Question 1

"Diminishing marginal returns" means that:

Accepted Answer

A)  each additional unit of an input used will decrease output. 
B)  each additional unit of an input used will increase output, but by smaller and smaller amounts. 
C)  each additional unit of an input used will increase output by larger and larger amounts. 
D)  the firm is maximizing profit. 
A)  each additional unit of an input used will decrease output. 
B)  each additional unit of an input used will increase output, but by smaller and smaller amounts. 
C)  each additional unit of an input used will increase output by larger and larger amounts. 
D)  the firm is maximizing profit.

Question 2

In the third of the three ranges of production:

Accepted Answer

A)  the total product curve has an increasing slope. 
B)  the marginal product curve has a positive slope. 
C)  the marginal product curve intersects the total product curve. 
D)  total product declines. 
A)  the total product curve has an increasing slope. 
B)  the marginal product curve has a positive slope. 
C)  the marginal product curve intersects the total product curve. 
D)  total product declines.

Question 3

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

Accepted Answer

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

Question 4

When marginal cost is above 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 5

Which of the following statements is a "true" statement?

Accepted Answer

A)  The world's food supply could be grown in a flower pot, if the law of diminishing returns did not hold! 
B)  The law of diminishing returns is another example of the statement, "That's okay in theory but not in practice." 
C)  No factor of production could ever be employed in such large quantities as to produce a marginal product that is negative. 
D)  Total product must always go up when a firm hires more inputs. 
A)  The world's food supply could be grown in a flower pot, if the law of diminishing returns did not hold! 
B)  The law of diminishing returns is another example of the statement, "That's okay in theory but not in practice." 
C)  No factor of production could ever be employed in such large quantities as to produce a marginal product that is negative. 
D)  Total product must always go up when a firm hires more inputs.

Question 6

The slope of the total cost curve is:

Accepted Answer

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

Question 7

Marginal cost _______ over the range of increasing marginal returns and _______ over the range of diminishing marginal returns.

Accepted Answer

A)  increases; falls 
B)  falls; increases 
C)  is constant; rises 
D)  increases; is constant 
A)  increases; falls 
B)  falls; increases 
C)  is constant; rises 
D)  increases; is constant

Question 8

A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  labor-intensive production. 
D)  capital-intensive production. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  labor-intensive production. 
D)  capital-intensive production.

Question 9

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)  lower wages. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  improved utilization of by-products. 
A)  lower wages. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  improved utilization of by-products.

Question 10

In the long run, all costs are:

Accepted Answer

A)  fixed. 
B)  constant. 
C)  variable. 
D)  marginal. 
A)  fixed. 
B)  constant. 
C)  variable. 
D)  marginal.

Question 11

A factor of production whose quantity can be changed during a particular period is a:

Accepted Answer

A)  marginal factor of production. 
B)  fixed factor of production. 
C)  incremental factor of production. 
D)  variable factor of production. 
A)  marginal factor of production. 
B)  fixed factor of production. 
C)  incremental factor of production. 
D)  variable factor of production.

Question 12

At 30 units of output, a firm's marginal cost and average variable cost each equal $10.Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost:

Accepted Answer

A)  is greater than $10 and its average variable cost is less than $10. 
B)  is less than $10 and its average variable cost is more than $10. 
C)  and its average variable cost are each greater than $10. 
D)  and its average variable cost are each equal to $10. 
A)  is greater than $10 and its average variable cost is less than $10. 
B)  is less than $10 and its average variable cost is more than $10. 
C)  and its average variable cost are each greater than $10. 
D)  and its average variable cost are each equal to $10.

Question 13

The slope of the total product curve:

Accepted Answer

A)  shows how output changes in response to a change in the quantity of a variable factor of production. 
B)  is the average product. 
C)  is the marginal product. 
D)  is described by A and C. 
A)  shows how output changes in response to a change in the quantity of a variable factor of production. 
B)  is the average product. 
C)  is the marginal product. 
D)  is described by A and C.

Question 14

The law of diminishing marginal returns holds that the:

Accepted Answer

A)  marginal product of any variable factor of production will eventually decline, assuming the quantities of other factors of production are given. 
B)  total product of any variable factor of production will eventually decline, all other things unchanged. 
C)  total product can only increase so long, because factors of production eventually become tired or wear out. 
D)  marginal product of any variable factor of production will at some point decline, because it will eventually become burdened with an excess and overwhelming abundance of other factors in the long run. 
A)  marginal product of any variable factor of production will eventually decline, assuming the quantities of other factors of production are given. 
B)  total product of any variable factor of production will eventually decline, all other things unchanged. 
C)  total product can only increase so long, because factors of production eventually become tired or wear out. 
D)  marginal product of any variable factor of production will at some point decline, because it will eventually become burdened with an excess and overwhelming abundance of other factors in the long run.

Question 15

If marginal cost is less than average total cost, then average total cost is decreasing.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  $0.10. 
B)  $0.20. 
C)  $0.80. 
D)  $0.90. 
A)  $0.10. 
B)  $0.20. 
C)  $0.80. 
D)  $0.90.

Question 17

Marginal product is the change is labor divided by the change in output.

Accepted Answer

A) True 
 B)False

Question 18

Average variable cost is:

Accepted Answer

A)  the firm's variable cost per unit multiplied by the quantity. 
B)  total variable cost divided by quantity. 
C)  the difference between average total cost and total variable cost. 
D)  the difference between total cost and total variable cost. 
A)  the firm's variable cost per unit multiplied by the quantity. 
B)  total variable cost divided by quantity. 
C)  the difference between average total cost and total variable cost. 
D)  the difference between total cost and total variable cost.

Question 19

At 130,000 units of output, a firm's marginal cost and average total cost are both $0.75.We can conclude that at this quantity of output the firm's average total cost curve is:

Accepted Answer

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

Question 20

The slope of the total product curve is:

Accepted Answer

A)  the change in the variable factor of production divided by the change in output. 
B)  always negative. 
C)  always positive. 
D)  the change in output divided by the change in the variable factor of production. 
A)  the change in the variable factor of production divided by the change in output. 
B)  always negative. 
C)  always positive. 
D)  the change in output divided by the change in the variable factor of production.

"Diminishing marginal returns" means that:

In the third of the three ranges of production:

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

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

Which of the following statements is a "true" statement?

The slope of the total cost curve is:

Marginal cost _ over the range of increasing marginal returns and _ over the range of diminishing marginal returns.

A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:

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

In the long run, all costs are:

A factor of production whose quantity can be changed during a particular period is a:

At 30 units of output, a firm's marginal cost and average variable cost each equal $10.Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost:

The slope of the total product curve:

The law of diminishing marginal returns holds that the:

If marginal cost is less than average total cost, then average total cost is decreasing.

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

Marginal product is the change is labor divided by the change in output.

Average variable cost is:

At 130,000 units of output, a firm's marginal cost and average total cost are both $0.75.We can conclude that at this quantity of output the firm's average total cost curve is:

The slope of the total product curve 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

"Diminishing marginal returns" means that:

In the third of the three ranges of production:

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

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

Which of the following statements is a "true" statement?

The slope of the total cost curve is:

Marginal cost _______ over the range of increasing marginal returns and _______ over the range of diminishing marginal returns.

A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:

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

In the long run, all costs are:

A factor of production whose quantity can be changed during a particular period is a:

At 30 units of output, a firm's marginal cost and average variable cost each equal $10.Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost:

The slope of the total product curve:

The law of diminishing marginal returns holds that the:

If marginal cost is less than average total cost, then average total cost is decreasing.

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

Marginal product is the change is labor divided by the change in output.

Average variable cost is:

At 130,000 units of output, a firm's marginal cost and average total cost are both $0.75.We can conclude that at this quantity of output the firm's average total cost curve is:

The slope of the total product curve 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

Marginal cost _ over the range of increasing marginal returns and _ over the range of diminishing marginal returns.