Question 1

In economics, technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 2

The absolute value of the slope of an isocost line equals the ratio of

Accepted Answer

A) the marginal productivities of the two inputs. 
B) the prices of the two inputs. 
C) the marginal utilities of the two inputs. 
D) the quantities of the two inputs. 
A) the marginal productivities of the two inputs. 
B) the prices of the two inputs. 
C) the marginal utilities of the two inputs. 
D) the quantities of the two inputs.

Question 3

What is the marginal product of labour and what is the average product of labour.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The marginal product of labour is the ad

Question 4

Figure 7.1  
-Refer to Figure 7.1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis, the marginal product curve

Accepted Answer

A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker. 
A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker.

Question 5

How is an explicit cost defined?

Accepted Answer

A) As a cost that does not change as output changes. 
B) As a nonmonetary opportunity cost. 
C) As a cost that involves spending money. 
D) As a nonmonetary accounting cost. 
A) As a cost that does not change as output changes. 
B) As a nonmonetary opportunity cost. 
C) As a cost that involves spending money. 
D) As a nonmonetary accounting cost.

Question 6

In the long run, the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 7

What does the long-run average cost curve show?

Accepted Answer

A) The lowest average cost of producing every level of output in the long run. 
B) Where the most profitable level of output occurs. 
C) The average cost of producing where diminishing returns are not present. 
D) The plant size or scale that the firm should build. 
A) The lowest average cost of producing every level of output in the long run. 
B) Where the most profitable level of output occurs. 
C) The average cost of producing where diminishing returns are not present. 
D) The plant size or scale that the firm should build.

Question 8

Figure 7.13  
-Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labour remains unchanged?

Accepted Answer

A) The movement from AF to BF 
B) The movement from BF to AF 
C) The movement from BF to BD 
D) The movement from BF to CE 
A) The movement from AF to BF 
B) The movement from BF to AF 
C) The movement from BF to BD 
D) The movement from BF to CE

Question 9

Table 7.4  
-Refer to Table 7.4.The table above shows the following relationship between hours spent fishing and the quantity of fish caught for Juan, a commercial fisherman.
a.Complete the Marginal Product column in Table 7-4.
b.Characterise the production function, i.e.does the production function display increasing marginal returns, diminishing marginal returns, etc.
c.Using the data above, graph Juan's marginal product curve.Be sure to label the horizontal and vertical axes.Is your graph consistent with your answer to part (b)? Explain.
d.Juan uses the following inputs for fishing - a small wooden boat (B), a fishing pole (P)and of course, his labour (L).Treating the boat and the fishing pole as fixed inputs and using the data above, graph Juan's Total Product of labour curve.Be sure to label the horizontal and vertical axes.
e.(Extra Credit)The opportunity cost of Juan's time is $8 per hour.If Juan receives $2 per metric for his fish, what is the optimal number of hours he should spend fishing? Explain how you arrived at your answer.Hint: Recall marginal benefit and marginal cost analysis.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

@#IMG-DLM& @#IMG-DLM& d. @#IMG-DLM& e.If Juan can sell his fish for $2

Question 10

If a firm experiences diminishing returns, its marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 11

If, when a firm doubles all its inputs, its average cost of production increases, 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 12

Figure 7.2  
-Refer to Figure 7.2.The curve labelled 'E' 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 13

Which of the following statements best describes the economic short run?

Accepted Answer

A) It is a period of one year or less. 
B) It is a period during which firms are free to vary all of their inputs. 
C) It is a period during which at least one of the firm's inputs is fixed. 
D) It is a period during which fixed inputs become variable inputs because of depreciation. 
A) It is a period of one year or less. 
B) It is a period during which firms are free to vary all of their inputs. 
C) It is a period during which at least one of the firm's inputs is fixed. 
D) It is a period during which fixed inputs become variable inputs because of depreciation.

Question 14

Figure 7.7   Figure 7.7 shows the cost structure for a firm.
-Refer to Figure 7.7.When the output level is 100 units, what is average fixed cost?

Accepted Answer

A) $10. 
B) $8. 
C) $5. 
D) This cannot be determined from the diagram. 
A) $10. 
B) $8. 
C) $5. 
D) This cannot be determined from the diagram.

Question 15

Figure 7.3   Fancy Footwear manufactures shoes.Figure 7.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 7.3.For what quantity of labour does production display diminishing returns?

Accepted Answer

A) For more than 1 unit of labour 
B) For more than 4 units of labour 
C) For more than 5 units of labour 
D) For more than 8 units of labour 
A) For more than 1 unit of labour 
B) For more than 4 units of labour 
C) For more than 5 units of labour 
D) For more than 8 units of labour

Question 16

Table 7.8   Elegant Settings manufactures stainless steel cutlery.Table 7.8 shows the company's cost data.
-Refer to Table 7.8.Elegant Settings experiences

Accepted Answer

A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400. 
A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400.

Question 17

When firms analyse the relationship between their level of production and their costs, they separate the time period involved into

Accepted Answer

A) morning and evening. 
B) 6 months or less; 6 months to 1 year; more than 1 year. 
C) a fixed period and a variable period. 
D) the short run and the long run. 
A) morning and evening. 
B) 6 months or less; 6 months to 1 year; more than 1 year. 
C) a fixed period and a variable period. 
D) the short run and the long run.

Question 18

An avocado orchard employs five full-time workers.Currently, the average product of labour is 60 kilograms of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 75 kilograms of avocados.The average product of the six workers will now be

Accepted Answer

A) more than 60 kilograms. 
B) less than 60 kilograms. 
C) equal to 60 kilograms. 
D) less than the marginal product of labour. 
A) more than 60 kilograms. 
B) less than 60 kilograms. 
C) equal to 60 kilograms. 
D) less than the marginal product of labour.

Question 19

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

Accepted Answer

A) True 
 B)False

Question 20

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Assume the two companies are o

In economics, technology only refers to the development of new products.

The absolute value of the slope of an isocost line equals the ratio of

What is the marginal product of labour and what is the average product of labour. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 7.1 -Refer to Figure 7.1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis, the marginal product curve

How is an explicit cost defined?

In the long run, the relevant cost is total cost.

What does the long-run average cost curve show?

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labour remains unchanged?

If a firm experiences diminishing returns, its marginal product must be negative.

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

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

Which of the following statements best describes the economic short run?

Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.When the output level is 100 units, what is average fixed cost?

Figure 7.3 Fancy Footwear manufactures shoes.Figure 7.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 7.3.For what quantity of labour does production display diminishing returns?

Table 7.8 Elegant Settings manufactures stainless steel cutlery.Table 7.8 shows the company's cost data. -Refer to Table 7.8.Elegant Settings experiences

When firms analyse the relationship between their level of production and their costs, they separate the time period involved into

An avocado orchard employs five full-time workers.Currently, the average product of labour is 60 kilograms of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 75 kilograms of avocados.The average product of the six workers will now be

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

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 economics, technology only refers to the development of new products.

The absolute value of the slope of an isocost line equals the ratio of

What is the marginal product of labour and what is the average product of labour. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 7.1 -Refer to Figure 7.1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis, the marginal product curve

How is an explicit cost defined?

In the long run, the relevant cost is total cost.

What does the long-run average cost curve show?

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labour remains unchanged?

If a firm experiences diminishing returns, its marginal product must be negative.

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

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

Which of the following statements best describes the economic short run?

Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.When the output level is 100 units, what is average fixed cost?

Figure 7.3 Fancy Footwear manufactures shoes.Figure 7.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 7.3.For what quantity of labour does production display diminishing returns?

Table 7.8 Elegant Settings manufactures stainless steel cutlery.Table 7.8 shows the company's cost data. -Refer to Table 7.8.Elegant Settings experiences

When firms analyse the relationship between their level of production and their costs, they separate the time period involved into

An avocado orchard employs five full-time workers.Currently, the average product of labour is 60 kilograms of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 75 kilograms of avocados.The average product of the six workers will now be

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

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