. 
A) the second worker. 
B) the third worker. 
C) the fourth worker. 
D) the fifth worker.

Question 5

Table 7.5  
-Refer to Table 7.5.Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business.Suzette rents space for her factory for $400 a week in a nearby strip mall.She can hire temporary workers for $200 a week.Table 7-5 above shows her output and cost data.Use the table to answer questions a-e.
a.Complete the table.
b.In the last week of summer Suzette closes her business to go on a family vacation.What are her costs during that week?
c.In one week Suzette exactly breaks even.If her revenue for the week is $1200, how many boxes of fruit and nuts did she produce?
d.Judging from the marginal product of labour data, would you say that Suzette had to settle for increasingly unproductive workers? Explain your answer.
e.Suzette has received an order for 1500 boxes of nuts per week for the next 3 months.If she expects the trend in the marginal product of labour will continue in the same direction, what do you think she should do? Should she not commit until she can move to a larger space or should she just hire more workers? Explain your answer.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a. @#IMG-DLM& b.$400
c.840 boxes
d.Diminishing mar

Question 6

Figure 7.16  
-Refer to Figure 7.16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Accepted Answer

A) Point a to point b 
B) Point a to point c 
C) Point b to point c 
D) Point b to point d 
A) Point a to point b 
B) Point a to point c 
C) Point b to point c 
D) Point b to point d

Question 7

How are implicit costs defined?

Accepted Answer

A) Accounting profit minus explicit cost. 
B) The nonmonetary opportunity cost of using the firm's own resources. 
C) The deferred cost of production. 
D) Total cost minus fixed costs. 
A) Accounting profit minus explicit cost. 
B) The nonmonetary opportunity cost of using the firm's own resources. 
C) The deferred cost of production. 
D) Total cost minus fixed costs.

Question 8

Which of the following costs will not change as output changes?

Accepted Answer

A) Marginal cost 
B) Total variable cost 
C) Average variable cost 
D) Total fixed cost 
A) Marginal cost 
B) Total variable cost 
C) Average variable cost 
D) Total fixed cost

Question 9

Table 7.7   Table 7.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 7.7.The variable cost of production when the firm produces 115 lanterns is

Accepted Answer

A) $1556 
B) $1157 
C) $956 
D) $10.05 
A) $1556 
B) $1157 
C) $956 
D) $10.05

Question 10

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

Accepted Answer

A) True 
 B)False

Question 11

What happens as a firm hires more labour in the short run?

Accepted Answer

A) Level of total product stays constant. 
B) Output per worker rises. 
C) Extra output of another worker may rise at first, but eventually must fall. 
D) Costs of production are increasing at a fixed rate per unit of output. 
A) Level of total product stays constant. 
B) Output per worker rises. 
C) Extra output of another worker may rise at first, but eventually must fall. 
D) Costs of production are increasing at a fixed rate per unit of output.

Question 12

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Accepted Answer

A) explicit cost of production. 
B) marginal cost of production. 
C) average cost of production. 
D) implicit cost of production. 
A) explicit cost of production. 
B) marginal cost of production. 
C) average cost of production. 
D) implicit cost of production.

Question 13

Which of the following is true at the output level where average total cost is at its minimum?

Accepted Answer

A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost. 
A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost.

Question 14

Suppose you have just opened a store to sell espresso machines.Both you and a competing store buy this machine from a manufacturer for $130 each.Your competitor, who has a store of the same size as yours, is currently selling about 10 machines a month at a price of $200 per machine.You expect to sell about 6 machines a month at a price of $220 per machine.If you lower your price, you expect to incur a loss.Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you?

Accepted Answer

A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximise revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases. 
A) The competing store probably has a lower marginal cost of production. 
B) The competing store probably has a lower average variable cost of production. 
C) The competing store's goal is to maximise revenue and not profit. 
D) The competing store probably has a lower average cost because average fixed cost falls as output increases.

Question 15

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A) Better trained workers 
B) More efficient physical capital 
C) Higher skill level of managers 
D) Outsourcing some aspect of production 
A) Better trained workers 
B) More efficient physical capital 
C) Higher skill level of managers 
D) Outsourcing some aspect of production

Question 16

Which of the following statements is true?

Accepted Answer

A) The average product of labour is at its maximum when the average product of labour equals the marginal product of labour. 
B) The average product of labour is at its minimum when the average product of labour equals the marginal product of labour. 
C) The average product of labour tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labour is greater than the average product of labour the average product of labour must be decreasing. 
A) The average product of labour is at its maximum when the average product of labour equals the marginal product of labour. 
B) The average product of labour is at its minimum when the average product of labour equals the marginal product of labour. 
C) The average product of labour tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labour is greater than the average product of labour the average product of labour must be decreasing.

Question 17

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Accepted Answer

A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve. 
A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve.

Question 18

Average fixed cost can be calculated using any of the formulas below except

Accepted Answer

A) TFC/Q. 
B) (TC - V
C) /Q. 
C) Δ(TC - V
C) /ΔQ. 
D) (TC/Q)- AVC. 
A) TFC/Q. 
B) (TC - V
C) /Q. 
C) Δ(TC - V
C) /ΔQ. 
D) (TC/Q)- AVC.

Question 19

Suppose the total cost of producing 40 000 flash drives is $120 000, and the fixed cost is   .
a.What is the variable cost?
b.When output is 40 000, what are the average variable cost and the average fixed cost?
c.Assuming the cost curves have the usual shape, is the dollar difference between the average total cost and the average variable cost greater when the output is 40 000 flash drives or when the output is   flash drives? Explain.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.Variable cost = total cost - fixed cos

Question 20

Which of the following is true if marginal product is greater than average product?

Accepted Answer

A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing. 
A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing.

In the long run, all of a firm's inputs are variable.

A curve that shows all the combinations of two inputs, such as labour and capital, which will produce the same level of output is called

What are the processes called that a firm uses to turn inputs into outputs of goods and services?

Figure 7.16 -Refer to Figure 7.16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

How are implicit costs defined?

Which of the following costs will not change as output changes?

Table 7.7 Table 7.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 7.7.The variable cost of production when the firm produces 115 lanterns is

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

What happens as a firm hires more labour in the short run?

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Which of the following is true at the output level where average total cost is at its minimum?

Which of the following is not a source of technological advancement for a producer?

Which of the following statements is true?

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Average fixed cost can be calculated using any of the formulas below except

Which of the following is true if marginal product is greater than average product?

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

In the long run, all of a firm's inputs are variable.

A curve that shows all the combinations of two inputs, such as labour and capital, which will produce the same level of output is called

What are the processes called that a firm uses to turn inputs into outputs of goods and services?

Figure 7.16 -Refer to Figure 7.16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

How are implicit costs defined?

Which of the following costs will not change as output changes?

Table 7.7 Table 7.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 7.7.The variable cost of production when the firm produces 115 lanterns is

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

What happens as a firm hires more labour in the short run?

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Which of the following is true at the output level where average total cost is at its minimum?

Which of the following is not a source of technological advancement for a producer?

Which of the following statements is true?

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Average fixed cost can be calculated using any of the formulas below except

Which of the following is true if marginal product is greater than average product?

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