Question 1

If production displays constant returns to scale, then all economies of scale have been exhausted.

Accepted Answer

A) True 
 B)False

Question 2

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Accepted Answer

A)  explicit cost of production. 
B)  marginal cost of production. 
C)  average cost of production. 
D)  implicit cost of production. 
A)  explicit cost of production. 
B)  marginal cost of production. 
C)  average cost of production. 
D)  implicit cost of production.

Question 3

Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?

Accepted Answer

A)  The marginal product of the sixth worker must be negative. 
B)  The average product of the sixth worker is negative. 
C)  The sixth worker is not as skilled as the fifth worker. 
D)  The total product becomes negative. 
A)  The marginal product of the sixth worker must be negative. 
B)  The average product of the sixth worker is negative. 
C)  The sixth worker is not as skilled as the fifth worker. 
D)  The total product becomes negative.

Question 4

Which of the following are examples of a firm experiencing a positive technological change?
a. A firm is able to reduce its inputs by 15 per cent and still produce the same level of output.
b. A seminar attended by the firm's workers makes them more productive.
c. A firm adds 5 per cent to its workforce and is able to maintain its initial level of output.
d. A firm restructures its distribution system and is able to save on its shipping times.
e. A firm rearranges its warehouse and finds that it can use fewer workers to maintain its productivity level.

Accepted Answer

Examples a, b, d, and e are examples of

Question 5

If a producer is not able to expand its plant capacity immediately, it is

Accepted Answer

A)  bankrupt. 
B)  operating in the long run. 
C)  operating in the short run. 
D)  losing money. 
A)  bankrupt. 
B)  operating in the long run. 
C)  operating in the short run. 
D)  losing money.

Question 6

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Accepted Answer

A)  a long-run production function. 
B)  a long-run marginal cost curve. 
C)  a minimum efficient scale curve. 
D)  a long-run average total cost curve. 
A)  a long-run production function. 
B)  a long-run marginal cost curve. 
C)  a minimum efficient scale curve. 
D)  a long-run average total cost curve.

Question 7

-Refer to Table 7-7. What is the variable cost of production when the firm produces 115 lanterns?

Accepted Answer

A)  $1556 
B)  $1157 
C)  $956 
D)  $10.05 
A)  $1556 
B)  $1157 
C)  $956 
D)  $10.05

Question 8

Long-run cost curves are U-shaped because

Accepted Answer

A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply. 
A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply.

Question 9

-Refer to Figure 7-11. Constant returns to scale

Accepted Answer

A)  occur for output rates greater than 5000 picture frames. 
B)  occur between 5000 and 20 000 picture frames per month. 
C)  occur between 10 000 and 20 000 pictures frames per month. 
D)  will shift the long-run average cost curve downward. 
A)  occur for output rates greater than 5000 picture frames. 
B)  occur between 5000 and 20 000 picture frames per month. 
C)  occur between 10 000 and 20 000 pictures frames per month. 
D)  will shift the long-run average cost curve downward.

Question 10

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 11

-Refer to Figure 7-1. The average product of the 4th worker

Accepted Answer

A)  is 68. 
B)  is 17. 
C)  is 11. 
D)  cannot be determined. 
A)  is 68. 
B)  is 17. 
C)  is 11. 
D)  cannot be determined.

Question 12

What are economies of scale? What are diseconomies of scale?

Accepted Answer

Economies of scale occur when

Question 13

Stan owns a software design business. He does not have time to expand his office space or redesign the layout of his office. He can increase the amount of work he does by working more hours, asking his current employees to work more hours, or hiring more employees. The relationship between Stan's inputs and the maximum output his firm can produce is called his

Accepted Answer

A)  long-run production function. 
B)  production possibility frontier. 
C)  short-run production function. 
D)  cost function. 
A)  long-run production function. 
B)  production possibility frontier. 
C)  short-run production function. 
D)  cost function.

Question 14

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

Accepted Answer

A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. 
A)  The shape of the LRATC is affected by the law of diminishing returns. 
B)  The SRATC, but not the LRATC, can be used by a firm's managers for planning. 
C)  The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D)  The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

Question 15

In the long run, all of a firm's inputs are variable.

Accepted Answer

A) True 
 B)False

Question 16

-Refer to Table 7-8. Elegant Settings experiences

Accepted Answer

A)  economies of scale up to an output level of 400. 
B)  diminishing returns up to an output level of 400. 
C)  increasing returns beyond an output level of 400. 
D)  economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400. 
A)  economies of scale up to an output level of 400. 
B)  diminishing returns up to an output level of 400. 
C)  increasing returns beyond an output level of 400. 
D)  economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400.

Question 17

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in

Question 18

Costs that change as output changes are called incremental costs.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following are implicit costs for a typical firm?

Accepted Answer

A)  the cost of labour 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee 
A)  the cost of labour 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee

Question 20

Maria's Yiros House sells yiros. The cost of ingredients (pita, meat, spices, etc.) to make a yiros is $2.00. Maria's pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Accepted Answer

A)  $100 
B)  $124.40 
C)  $220 
D)  $340 
A)  $100 
B)  $124.40 
C)  $220 
D)  $340

If production displays constant returns to scale, then all economies of scale have been exhausted.

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?

If a producer is not able to expand its plant capacity immediately, it is

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

-Refer to Table 7-7. What is the variable cost of production when the firm produces 115 lanterns?

Long-run cost curves are U-shaped because

-Refer to Figure 7-11. Constant returns to scale

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

-Refer to Figure 7-1. The average product of the 4th worker

What are economies of scale? What are diseconomies of scale?

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

In the long run, all of a firm's inputs are variable.

-Refer to Table 7-8. Elegant Settings experiences

State the law of diminishing marginal returns.

Costs that change as output changes are called incremental costs.

Which of the following are implicit costs for a typical firm?

Maria's Yiros House sells yiros. The cost of ingredients (pita, meat, spices, etc.) to make a yiros is $2.00. Maria's pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 7: Technology , Production and Costs

If production displays constant returns to scale, then all economies of scale have been exhausted.

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?

If a producer is not able to expand its plant capacity immediately, it is

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

-Refer to Table 7-7. What is the variable cost of production when the firm produces 115 lanterns?

Long-run cost curves are U-shaped because

-Refer to Figure 7-11. Constant returns to scale

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

-Refer to Figure 7-1. The average product of the 4th worker

What are economies of scale? What are diseconomies of scale?

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

In the long run, all of a firm's inputs are variable.

-Refer to Table 7-8. Elegant Settings experiences

State the law of diminishing marginal returns.

Costs that change as output changes are called incremental costs.

Which of the following are implicit costs for a typical firm?

Maria's Yiros House sells yiros. The cost of ingredients (pita, meat, spices, etc.) to make a yiros is $2.00. Maria's pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters