Question 1

When an increase in the firm's output reduces its long-run average cost, it experiences:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  variable returns to scale. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  variable returns to scale.

Question 2

Use the following to answer question(s):    
-(Exhibit: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

Accepted Answer

A)  $0.05. 
B)  $0.10. 
C)  $0.30. 
D)  $0.40. 
A)  $0.05. 
B)  $0.10. 
C)  $0.30. 
D)  $0.40.

Question 3

The Case in Point on The Production of Fitness made the point that:

Accepted Answer

A)  when it comes to fitness, more exercise always generates increasing marginal benefits. 
B)  working out every day is better than taking a day or two off when it comes to building up aerobic capacity. 
C)  the law of diminishing returns applies to athletic training. 
D)  the law of diminishing returns doesn't apply to aerobic exercise. 
A)  when it comes to fitness, more exercise always generates increasing marginal benefits. 
B)  working out every day is better than taking a day or two off when it comes to building up aerobic capacity. 
C)  the law of diminishing returns applies to athletic training. 
D)  the law of diminishing returns doesn't apply to aerobic exercise.

Question 4

In the long run, a firm seeks the combination of two factors a and b such that:

Accepted Answer

A)  MPₐ/Pₐ = MPb/Pb. 
B)  MPₐ/Pₐ  MPb/Pb. 
D)  MPₐ/MPb < Pₐ/Pb. 
A)  MPₐ/Pₐ = MPb/Pb. 
B)  MPₐ/Pₐ  MPb/Pb. 
D)  MPₐ/MPb < Pₐ/Pb.

Question 5

A factor of production whose quantity cannot 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 6

Use the following to answer question(s): Long-Run Average Cost
  
-(Exhibit: Long-Run Average Cost) Output per period in the region B to C indicates that a firm is experiencing:

Accepted Answer

A)  constant returns to scale. 
B)  diseconomies of scale. 
C)  economies of scale. 
D)  falling marginal cost. 
A)  constant returns to scale. 
B)  diseconomies of scale. 
C)  economies of scale. 
D)  falling marginal cost.

Question 7

At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42.We can conclude that the average product curve at 36 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

If a firm uses two factors, labor (L) and capital (K), and MPL/PL > MPK/PK, the firm should use more _______ and _______ .

Accepted Answer

A)  capital; less labor 
B)  labor; less capital 
C)  labor; more capital 
D)  capital; more labor 
A)  capital; less labor 
B)  labor; less capital 
C)  labor; more capital 
D)  capital; more labor

Question 9

Use the following for questions 53-56.
  
-(Exhibit: Production of Bagels) Negative marginal returns occur with the addition of the ________ worker.

Accepted Answer

A)  fifth 
B)  sixth 
C)  eighth 
D)  ninth 
A)  fifth 
B)  sixth 
C)  eighth 
D)  ninth

Question 10

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, total cost is:

Accepted Answer

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

Question 11

Average variable cost is the ratio of:

Accepted Answer

A)  total cost to the marginal cost. 
B)  total cost to the amount of variable input. 
C)  variable cost to the quantity of output. 
D)  marginal cost to the quantity of output. 
A)  total cost to the marginal cost. 
B)  total cost to the amount of variable input. 
C)  variable cost to the quantity of output. 
D)  marginal cost to the quantity of output.

Question 12

Heavenly Delights, an ice cream maker, has discovered that the ratio of the marginal product of labor to the price of labor is 4.5, while the ratio of the marginal product of capital to the price of capital is 6.9.The firm has determined that it does not want to change its total costs.Heavenly Delights 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)  give up ice cream production and produce broccoli instead. 
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)  give up ice cream production and produce broccoli instead.

Question 13

In the long run:

Accepted Answer

A)  all inputs are fixed. 
B)  inputs are neither variable nor fixed. 
C)  at least one input is variable and one input is fixed. 
D)  all inputs are variable. 
A)  all inputs are fixed. 
B)  inputs are neither variable nor fixed. 
C)  at least one input is variable and one input is fixed. 
D)  all inputs are variable.

Question 14

A farm can produce 1,000 bushels of wheat per year with 2 workers and 1,300 bushels of wheat per year with 3 workers.The marginal product of the third worker is:

Accepted Answer

A)  100 bushels. 
B)  300 bushels. 
C)  1,300 bushels. 
D)  2,300 bushels. 
A)  100 bushels. 
B)  300 bushels. 
C)  1,300 bushels. 
D)  2,300 bushels.

Question 15

Total cost is equal to the quantity of output multiplied by the sum of fixed cost and variable cost.

Accepted Answer

A) True 
 B)False

Question 16

In the second of the three ranges of production:

Accepted Answer

A)  the total product curve has a decreasing slope. 
B)  the marginal product curve has a positive slope. 
C)  the marginal product curve intersects the total product curve. 
D)  marginal product is negative. 
A)  the total product curve has a decreasing slope. 
B)  the marginal product curve has a positive slope. 
C)  the marginal product curve intersects the total product curve. 
D)  marginal product is negative.

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

A)  $0.10. 
B)  $0.15. 
C)  $0.20. 
D)  $0.80. 
A)  $0.10. 
B)  $0.15. 
C)  $0.20. 
D)  $0.80.

Question 19

At 50 units of output, a firm's average variable cost is $30.Therefore, its:

Accepted Answer

A)  average total cost is $30. 
B)  average total cost is greater than $30. 
C)  average total cost is less than $30. 
D)  marginal cost is $30. 
A)  average total cost is $30. 
B)  average total cost is greater than $30. 
C)  average total cost is less than $30. 
D)  marginal cost is $30.

Question 20

At quantities greater than the long-run least per-unit cost quantity of output, the long-run average cost curve is tangent to the _______ of the corresponding short-run average cost curve.

Accepted Answer

A)  minimum 
B)  maximum 
C)  right of the minimum 
D)  left of the minimum 
A)  minimum 
B)  maximum 
C)  right of the minimum 
D)  left of the minimum

When an increase in the firm's output reduces its long-run average cost, it experiences:

Use the following to answer question(s): -(Exhibit: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

The Case in Point on The Production of Fitness made the point that:

In the long run, a firm seeks the combination of two factors a and b such that:

A factor of production whose quantity cannot be changed during a particular period is a:

Use the following to answer question(s): Long-Run Average Cost -(Exhibit: Long-Run Average Cost) Output per period in the region B to C indicates that a firm is experiencing:

At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42.We can conclude that the average product curve at 36 units of labor is:

If a firm uses two factors, labor (L) and capital (K), and MPL/PL > MPK/PK, the firm should use more _ and _ .

Use the following for questions 53-56. -(Exhibit: Production of Bagels) Negative marginal returns occur with the addition of the ________ worker.

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, total cost is:

Average variable cost is the ratio of:

In the long run:

A farm can produce 1,000 bushels of wheat per year with 2 workers and 1,300 bushels of wheat per year with 3 workers.The marginal product of the third worker is:

Total cost is equal to the quantity of output multiplied by the sum of fixed cost and variable cost.

In the second 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 W represents the firm's _______ curve.

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

At 50 units of output, a firm's average variable cost is $30.Therefore, its:

At quantities greater than the long-run least per-unit cost quantity of output, the long-run average cost curve is tangent to the _______ of the corresponding short-run average cost curve.

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 an increase in the firm's output reduces its long-run average cost, it experiences:

Use the following to answer question(s): -(Exhibit: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

The Case in Point on The Production of Fitness made the point that:

In the long run, a firm seeks the combination of two factors a and b such that:

A factor of production whose quantity cannot be changed during a particular period is a:

Use the following to answer question(s): Long-Run Average Cost -(Exhibit: Long-Run Average Cost) Output per period in the region B to C indicates that a firm is experiencing:

At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42.We can conclude that the average product curve at 36 units of labor is:

If a firm uses two factors, labor (L) and capital (K), and MPL/PL > MPK/PK, the firm should use more _______ and _______ .

Use the following for questions 53-56. -(Exhibit: Production of Bagels) Negative marginal returns occur with the addition of the ________ worker.

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, total cost is:

Average variable cost is the ratio of:

In the long run:

A farm can produce 1,000 bushels of wheat per year with 2 workers and 1,300 bushels of wheat per year with 3 workers.The marginal product of the third worker is:

Total cost is equal to the quantity of output multiplied by the sum of fixed cost and variable cost.

In the second 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 W represents the firm's _______ curve.

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

At 50 units of output, a firm's average variable cost is $30.Therefore, its:

At quantities greater than the long-run least per-unit cost quantity of output, the long-run average cost curve is tangent to the _______ of the corresponding short-run average cost curve.

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

If a firm uses two factors, labor (L) and capital (K), and MPL/PL > MPK/PK, the firm should use more _ and _ .