Question 1

Exhibit 11-10   Refer to Exhibit 11-10.In the long run the firm can move from

Accepted Answer

A)  A to B 
B)  A to C 
C)  B to A 
D)  all of the above 
A)  A to B 
B)  A to C 
C)  B to A 
D)  all of the above

Question 2

Which of the following is most likely to be a fixed cost for a business?

Accepted Answer

A)  payment for raw materials used in manufacturing goods 
B)  interest payments on a loan used to finance the construction of a building 
C)  shipping charges for the delivery of products 
D)  wages paid to temporary workers 
A)  payment for raw materials used in manufacturing goods 
B)  interest payments on a loan used to finance the construction of a building 
C)  shipping charges for the delivery of products 
D)  wages paid to temporary workers

Question 3

One would expect to observe a diminishing marginal product of labor when crowded office space reduces the productivity of new workers.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 11-1   Refer to Exhibit 11-1.The marginal product of labor begins to diminish with the addition of the ____ picker.

Accepted Answer

A)  fourth 
B)  fifth 
C)  seventh 
D)  eighth 
A)  fourth 
B)  fifth 
C)  seventh 
D)  eighth

Question 5

The total fixed cost of operating a lumberyard equals $12,000 this year.The average fixed cost of the lumberyard will not be affected by the quantity of lumber that is sold.

Accepted Answer

A) True 
 B)False

Question 6

An economic profit of zero indicates a satisfactory situation for the firm.

Accepted Answer

A) True 
 B)False

Question 7

The sum of AVC and AFC equals:

Accepted Answer

A)  total variable cost. 
B)  economic profit. 
C)  accounting profit. 
D)  average total cost. 
A)  total variable cost. 
B)  economic profit. 
C)  accounting profit. 
D)  average total cost.

Question 8

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches:
  Refer to Exhibit 11-8.If the output equals four watches per week,then the average total cost of producing a watch equals:

Accepted Answer

A)  $72. 
B)  $3. 
C)  $18. 
D)  $5.50. 
A)  $72. 
B)  $3. 
C)  $18. 
D)  $5.50.

Question 9

Why is the long-run average total cost (LRATC)curve called the planning curve?

Accepted Answer

The LRATC curve is often called a planni

Question 10

In the table below,diminishing marginal product is first evident with the addition of the ____ worker.

Accepted Answer

A)  5 
B)  6 
C)  7 
D)  8 
A)  5 
B)  6 
C)  7 
D)  8

Question 11

Diminishing marginal product first sets in at the minimum point of the

Accepted Answer

A)  ATC curve. 
B)  AVC curve. 
C)  AFC curve. 
D)  MC curve. 
A)  ATC curve. 
B)  AVC curve. 
C)  AFC curve. 
D)  MC curve.

Question 12

Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9,and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5.Given the above information,

Accepted Answer

A)  the marginal cost of the third unit is greater than the marginal cost of the first unit. 
B)  the marginal cost of the fourth unit is the same as the marginal cost of the second unit. 
C)  the average variable cost of four units is the same as for three units. 
D)  both (b) and (c) are correct. 
A)  the marginal cost of the third unit is greater than the marginal cost of the first unit. 
B)  the marginal cost of the fourth unit is the same as the marginal cost of the second unit. 
C)  the average variable cost of four units is the same as for three units. 
D)  both (b) and (c) are correct.

Question 13

When economies of scale exist,an increase in the level of output will lead to:

Accepted Answer

A)  a decrease in cost per unit. 
B)  an increase in cost per unit. 
C)  a decrease in total cost. 
D)  both a. and c. above 
A)  a decrease in cost per unit. 
B)  an increase in cost per unit. 
C)  a decrease in total cost. 
D)  both a. and c. above

Question 14

Explain the cost advantage of a firm operating at constant returns to scale.

Accepted Answer

If we compare a firm operating in the co

Question 15

In the long run,all costs are variable.

Accepted Answer

A) True 
 B)False

Question 16

A firm can produce 840 gallons of paint per day with 6 workers,or 910 gallons per day with 7 workers.The marginal product of labor over this range of output,stated in gallons per worker per day,is

Accepted Answer

A)  140. 
B)  135. 
C)  130. 
D)  70. 
A)  140. 
B)  135. 
C)  130. 
D)  70.

Question 17

Which of the following factors of production is not variable in the long run?

Accepted Answer

A)  the size of the firm's plant 
B)  land 
C)  highly skilled labor 
D)  All factors are variable in the long run. 
A)  the size of the firm's plant 
B)  land 
C)  highly skilled labor 
D)  All factors are variable in the long run.

Question 18

Which of the following is true at the output level where diminishing marginal product first set in?

Accepted Answer

A)  Both marginal product and marginal cost are at a minimum. 
B)  Both marginal product and marginal cost are at a maximum. 
C)  Marginal product is at a maximum and marginal cost is at a minimum. 
D)  Marginal product is at a minimum and marginal cost is at a maximum. 
A)  Both marginal product and marginal cost are at a minimum. 
B)  Both marginal product and marginal cost are at a maximum. 
C)  Marginal product is at a maximum and marginal cost is at a minimum. 
D)  Marginal product is at a minimum and marginal cost is at a maximum.

Question 19

Economic profits will take into account:

Accepted Answer

A)  explicit costs but not implicit costs. 
B)  implicit costs but not explicit costs. 
C)  both implicit and explicit costs. 
D)  neither explicit nor implicit costs. 
A)  explicit costs but not implicit costs. 
B)  implicit costs but not explicit costs. 
C)  both implicit and explicit costs. 
D)  neither explicit nor implicit costs.

Question 20

Accounting profits are calculated based upon:

Accepted Answer

A)  explicit cash receipts and implicit expenditures of cash. 
B)  actual cash receipts and actual expenditures of cash. 
C)  implicit cash receipts and actual expenditures of cash. 
D)  opportunity costs plus explicit costs. 
A)  explicit cash receipts and implicit expenditures of cash. 
B)  actual cash receipts and actual expenditures of cash. 
C)  implicit cash receipts and actual expenditures of cash. 
D)  opportunity costs plus explicit costs.

Exam 11: The Firm: Production and Costs

Exhibit 11-10 Refer to Exhibit 11-10.In the long run the firm can move from

Which of the following is most likely to be a fixed cost for a business?

One would expect to observe a diminishing marginal product of labor when crowded office space reduces the productivity of new workers.

Exhibit 11-1 Refer to Exhibit 11-1.The marginal product of labor begins to diminish with the addition of the ____ picker.

The total fixed cost of operating a lumberyard equals $12,000 this year.The average fixed cost of the lumberyard will not be affected by the quantity of lumber that is sold.

An economic profit of zero indicates a satisfactory situation for the firm.

The sum of AVC and AFC equals:

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches: Refer to Exhibit 11-8.If the output equals four watches per week,then the average total cost of producing a watch equals:

Why is the long-run average total cost (LRATC)curve called the planning curve?

In the table below,diminishing marginal product is first evident with the addition of the ____ worker.

Diminishing marginal product first sets in at the minimum point of the

Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9,and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5.Given the above information,

When economies of scale exist,an increase in the level of output will lead to:

Explain the cost advantage of a firm operating at constant returns to scale.

In the long run,all costs are variable.

A firm can produce 840 gallons of paint per day with 6 workers,or 910 gallons per day with 7 workers.The marginal product of labor over this range of output,stated in gallons per worker per day,is

Which of the following factors of production is not variable in the long run?

Which of the following is true at the output level where diminishing marginal product first set in?

Economic profits will take into account:

Accounting profits are calculated based upon:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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