Question 1

The division of labour and specialisation explain

Accepted Answer

A) why, when the marginal product of labour increases, so does the average product of labour. 
B) why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C) why the marginal product of labour rises as a firm hires its first units of labour. 
D) why firms may find it profitable to use more workers when the marginal product of labour is negative. 
A) why, when the marginal product of labour increases, so does the average product of labour. 
B) why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C) why the marginal product of labour rises as a firm hires its first units of labour. 
D) why firms may find it profitable to use more workers when the marginal product of labour is negative.

Question 2

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs.

Question 3

Figure 7.9  
-Refer to Figure 7.9 above to solve the following problems.
a.Calculate the fixed cost of production.
b.Calculate the average total cost of production when the firm produces 20 units of output.
c.Calculate the average variable cost of production when the firm produces 20 units of output.
d.Calculate the average fixed cost of production when the firm produces 20 units of output.
e.Calculate the average fixed cost of production when the firm produces 15 units of output.
f.If the firm increases output from 15 to 20 units what is the marginal cost of output?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.$100
b.$

Question 4

Stan owns a software design business.He does not have time to expand his office space or redesign the layout of his office.He can increase the amount of work he does by working more hours, asking his current employees to work more hours, or hiring more employees.The relationship between Stan's inputs and the maximum output his firm can produce is called his

Accepted Answer

A) long-run production function. 
B) production possibility frontier. 
C) short-run production function. 
D) cost function. 
A) long-run production function. 
B) production possibility frontier. 
C) short-run production function. 
D) cost function.

Question 5

The marginal rate of technical substitution is measured by

Accepted Answer

A) the slope of the isoquant. 
B) the relative input prices. 
C) the slope of the isocost line. 
D) the ratio of the product's price to the product's cost of production. 
A) the slope of the isoquant. 
B) the relative input prices. 
C) the slope of the isocost line. 
D) the ratio of the product's price to the product's cost of production.

Question 6

Figure 7.14  
-Refer to Figure 7.14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

Accepted Answer

A) Combination e: 10 hours of labour and 48 units of capital 
B) Combination f: 40 hours of labour and 24 units of capital 
C) Combination g: 60 hours of labour and 14 units of capital 
D) Combination h: 60 hours of labour and 9 units of capital 
A) Combination e: 10 hours of labour and 48 units of capital 
B) Combination f: 40 hours of labour and 24 units of capital 
C) Combination g: 60 hours of labour and 14 units of capital 
D) Combination h: 60 hours of labour and 9 units of capital

Question 7

The slope of an isocost line ________ and equals the negative of ________.

Accepted Answer

A) increases as we move down the line; the ratio of input prices 
B) decreases as we move down the line; the ratio of the marginal products 
C) is constant; the ratio of input prices 
D) is constant; the ratio of the marginal products 
A) increases as we move down the line; the ratio of input prices 
B) decreases as we move down the line; the ratio of the marginal products 
C) is constant; the ratio of input prices 
D) is constant; the ratio of the marginal products

Question 8

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 9

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following are implicit costs for a typical firm?

Accepted Answer

A) The cost of labour 
B) The opportunity cost of capital owned and used by the firm 
C) The cost of energy used in production 
D) A business licensing fee 
A) The cost of labour 
B) The opportunity cost of capital owned and used by the firm 
C) The cost of energy used in production 
D) A business licensing fee

Question 11

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

Accepted Answer

A) experiences an increase in demand. 
B) experiences positive technological change. 
C) will hire more workers in order to produce more output. 
D) is operating in the short run. 
A) experiences an increase in demand. 
B) experiences positive technological change. 
C) will hire more workers in order to produce more output. 
D) is operating in the short run.

Question 12

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 marginal cost curve?

Accepted Answer

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

Question 13

State the law of diminishing marginal returns.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

As more units of a variable in

Question 14

Figure 7.1  
-Refer to Figure 7.1.What is the average product of the 4th worker?

Accepted Answer

A) 68. 
B) 17. 
C) 11. 
D) Cannot be determined. 
A) 68. 
B) 17. 
C) 11. 
D) Cannot be determined.

Question 15

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 16

An expansion path shows

Accepted Answer

A) the level of sales necessary for a firm if it wants to expand. 
B) the level of long-run average cost at different scales of operation. 
C) the least-cost combination of inputs for each level of output. 
D) the returns to scale at each level of output. 
A) the level of sales necessary for a firm if it wants to expand. 
B) the level of long-run average cost at different scales of operation. 
C) the least-cost combination of inputs for each level of output. 
D) the returns to scale at each level of output.

Question 17

Which of the following statements is false?

Accepted Answer

A) When marginal cost equals average total cost, average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.' 
A) When marginal cost equals average total cost, average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.'

Question 18

What is average total cost?

Accepted Answer

A) Total cost divided by the quantity of output produced. 
B) Total explicit costs divided by the quantity of output produced. 
C) Variable cost divided by the quantity of output produced. 
D) The change in fixed plus variable cost divided by the quantity of output produced. 
A) Total cost divided by the quantity of output produced. 
B) Total explicit costs divided by the quantity of output produced. 
C) Variable cost divided by the quantity of output produced. 
D) The change in fixed plus variable cost divided by the quantity of output produced.

Question 19

What is the basic activity of a firm?

Accepted Answer

A) To set the prices of its products as high as possible. 
B) To compete with other firms that produce similar products. 
C) To provide jobs for its employees. 
D) To use inputs to produce outputs of goods and services. 
A) To set the prices of its products as high as possible. 
B) To compete with other firms that produce similar products. 
C) To provide jobs for its employees. 
D) To use inputs to produce outputs of goods and services.

Question 20

The definition for the marginal product of labour is

Accepted Answer

A) the additional sales revenue that results when one more worker is hired. 
B) the additional output that results when one more worker is hired, holding all other resources constant. 
C) the additional number of workers required to produce one more unit of output. 
D) the cost of hiring one more worker. 
A) the additional sales revenue that results when one more worker is hired. 
B) the additional output that results when one more worker is hired, holding all other resources constant. 
C) the additional number of workers required to produce one more unit of output. 
D) the cost of hiring one more worker.

The division of labour and specialisation explain

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

The marginal rate of technical substitution is measured by

Figure 7.14 -Refer to Figure 7.14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

The slope of an isocost line and equals the negative of .

Economic costs include implicit costs but not explicit costs.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Which of the following are implicit costs for a typical firm?

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

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 marginal cost curve?

State the law of diminishing marginal returns. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 7.1 -Refer to Figure 7.1.What is the average product of the 4^th worker?

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

An expansion path shows

Which of the following statements is false?

What is average total cost?

What is the basic activity of a firm?

The definition for the marginal product of labour is

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

The division of labour and specialisation explain

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

The marginal rate of technical substitution is measured by

Figure 7.14 -Refer to Figure 7.14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

The slope of an isocost line ________ and equals the negative of ________.

Economic costs include implicit costs but not explicit costs.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Which of the following are implicit costs for a typical firm?

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

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 marginal cost curve?

State the law of diminishing marginal returns. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 7.1 -Refer to Figure 7.1.What is the average product of the 4th worker?

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

An expansion path shows

Which of the following statements is false?

What is average total cost?

What is the basic activity of a firm?

The definition for the marginal product of labour is

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 slope of an isocost line and equals the negative of .

Figure 7.1 -Refer to Figure 7.1.What is the average product of the 4^th worker?