Question 1

The long-run average cost (LRAC) curve shows:

Accepted Answer

A)  the firm's cost per unit at each level of output. 
B)  the firm's average of total fixed and total variable costs at each level of output. 
C)  the firm's total variable costs averaged for each level of input. 
D)  the firm's total cost at each level of output. 
A)  the firm's cost per unit at each level of output. 
B)  the firm's average of total fixed and total variable costs at each level of output. 
C)  the firm's total variable costs averaged for each level of input. 
D)  the firm's total cost at each level of output.

Question 2

A university that benefits from lower costs per unit as it grows is an example of:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  increasing opportunity costs. 
D)  scale reduction. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  increasing opportunity costs. 
D)  scale reduction.

Question 3

If the slope of the total product curve is decreasing, the slope of the total variable cost curve is:

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  unchanged. 
D)  at its minimum value. 
A)  increasing. 
B)  decreasing. 
C)  unchanged. 
D)  at its minimum value.

Question 4

When diseconomies of scale outweigh economies of scale, the:

Accepted Answer

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

Question 5

Use the following to answer question(s): Short-Run Costs
  
-(Exhibit: Short-Run Costs) Curve A crosses the average variable cost curve at:

Accepted Answer

A)  approximately 2.8 units of output. 
B)  approximately 5.3 units of output. 
C)  the minimum value of curve B. 
D)  the level of output where diminishing marginal returns begin. 
A)  approximately 2.8 units of output. 
B)  approximately 5.3 units of output. 
C)  the minimum value of curve B. 
D)  the level of output where diminishing marginal returns begin.

Question 6

Marginal cost _______ over the range of _______ , then _______ over the range of _______ .

Accepted Answer

A)  falls; increasing marginal returns; rises; diminishing marginal returns 
B)  rises; increasing marginal returns; falls; diminishing marginal returns 
C)  falls; decreasing returns; rises; increasing returns 
D)  rises; diminishing marginal returns; falls; constant marginal returns 
A)  falls; increasing marginal returns; rises; diminishing marginal returns 
B)  rises; increasing marginal returns; falls; diminishing marginal returns 
C)  falls; decreasing returns; rises; increasing returns 
D)  rises; diminishing marginal returns; falls; constant marginal returns

Question 7

Use the following for questions 53-56.
  
-(Exhibit: Production of Bagels) The marginal product of the fifth worker is:

Accepted Answer

A)  5,000. 
B)  9,000. 
C)  10,000. 
D)  12,000. 
A)  5,000. 
B)  9,000. 
C)  10,000. 
D)  12,000.

Question 8

A relationship between output and the quantity of a variable factor of production used in a period, given the levels of all other factors of production is a(n):

Accepted Answer

A)  budget constraint. 
B)  planning curve. 
C)  indifference curve. 
D)  total product curve. 
A)  budget constraint. 
B)  planning curve. 
C)  indifference curve. 
D)  total product curve.

Question 9

Diminishing marginal returns occurs when marginal product is falling and below zero.

Accepted Answer

A) True 
 B)False

Question 10

If the total costs per day of producing 96, 97, 98, 99, and 100 T-shirts are $200, $217, $237, $255, and $280, respectively, the marginal cost of the 100th T-shirt is $280.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer question(s):    
-(Exhibit: Costs of Producing Bagels) The total cost of producing two bagels is:

Accepted Answer

A)  $0.10. 
B)  $0.20. 
C)  $0.40. 
D)  $0.50. 
A)  $0.10. 
B)  $0.20. 
C)  $0.40. 
D)  $0.50.

Question 12

Use the following to answer question(s): Short-Run Costs
  
-(Exhibit: Short-Run Costs) At 6 units of output, average fixed cost is approximately:

Accepted Answer

A)  $50 
B)  $70 
C)  $120 
D)  $150 
A)  $50 
B)  $70 
C)  $120 
D)  $150

Question 13

Marginal cost is the:

Accepted Answer

A)  increase in total cost when one more unit of output is produced. 
B)  reduction in cost from economies of scale. 
C)  ratio of average total cost to total cost. 
D)  increase in output from the addition of one unit of labor. 
A)  increase in total cost when one more unit of output is produced. 
B)  reduction in cost from economies of scale. 
C)  ratio of average total cost to total cost. 
D)  increase in output from the addition of one unit of labor.

Question 14

At any one time:

Accepted Answer

A)  a firm must make only short-run or long-run decisions. 
B)  a firm will be making both short-run and long-run decisions. 
C)  the firm will find it most efficient to make only short-run decisions. 
D)  the firm will make only long-run decisions. 
A)  a firm must make only short-run or long-run decisions. 
B)  a firm will be making both short-run and long-run decisions. 
C)  the firm will find it most efficient to make only short-run decisions. 
D)  the firm will make only long-run decisions.

Question 15

Use the following for questions 37-43.
Exhibit: Total Product
  
-(Exhibit: Total Product) After hiring L₂ units of labor and producing at point B on the total product curve, hiring more units of labor would result in which of the following statements being true?

Accepted Answer

A)  The marginal product of labor is rising. 
B)  The marginal product of labor is negative. 
C)  Total product is negative. 
D)  Average product is negative. 
A)  The marginal product of labor is rising. 
B)  The marginal product of labor is negative. 
C)  Total product is negative. 
D)  Average product is negative.

Question 16

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

Accepted Answer

A)  increasing; increasing 
B)  decreasing; increasing 
C)  increasing; decreasing 
D)  decreasing; decreasing 
A)  increasing; increasing 
B)  decreasing; increasing 
C)  increasing; decreasing 
D)  decreasing; decreasing

Question 17

The slope of the total product curve is the average product curve.

Accepted Answer

A) True 
 B)False

Question 18

If a firm produces 10 units of output and incurs $35 in average total cost and $5 in average fixed cost, total variable cost is:

Accepted Answer

A)  $35. 
B)  $50. 
C)  $300. 
D)  $350. 
A)  $35. 
B)  $50. 
C)  $300. 
D)  $350.

Question 19

When a firm experiences diminishing marginal returns:

Accepted Answer

A)  its output is falling. 
B)  marginal product is falling, yet it is still positive. 
C)  total product is going up, even though marginal product is falling. 
D)  B and C are true. 
A)  its output is falling. 
B)  marginal product is falling, yet it is still positive. 
C)  total product is going up, even though marginal product is falling. 
D)  B and C are true.

Question 20

Use the following for questions 44-50.
  
-(Exhibit: Total Product and Marginal Product) The average product of the 4th worker is ________ units.

Accepted Answer

A)  2.0 
B)  2.25 
C)  5.0 
D)  9.0 
A)  2.0 
B)  2.25 
C)  5.0 
D)  9.0

The long-run average cost (LRAC) curve shows:

A university that benefits from lower costs per unit as it grows is an example of:

If the slope of the total product curve is decreasing, the slope of the total variable cost curve is:

When diseconomies of scale outweigh economies of scale, the:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) Curve A crosses the average variable cost curve at:

Marginal cost ___ over the range of _ , then _ over the range of ___ .

Use the following for questions 53-56. -(Exhibit: Production of Bagels) The marginal product of the fifth worker is:

A relationship between output and the quantity of a variable factor of production used in a period, given the levels of all other factors of production is a(n):

Diminishing marginal returns occurs when marginal product is falling and below zero.

If the total costs per day of producing 96, 97, 98, 99, and 100 T-shirts are $200, $217, $237, $255, and $280, respectively, the marginal cost of the 100th T-shirt is $280.

Use the following to answer question(s): -(Exhibit: Costs of Producing Bagels) The total cost of producing two bagels is:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) At 6 units of output, average fixed cost is approximately:

Marginal cost is the:

At any one time:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) After hiring L₂ units of labor and producing at point B on the total product curve, hiring more units of labor would result in which of the following statements being true?

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

The slope of the total product curve is the average product curve.

If a firm produces 10 units of output and incurs $35 in average total cost and $5 in average fixed cost, total variable cost is:

When a firm experiences diminishing marginal returns:

Use the following for questions 44-50. -(Exhibit: Total Product and Marginal Product) The average product of the 4th worker is ________ units.

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

The long-run average cost (LRAC) curve shows:

A university that benefits from lower costs per unit as it grows is an example of:

If the slope of the total product curve is decreasing, the slope of the total variable cost curve is:

When diseconomies of scale outweigh economies of scale, the:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) Curve A crosses the average variable cost curve at:

Marginal cost _______ over the range of _______ , then _______ over the range of _______ .

Use the following for questions 53-56. -(Exhibit: Production of Bagels) The marginal product of the fifth worker is:

A relationship between output and the quantity of a variable factor of production used in a period, given the levels of all other factors of production is a(n):

Diminishing marginal returns occurs when marginal product is falling and below zero.

If the total costs per day of producing 96, 97, 98, 99, and 100 T-shirts are $200, $217, $237, $255, and $280, respectively, the marginal cost of the 100th T-shirt is $280.

Use the following to answer question(s): -(Exhibit: Costs of Producing Bagels) The total cost of producing two bagels is:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) At 6 units of output, average fixed cost is approximately:

Marginal cost is the:

At any one time:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) After hiring L₂ units of labor and producing at point B on the total product curve, hiring more units of labor would result in which of the following statements being true?

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

The slope of the total product curve is the average product curve.

If a firm produces 10 units of output and incurs $35 in average total cost and $5 in average fixed cost, total variable cost is:

When a firm experiences diminishing marginal returns:

Use the following for questions 44-50. -(Exhibit: Total Product and Marginal Product) The average product of the 4th worker is ________ units.

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

Marginal cost ___ over the range of _ , then _ over the range of ___ .

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