Question 1

What is the term for the situation where a firm's output is less than economic capacity?

Accepted Answer

A) Capacity output. 
B) Total capacity. 
C) Explicit capacity. 
D) Excess capacity. 
A) Capacity output. 
B) Total capacity. 
C) Explicit capacity. 
D) Excess capacity.

Question 2

-Refer to the graph above to answer this question.At what output does excess capacity exists?

Accepted Answer

A) 180. 
B) 200. 
C) Any output above 180. 
D) Any output below 180. 
A) 180. 
B) 200. 
C) Any output above 180. 
D) Any output below 180.

Question 3

Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of average variable cost when it is at a minimum?

Accepted Answer

A) $4. 
B) $4.44. 
C) $15. 
D) $40. 
A) $4. 
B) $4.44. 
C) $15. 
D) $40.

Question 4

Below are some production data for Quite Simple Products Ltd.
  
-Refer to the information above to answer this question.What is the average product of the sixth unit of labour?

Accepted Answer

A) 6. 
B) 20. 
C) 31. 
D) 35. 
E) 210. 
A) 6. 
B) 20. 
C) 31. 
D) 35. 
E) 210.

Question 5

The graph below illustrates the average and marginal product of labour for Get Smart Enterprises.
  
-Refer to the graph above to answer this question.How many units of labour does the firm need to employ to achieve an output that minimizes average variable cost?

Accepted Answer

A) 1. 
B) 3. 
C) 6. 
D) 9. 
E) 12. 
A) 1. 
B) 3. 
C) 6. 
D) 9. 
E) 12.

Question 6

Below are some financial data for the Do Drop In convenience store.
   The owners have put $40,000 into the business and they worked a total of 80 hours during the week.Savings accounts are currently paying 5.2% interest and the going wage rate is $8 per hour.
-Refer to the information above to answer this question.What is the week's economic profit for the Do Drop In?

Accepted Answer

A) -$320. 
B) -$40. 
C) $280. 
D) $320. 
E) $1,050. 
A) -$320. 
B) -$40. 
C) $280. 
D) $320. 
E) $1,050.

Question 7

-Refer to the graph above to answer this question.What is the most productive output?

Accepted Answer

A) 1. 
B) 6. 
C) 8. 
D) 11. 
A) 1. 
B) 6. 
C) 8. 
D) 11.

Question 8

"A downward shift in the average fixed cost curve will lead to a downward shift in the marginal cost curve." Evaluate this statement.

Accepted Answer

This statement is incorrect.Fi

Question 9

Differentiate between the short-run and the long-run.

Accepted Answer

The short-run is defined as a time perio

Question 10

-Refer to the graph above to answer this question.Which curve illustrates average variable cost?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 11

Stefanie is presently working part time as an activities facilitator at a local community centre where she earns $1,400 a month.She is not happy with her job and is thinking of returning to college to do a two-year program to upgrade her skills.She has estimated the costs of doing this as follows:
   What would be an economist's estimate of the cost of Stefanie taking the two-year programme?

Accepted Answer

(4,200 * 2)+ (800 *

Question 12

Draw and correctly label a typical set of AFC,ATC,AVC,and MC cost curves.

Accepted Answer

The correc

Question 13

What is the term for the annual cost of wear of any asset that is expected to be in use for more than a year?

Accepted Answer

A) Diminishing returns. 
B) Marginal cost. 
C) Depreciation. 
D) Sunk cost. 
E) Explicit cost. 
A) Diminishing returns. 
B) Marginal cost. 
C) Depreciation. 
D) Sunk cost. 
E) Explicit cost.

Question 14

All of the following statements,except one,are correct.Which is the exception?

Accepted Answer

A) If the marginal cost curve shifts down,then the average total cost curve will also shift down. 
B) If the marginal cost curve shifts down,then the average variable cost curve will also shift down. 
C) The average fixed cost curve will be unaffected by a shift in the marginal cost curve. 
D) If the marginal product curve shifts up,then the marginal cost curve will shift up. 
E) If the marginal product curve shifts up,then the average product curve will shift up. 
A) If the marginal cost curve shifts down,then the average total cost curve will also shift down. 
B) If the marginal cost curve shifts down,then the average variable cost curve will also shift down. 
C) The average fixed cost curve will be unaffected by a shift in the marginal cost curve. 
D) If the marginal product curve shifts up,then the marginal cost curve will shift up. 
E) If the marginal product curve shifts up,then the average product curve will shift up.

Question 15

Why would firms want to operate at an output level above economic capacity?

Accepted Answer

In the short run they might wish to temp

Question 16

-The upward shift of the average total cost curve from ATC1 to ATC2 implies that:

Accepted Answer

A) Economic capacity is at a higher output level. 
B) Economic capacity is at a lower output level. 
C) Economic capacity is at the same level. 
D) Economic capacity cannot be determined. 
A) Economic capacity is at a higher output level. 
B) Economic capacity is at a lower output level. 
C) Economic capacity is at the same level. 
D) Economic capacity cannot be determined.

Question 17

-Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of marginal cost when it is at a minimum?

Accepted Answer

A) $4. 
B) $5. 
C) $15. 
D) $40. 
A) $4. 
B) $5. 
C) $15. 
D) $40.

Question 18

-What term describes output where average total cost is at a minimum?

Accepted Answer

A) Excess capacity. 
B) Economic capacity. 
C) Economic profits. 
D) Marginal capacity. 
A) Excess capacity. 
B) Economic capacity. 
C) Economic profits. 
D) Marginal capacity.

Question 19

-Refer to the information above to answer this question.If total variable cost decreases by 20% at all levels of output,what is AVC when output is 20?

Accepted Answer

A) $4 
B) $6 
C) $6.95 
D) $16 
E) $20 
A) $4 
B) $6 
C) $6.95 
D) $16 
E) $20

Question 20

What is amount of the opportunity cost of a sunk cost? Explain

Accepted Answer

A sunk cost is irreversible co

What is the term for the situation where a firm's output is less than economic capacity?

-Refer to the graph above to answer this question.At what output does excess capacity exists?

Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of average variable cost when it is at a minimum?

Below are some production data for Quite Simple Products Ltd. -Refer to the information above to answer this question.What is the average product of the sixth unit of labour?

The graph below illustrates the average and marginal product of labour for Get Smart Enterprises. -Refer to the graph above to answer this question.How many units of labour does the firm need to employ to achieve an output that minimizes average variable cost?

-Refer to the graph above to answer this question.What is the most productive output?

"A downward shift in the average fixed cost curve will lead to a downward shift in the marginal cost curve." Evaluate this statement.

Differentiate between the short-run and the long-run.

-Refer to the graph above to answer this question.Which curve illustrates average variable cost?

Draw and correctly label a typical set of AFC,ATC,AVC,and MC cost curves.

What is the term for the annual cost of wear of any asset that is expected to be in use for more than a year?

All of the following statements,except one,are correct.Which is the exception?

Why would firms want to operate at an output level above economic capacity?

-The upward shift of the average total cost curve from ATC₁ to ATC₂ implies that:

-Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of marginal cost when it is at a minimum?

-What term describes output where average total cost is at a minimum?

-Refer to the information above to answer this question.If total variable cost decreases by 20% at all levels of output,what is AVC when output is 20?

What is amount of the opportunity cost of a sunk cost? Explain

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 6: A Firms Production Decisions and Costs in the Short Run

What is the term for the situation where a firm's output is less than economic capacity?

-Refer to the graph above to answer this question.At what output does excess capacity exists?

Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of average variable cost when it is at a minimum?

Below are some production data for Quite Simple Products Ltd. -Refer to the information above to answer this question.What is the average product of the sixth unit of labour?

The graph below illustrates the average and marginal product of labour for Get Smart Enterprises. -Refer to the graph above to answer this question.How many units of labour does the firm need to employ to achieve an output that minimizes average variable cost?

-Refer to the graph above to answer this question.What is the most productive output?

"A downward shift in the average fixed cost curve will lead to a downward shift in the marginal cost curve." Evaluate this statement.

Differentiate between the short-run and the long-run.

-Refer to the graph above to answer this question.Which curve illustrates average variable cost?

Draw and correctly label a typical set of AFC,ATC,AVC,and MC cost curves.

What is the term for the annual cost of wear of any asset that is expected to be in use for more than a year?

All of the following statements,except one,are correct.Which is the exception?

Why would firms want to operate at an output level above economic capacity?

-The upward shift of the average total cost curve from ATC1 to ATC2 implies that:

-Use Table 6.6 to answer this question.Assuming that the only variable input is labour and all units of labour cost the same,what is the value of marginal cost when it is at a minimum?

-What term describes output where average total cost is at a minimum?

-Refer to the information above to answer this question.If total variable cost decreases by 20% at all levels of output,what is AVC when output is 20?

What is amount of the opportunity cost of a sunk cost? Explain

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

-The upward shift of the average total cost curve from ATC₁ to ATC₂ implies that: