Question 1

-The downward 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 2

-Refer to the information above to answer this question.What is the value of marginal cost at economic capacity?

Accepted Answer

A) $5. 
B) $6. 
C) $8. 
D) $12. 
E) $80. 
A) $5. 
B) $6. 
C) $8. 
D) $12. 
E) $80.

Question 3

Which of the following statements is true about the average product of labour?

Accepted Answer

A) It is equal to total output divided by the quantity of labour inputs used. 
B) It is equal to the increase in total output divided by the quantity of labour used. 
C) It is equal to the change in the marginal product of labour. 
D) It is equal to the quantity of labour inputs used divided by total output. 
A) It is equal to total output divided by the quantity of labour inputs used. 
B) It is equal to the increase in total output divided by the quantity of labour used. 
C) It is equal to the change in the marginal product of labour. 
D) It is equal to the quantity of labour inputs used divided by total output.

Question 4

What term is used to describe the result of adding more and more units of a variable resource to a production process where there is at least one fixed variable and the resulting increase in output begins to decrease?

Accepted Answer

A) Depreciation. 
B) The law of increasing productivity. 
C) The law of marginal productivity. 
D) The law of diminishing returns. 
A) Depreciation. 
B) The law of increasing productivity. 
C) The law of marginal productivity. 
D) The law of diminishing returns.

Question 5

What will happen to total product after the point of diminishing returns has been reached?

Accepted Answer

A) It will continue to rise until marginal product becomes zero. 
B) It will continue to rise until marginal product begins to decline. 
C) It will begin to fall. 
D) It will start to rise for the first time. 
A) It will continue to rise until marginal product becomes zero. 
B) It will continue to rise until marginal product begins to decline. 
C) It will begin to fall. 
D) It will start to rise for the first time.

Question 6

The division of labour is the dividing of the production process into a series of specialized tasks,each done by a different worker.

Accepted Answer

A) True 
 B)False

Question 7

What is the difference between normal profits and economic profits?

Accepted Answer

Normal profit is the profit th

Question 8

What is the law of diminishing returns?

Accepted Answer

A) As more of a fixed input is added to a variable input in the production process the resulting increase in output will,at some point,accelerate. 
B) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,accelerate. 
C) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,diminish. 
D) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,become negative. 
A) As more of a fixed input is added to a variable input in the production process the resulting increase in output will,at some point,accelerate. 
B) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,accelerate. 
C) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,diminish. 
D) As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,become negative.

Question 9

Complete the following table.

Accepted Answer

The answer of Complete the following table.
  ...

Question 10

-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Curve 1 illustrates marginal product while curve 3 illustrates average variable cost. 
B) Curve 1 illustrates average variable cost while curve 3 illustrates marginal product. 
C) Curve 1 illustrates average product while curve 3 illustrates average variable cost. 
D) Curve 2 illustrates marginal product while curve 3 illustrates average variable cost. 
E) The most productive output is best illustrated by curves 1 and 4. 
A) Curve 1 illustrates marginal product while curve 3 illustrates average variable cost. 
B) Curve 1 illustrates average variable cost while curve 3 illustrates marginal product. 
C) Curve 1 illustrates average product while curve 3 illustrates average variable cost. 
D) Curve 2 illustrates marginal product while curve 3 illustrates average variable cost. 
E) The most productive output is best illustrated by curves 1 and 4.

Question 11

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

Accepted Answer

A) $10 
B) $12 
C) $16 
D) $30 
E) $80 
A) $10 
B) $12 
C) $16 
D) $30 
E) $80

Question 12

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 are the week's total explicit costs for the Do Drop In?

Accepted Answer

A) $3,160. 
B) $4,440. 
C) $6,300. 
D) $6,900. 
E) $7,580. 
A) $3,160. 
B) $4,440. 
C) $6,300. 
D) $6,900. 
E) $7,580.

Question 13

Which of the following conditions is necessary in order to consider a cost a sunk cost?

Accepted Answer

A) It must have occurred over six months ago. 
B) It must have occurred as a result of the purchase of a fixed asset. 
C) It must have occurred as a result of the purchase of a fixed asset and have no resale value. 
D) It must have occurred as a result of the purchase of a fixed asset and be fully paid for. 
A) It must have occurred over six months ago. 
B) It must have occurred as a result of the purchase of a fixed asset. 
C) It must have occurred as a result of the purchase of a fixed asset and have no resale value. 
D) It must have occurred as a result of the purchase of a fixed asset and be fully paid for.

Question 14

What is total variable cost?

Accepted Answer

A) Those costs that do not vary with the level of output. 
B) The total of all costs that vary with the level of output. 
C) The sum of both total fixed cost and marginal cost. 
D) The increase in total variable cost as a result of producing one more unit of output. 
A) Those costs that do not vary with the level of output. 
B) The total of all costs that vary with the level of output. 
C) The sum of both total fixed cost and marginal cost. 
D) The increase in total variable cost as a result of producing one more unit of output.

Question 15

The data in the table is for a firm in which labour is the only variable cost and each unit of labour costs the same regardless of how many units are bought.
  
-Refer to the information above to answer this question.What is the value of TVC if 7 units of labour are used?

Accepted Answer

A) $70. 
B) $100. 
C) $130.2. 
D) $700. 
E) $910. 
A) $70. 
B) $100. 
C) $130.2. 
D) $700. 
E) $910.

Question 16

Marginal product is the increase in total product as a result of adding one more unit of output.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a type of business organization that firms can form?

Accepted Answer

A) Sole proprietor. 
B) Unlimited partnership. 
C) Non-profit organization. 
D) Crown corporation. 
A) Sole proprietor. 
B) Unlimited partnership. 
C) Non-profit organization. 
D) Crown corporation.

Question 18

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 economic capacity?

Accepted Answer

A) 3. 
B) 6. 
C) 9. 
D) 12. 
E) Cannot be determined. 
A) 3. 
B) 6. 
C) 9. 
D) 12. 
E) Cannot be determined.

Question 19

Which of the following statements is true about the division of labour?

Accepted Answer

A) It causes the marginal product of labour to increase,but it has no effect on the average product of labour. 
B) It was first thought of by David Ricardo in his example of a hat factory. 
C) It is an idea that has little application in the real world. 
D) Its application results in both the marginal and average product of labour increasing. 
A) It causes the marginal product of labour to increase,but it has no effect on the average product of labour. 
B) It was first thought of by David Ricardo in his example of a hat factory. 
C) It is an idea that has little application in the real world. 
D) Its application results in both the marginal and average product of labour increasing.

Question 20

The short run is a period of time in which the output is fixed.

Accepted Answer

A) True 
 B)False

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

-Refer to the information above to answer this question.What is the value of marginal cost at economic capacity?

Which of the following statements is true about the average product of labour?

What term is used to describe the result of adding more and more units of a variable resource to a production process where there is at least one fixed variable and the resulting increase in output begins to decrease?

What will happen to total product after the point of diminishing returns has been reached?

The division of labour is the dividing of the production process into a series of specialized tasks,each done by a different worker.

What is the difference between normal profits and economic profits?

What is the law of diminishing returns?

Complete the following table.

-Refer to the graph above to answer this question.Which of the following statements is correct?

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

Which of the following conditions is necessary in order to consider a cost a sunk cost?

What is total variable cost?

The data in the table is for a firm in which labour is the only variable cost and each unit of labour costs the same regardless of how many units are bought. -Refer to the information above to answer this question.What is the value of TVC if 7 units of labour are used?

Marginal product is the increase in total product as a result of adding one more unit of output.

Which of the following is not a type of business organization that firms can form?

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 economic capacity?

Which of the following statements is true about the division of labour?

The short run is a period of time in which the output is fixed.

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

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

-Refer to the information above to answer this question.What is the value of marginal cost at economic capacity?

Which of the following statements is true about the average product of labour?

What term is used to describe the result of adding more and more units of a variable resource to a production process where there is at least one fixed variable and the resulting increase in output begins to decrease?

What will happen to total product after the point of diminishing returns has been reached?

The division of labour is the dividing of the production process into a series of specialized tasks,each done by a different worker.

What is the difference between normal profits and economic profits?

What is the law of diminishing returns?

Complete the following table.

-Refer to the graph above to answer this question.Which of the following statements is correct?

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

Which of the following conditions is necessary in order to consider a cost a sunk cost?

What is total variable cost?

The data in the table is for a firm in which labour is the only variable cost and each unit of labour costs the same regardless of how many units are bought. -Refer to the information above to answer this question.What is the value of TVC if 7 units of labour are used?

Marginal product is the increase in total product as a result of adding one more unit of output.

Which of the following is not a type of business organization that firms can form?

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 economic capacity?

Which of the following statements is true about the division of labour?

The short run is a period of time in which the output is fixed.

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 downward shift of the average total cost curve from ATC₁ to ATC₂ implies that: