Question 1

Use the following to answer question(s): Short-Run Costs
  
-(Exhibit: Short-Run Costs) The vertical difference between curve B and curve C at any quantity of output is:

Accepted Answer

A)  marginal cost. 
B)  fixed cost. 
C)  average fixed cost. 
D)  average variable cost. 
A)  marginal cost. 
B)  fixed cost. 
C)  average fixed cost. 
D)  average variable cost. C

Question 2

Economies and diseconomies of scale account for the shape of the:

Accepted Answer

A)  average total cost curve. 
B)  average variable cost curve. 
C)  long-run average cost curve. 
D)  marginal cost curve. 
A)  average total cost curve. 
B)  average variable cost curve. 
C)  long-run average cost curve. 
D)  marginal cost curve. C

Question 3

Marginal cost, mathematically, is the slope of the:

Accepted Answer

A)  average total cost curve. 
B)  average variable cost curve. 
C)  average fixed cost curve. 
D)  total cost curve. 
A)  average total cost curve. 
B)  average variable cost curve. 
C)  average fixed cost curve. 
D)  total cost curve. D

Question 4

A firm's marginal cost is:

Accepted Answer

A)  the ratio of the change in total cost to the change in the quantity of output. 
B)  the change in total cost divided by the change in labor input. 
C)  the slope of the average fixed cost curve. 
D)  all of the above. 
A)  the ratio of the change in total cost to the change in the quantity of output. 
B)  the change in total cost divided by the change in labor input. 
C)  the slope of the average fixed cost curve. 
D)  all of the above.

Question 5

Profit-maximizing firms seek to maximize output.

Accepted Answer

A) True 
 B)False

Question 6

Total cost is constant because fixed cost is constant.

Accepted Answer

A) True 
 B)False

Question 7

At 76 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 42.9.We can conclude that the average product curve at 76 units of labor is:

Accepted Answer

A)  upward-sloping. 
B)  downward-sloping. 
C)  vertical. 
D)  horizontal. 
A)  upward-sloping. 
B)  downward-sloping. 
C)  vertical. 
D)  horizontal.

Question 8

Increasing marginal returns for the first four units of a variable input is exhibited by the total product sequence:

Accepted Answer

A)  50, 50, 50, 50. 
B)  50, 40, 30, 20. 
C)  50, 110, 180, 260. 
D)  50, 100, 150, 200. 
A)  50, 50, 50, 50. 
B)  50, 40, 30, 20. 
C)  50, 110, 180, 260. 
D)  50, 100, 150, 200.

Question 9

The costs incurred by a firm in its use of variable factors of production are:

Accepted Answer

A)  total costs. 
B)  marginal costs. 
C)  variable costs. 
D)  fixed costs. 
A)  total costs. 
B)  marginal costs. 
C)  variable costs. 
D)  fixed costs.

Question 10

Use the following to answer question(s): Long-Run Average Cost
  
-(Exhibit: Long-Run Average Cost) In the region from O to A, output per period is _______ and long-run average cost is _______ .

Accepted Answer

A)  decreasing; increasing 
B)  increasing; decreasing 
C)  increasing; increasing 
D)  increasing; remaining the same 
A)  decreasing; increasing 
B)  increasing; decreasing 
C)  increasing; increasing 
D)  increasing; remaining the same

Question 11

Use the following for questions 37-43.
Exhibit: Total Product
  
-(Exhibit: Total Product) Between points A and B, which of the following is (are) true?

Accepted Answer

A)  Total product is going down. 
B)  The marginal product of labor is rising. 
C)  The marginal product of labor is falling. 
D)  Only A and C are true. 
A)  Total product is going down. 
B)  The marginal product of labor is rising. 
C)  The marginal product of labor is falling. 
D)  Only A and C are true.

Question 12

Average total cost is:

Accepted Answer

A)  the change in cost divided by the change in quantity. 
B)  total cost divided by quantity. 
C)  the change in quantity divided by the change in costs. 
D)  total cost times quantity. 
A)  the change in cost divided by the change in quantity. 
B)  total cost divided by quantity. 
C)  the change in quantity divided by the change in costs. 
D)  total cost times quantity.

Question 13

Suppose a firm is using labor and capital and obtaining the maximum possible output for a given total cost.If the price of labor increases, all other things unchanged, then the firm will:

Accepted Answer

A)  shift funds out of labor into capital. 
B)  adjust factor utilization until the ratios of marginal product to price are equal for the two factors. 
C)  hire less labor, which will result in an increase in labor's marginal product, and hire more capital, leading to a fall in the marginal product of capital. 
D)  do all of the above. 
A)  shift funds out of labor into capital. 
B)  adjust factor utilization until the ratios of marginal product to price are equal for the two factors. 
C)  hire less labor, which will result in an increase in labor's marginal product, and hire more capital, leading to a fall in the marginal product of capital. 
D)  do all of the above.

Question 14

Use the following to answer question(s): A Firm's Cost Curves
  
-(Exhibit: A Firm's Cost Curves) The curve X represents the firm's _______ curve.

Accepted Answer

A)  marginal cost 
B)  average total cost 
C)  average fixed cost 
D)  average variable cost 
A)  marginal cost 
B)  average total cost 
C)  average fixed cost 
D)  average variable cost

Question 15

If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:

Accepted Answer

A)  decreased input prices. 
B)  improved utilization of by-products. 
C)  specialization of resources. 
D)  limited decision-making capacity. 
A)  decreased input prices. 
B)  improved utilization of by-products. 
C)  specialization of resources. 
D)  limited decision-making capacity.

Question 16

Firms seek to use factors in the most efficient way in order to maximize profits.

Accepted Answer

A) True 
 B)False

Question 17

Use the following for questions 44-50.
  
-(Exhibit: Total Product and Marginal Product) The marginal product of the second worker is:

Accepted Answer

A)  1.0. 
B)  1.5. 
C)  2.0. 
D)  3.0. 
A)  1.0. 
B)  1.5. 
C)  2.0. 
D)  3.0.

Question 18

When diseconomies of scale outweigh economies of scale, the long-run average cost curve rises.

Accepted Answer

A) True 
 B)False

Question 19

The law of diminishing marginal returns assumes that:

Accepted Answer

A)  technology is constant. 
B)  all costs are variable. 
C)  all inputs are fixed. 
D)  all costs are fixed. 
A)  technology is constant. 
B)  all costs are variable. 
C)  all inputs are fixed. 
D)  all costs are fixed.

Question 20

Use the following for questions 37-43.
Exhibit: Total Product
  
-(Exhibit: Total Product) As units of labor are hired between quantities L₁ and L₂, _______ is ________ and _______ is ________.

Accepted Answer

A)  total product; falling; marginal product; positive 
B)  marginal product; zero; total product; falling 
C)  total product; rising; marginal product; negative 
D)  None of the above is a true statement. 
A)  total product; falling; marginal product; positive 
B)  marginal product; zero; total product; falling 
C)  total product; rising; marginal product; negative 
D)  None of the above is a true statement.

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) The vertical difference between curve B and curve C at any quantity of output is:

Economies and diseconomies of scale account for the shape of the:

Marginal cost, mathematically, is the slope of the:

A firm's marginal cost is:

Profit-maximizing firms seek to maximize output.

Total cost is constant because fixed cost is constant.

At 76 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 42.9.We can conclude that the average product curve at 76 units of labor is:

Increasing marginal returns for the first four units of a variable input is exhibited by the total product sequence:

The costs incurred by a firm in its use of variable factors of production are:

Use the following to answer question(s): Long-Run Average Cost -(Exhibit: Long-Run Average Cost) In the region from O to A, output per period is _ and long-run average cost is _ .

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) Between points A and B, which of the following is (are) true?

Average total cost is:

Suppose a firm is using labor and capital and obtaining the maximum possible output for a given total cost.If the price of labor increases, all other things unchanged, then the firm will:

Use the following to answer question(s): A Firm's Cost Curves -(Exhibit: A Firm's Cost Curves) The curve X represents the firm's _______ curve.

If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:

Firms seek to use factors in the most efficient way in order to maximize profits.

Use the following for questions 44-50. -(Exhibit: Total Product and Marginal Product) The marginal product of the second worker is:

When diseconomies of scale outweigh economies of scale, the long-run average cost curve rises.

The law of diminishing marginal returns assumes that:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) As units of labor are hired between quantities L₁ and L₂, ___ is and _ is ______.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 8: Production and Cost

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) The vertical difference between curve B and curve C at any quantity of output is:

Economies and diseconomies of scale account for the shape of the:

Marginal cost, mathematically, is the slope of the:

A firm's marginal cost is:

Profit-maximizing firms seek to maximize output.

Total cost is constant because fixed cost is constant.

At 76 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 42.9.We can conclude that the average product curve at 76 units of labor is:

Increasing marginal returns for the first four units of a variable input is exhibited by the total product sequence:

The costs incurred by a firm in its use of variable factors of production are:

Use the following to answer question(s): Long-Run Average Cost -(Exhibit: Long-Run Average Cost) In the region from O to A, output per period is _______ and long-run average cost is _______ .

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) Between points A and B, which of the following is (are) true?

Average total cost is:

Suppose a firm is using labor and capital and obtaining the maximum possible output for a given total cost.If the price of labor increases, all other things unchanged, then the firm will:

Use the following to answer question(s): A Firm's Cost Curves -(Exhibit: A Firm's Cost Curves) The curve X represents the firm's _______ curve.

If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:

Firms seek to use factors in the most efficient way in order to maximize profits.

Use the following for questions 44-50. -(Exhibit: Total Product and Marginal Product) The marginal product of the second worker is:

When diseconomies of scale outweigh economies of scale, the long-run average cost curve rises.

The law of diminishing marginal returns assumes that:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) As units of labor are hired between quantities L₁ and L₂, _______ is ________ and _______ is ________.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Use the following to answer question(s): Long-Run Average Cost -(Exhibit: Long-Run Average Cost) In the region from O to A, output per period is _ and long-run average cost is _ .

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) As units of labor are hired between quantities L₁ and L₂, ___ is and _ is ______.