Question 1

When a firm maximizes output for a given cost, which of the following is true?

Accepted Answer

A)  MP₁/P₁ = MP₂/P₂ 
B)  P₁/MP₁ > MP₂/P₂ 
C)  MP₁/P₂ = MP₂/P₁ 
D)  MP₁/P₁ > MP₂/P₂ 
A)  MP₁/P₁ = MP₂/P₂ 
B)  P₁/MP₁ > MP₂/P₂ 
C)  MP₁/P₂ = MP₂/P₁ 
D)  MP₁/P₁ > MP₂/P₂

Question 2

Use the following for questions 44-50.
  
-Marginal product:

Accepted Answer

A)  can never increase. 
B)  can only be falling. 
C)  can be less than zero. 
D)  never equals average product. 
A)  can never increase. 
B)  can only be falling. 
C)  can be less than zero. 
D)  never equals average product.

Question 3

Use the following to answer question(s): Short-Run Costs
  
-(Exhibit: Short-Run Costs) At 7 units of output, average fixed cost is approximately _______ , and average variable cost is approximately _______ .

Accepted Answer

A)  $100; $100 
B)  $10; $135 
C)  $40; $ 100 
D)  $140; $140 
A)  $100; $100 
B)  $10; $135 
C)  $40; $ 100 
D)  $140; $140

Question 4

If marginal cost is above average total cost, average total cost must be falling, whether marginal cost is rising or falling.

Accepted Answer

A) True 
 B)False

Question 5

Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1.The firm has determined that it does not want to change its total costs.Bev's Bakery should:

Accepted Answer

A)  do nothing; the differences in the ratios of marginal product to input price are too small to matter. 
B)  use more labor and less capital. 
C)  use more capital and less labor. 
D)  do nothing different since there is insufficient information upon which to make a decision. 
A)  do nothing; the differences in the ratios of marginal product to input price are too small to matter. 
B)  use more labor and less capital. 
C)  use more capital and less labor. 
D)  do nothing different since there is insufficient information upon which to make a decision.

Question 6

Marginal product, mathematically, is the slope of the:

Accepted Answer

A)  total product curve. 
B)  average product curve. 
C)  marginal product curve. 
D)  opportunity product curve. 
A)  total product curve. 
B)  average product curve. 
C)  marginal product curve. 
D)  opportunity product curve.

Question 7

Discuss and explain why, in general, the profit-maximizing firm will seek a combination of factors such that MP₁/P₁ = MP₂/P₂ = Ö = MPn/Pn.

Accepted Answer

The profit-maximizing firm seeks a combi

Question 8

If a firm increases the ratio of capital to labor, it becomes more:

Accepted Answer

A)  labor intensive. 
B)  output intensive. 
C)  capital intensive. 
D)  cost intensive. 
A)  labor intensive. 
B)  output intensive. 
C)  capital intensive. 
D)  cost intensive.

Question 9

Use the following for questions 37-43.
Exhibit: Total Product
  
-(Exhibit: Total Product) When hiring units of labor between zero and L₁ units of labor, which of the following statements is true?

Accepted Answer

A)  The marginal product of labor is increasing. 
B)  The marginal product of labor is decreasing. 
C)  Total product is increasing at a diminishing rate. 
D)  None of the above statements is true. 
A)  The marginal product of labor is increasing. 
B)  The marginal product of labor is decreasing. 
C)  Total product is increasing at a diminishing rate. 
D)  None of the above statements is true.

Question 10

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

Accepted Answer

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

Question 11

If marginal product is less than average product, average product must be falling.

Accepted Answer

A) True 
 B)False

Question 12

The marginal cost curve intersects the total variable cost curve at:

Accepted Answer

A)  its lowest point. 
B)  its maximum. 
C)  its endpoint. 
D)  no point; the curves don't intersect. 
A)  its lowest point. 
B)  its maximum. 
C)  its endpoint. 
D)  no point; the curves don't intersect.

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

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

Question 15

When marginal cost is below average variable cost, average variable cost must be:

Accepted Answer

A)  at its minimum. 
B)  at its maximum. 
C)  falling. 
D)  rising. 
A)  at its minimum. 
B)  at its maximum. 
C)  falling. 
D)  rising.

Question 16

The law stating that if the quantity of a variable factor of production is increased, with the quantities of all other factors given, the marginal product of the variable factor will eventually decline is the law of:

Accepted Answer

A)  demand. 
B)  supply. 
C)  decreasing average production. 
D)  diminishing marginal returns. 
A)  demand. 
B)  supply. 
C)  decreasing average production. 
D)  diminishing marginal returns.

Question 17

In the range of diminishing marginal returns total product is still increasing.

Accepted Answer

A) True 
 B)False

Question 18

It is _______ for a factor of production to have _______ .

Accepted Answer

A)  impossible; negative marginal returns 
B)  possible; negative marginal returns 
C)  impossible; a marginal product of zero 
D)  none of the above are correct 
A)  impossible; negative marginal returns 
B)  possible; negative marginal returns 
C)  impossible; a marginal product of zero 
D)  none of the above are correct

Question 19

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

Accepted Answer

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

Question 20

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

Accepted Answer

A)  the minimum value of Curve B. 
B)  approximately 4.3 units of output. 
C)  approximately 2.8 units of output. 
D)  none of the above points. 
A)  the minimum value of Curve B. 
B)  approximately 4.3 units of output. 
C)  approximately 2.8 units of output. 
D)  none of the above points.

When a firm maximizes output for a given cost, which of the following is true?

Use the following for questions 44-50. -Marginal product:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) At 7 units of output, average fixed cost is approximately _ , and average variable cost is approximately _ .

If marginal cost is above average total cost, average total cost must be falling, whether marginal cost is rising or falling.

Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1.The firm has determined that it does not want to change its total costs.Bev's Bakery should:

Marginal product, mathematically, is the slope of the:

Discuss and explain why, in general, the profit-maximizing firm will seek a combination of factors such that MP₁/P₁ = MP₂/P₂ = Ö = MPn/Pn.

If a firm increases the ratio of capital to labor, it becomes more:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) When hiring units of labor between zero and L₁ units of labor, which of the following statements is true?

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

If marginal product is less than average product, average product must be falling.

The marginal cost curve intersects the total variable cost curve at:

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

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

When marginal cost is below average variable cost, average variable cost must be:

The law stating that if the quantity of a variable factor of production is increased, with the quantities of all other factors given, the marginal product of the variable factor will eventually decline is the law of:

In the range of diminishing marginal returns total product is still increasing.

It is _ for a factor of production to have _ .

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

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

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

When a firm maximizes output for a given cost, which of the following is true?

Use the following for questions 44-50. -Marginal product:

Use the following to answer question(s): Short-Run Costs -(Exhibit: Short-Run Costs) At 7 units of output, average fixed cost is approximately _______ , and average variable cost is approximately _______ .

If marginal cost is above average total cost, average total cost must be falling, whether marginal cost is rising or falling.

Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1.The firm has determined that it does not want to change its total costs.Bev's Bakery should:

Marginal product, mathematically, is the slope of the:

Discuss and explain why, in general, the profit-maximizing firm will seek a combination of factors such that MP₁/P₁ = MP₂/P₂ = Ö = MPn/Pn.

If a firm increases the ratio of capital to labor, it becomes more:

Use the following for questions 37-43. Exhibit: Total Product -(Exhibit: Total Product) When hiring units of labor between zero and L₁ units of labor, which of the following statements is true?

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

If marginal product is less than average product, average product must be falling.

The marginal cost curve intersects the total variable cost curve at:

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

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

When marginal cost is below average variable cost, average variable cost must be:

The law stating that if the quantity of a variable factor of production is increased, with the quantities of all other factors given, the marginal product of the variable factor will eventually decline is the law of:

In the range of diminishing marginal returns total product is still increasing.

It is _______ for a factor of production to have _______ .

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

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

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): Short-Run Costs -(Exhibit: Short-Run Costs) At 7 units of output, average fixed cost is approximately _ , and average variable cost is approximately _ .

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

It is _ for a factor of production to have _ .