Question 1

An isoquant shows

Accepted Answer

A)  the combinations of two goods that yield the same total satisfaction. 
B)  the combinations of two inputs that yield the same total product. 
C)  the combinations of two inputs that cost the same total quantity of money. 
D)  the combination of two goods that cost the same amount of money. 
A)  the combinations of two goods that yield the same total satisfaction. 
B)  the combinations of two inputs that yield the same total product. 
C)  the combinations of two inputs that cost the same total quantity of money. 
D)  the combination of two goods that cost the same amount of money.

Question 2

-Refer to Table 7-2. What is the marginal product of the 4th worker?

Accepted Answer

A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels 
A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels

Question 3

The slope of an isocost line determines the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 4

-Refer to Table 7-6. Alicia Gregory owns a foot massage business. She leases 4 computer-controlled massage booths, for which she pays $125 per day. She cannot increase the number machines she leases without giving the manufacturer 3 months notice. She can hire as many workers as she wants at a cost of $75 per day per worker. These are the only two inputs she uses in her business. Use this information to fill in the columns in the above table.

Accepted Answer

The answer of 
-Refer to Table 7-6. Alicia Gregory owns...

Question 5

A downward-sloping marginal product of labour curve demonstrates the law of diminishing marginal returns.

Accepted Answer

A) True 
 B)False

Question 6

The marginal product of labour is defined as

Accepted Answer

A)  the change in total revenue that results when an additional unit of a labour is hired. 
B)  the additional labour required to produce one more unit of output. 
C)  the additional labour cost of producing one more unit of output. 
D)  the change in output that a firm produces as a result of hiring one more worker. 
A)  the change in total revenue that results when an additional unit of a labour is hired. 
B)  the additional labour required to produce one more unit of output. 
C)  the additional labour cost of producing one more unit of output. 
D)  the change in output that a firm produces as a result of hiring one more worker.

Question 7

-Refer to Table 7-4. The table above shows the following relationship between hours spent fishing and the quantity of fish caught for Juan, a commercial fisherman.
a. Complete the Marginal Product column in Table 11-4.
b. Characterise the production function, i.e. does the production function display increasing marginal returns, diminishing marginal returns, etc.
c. Using the data above, graph Juan's marginal product curve. Be sure to label the horizontal and vertical axes. Is your graph consistent with your answer to part (b)? Explain.
d. Juan uses the following inputs for fishing - a small wooden boat (B), a fishing pole (P) and of course, his labour (L). Treating the boat and the fishing pole as fixed inputs and using the data above, graph Juan's Total Product of labour curve. Be sure to label the horizontal and vertical axes.
e. (Extra Credit) The opportunity cost of Juan's time is $8 per hour. If Juan receives $2 per pound for his fish, what is the optimal number of hours he should spend fishing? Explain how you arrived at your answer. Hint: Recall marginal benefit and marginal cost analysis.

Accepted Answer

equals the

Question 8

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 9

-Refer to Figure 7-1. The marginal product of the 7th worker is

Accepted Answer

A)  66. 
B)  9.43. 
C)  2. 
D)  -2. 
A)  66. 
B)  9.43. 
C)  2. 
D)  -2.

Question 10

Which of the following would be categorised as an opportunity cost? a. not being able to spend your $10 000 savings if you sink the money into your business
B. the cost of purchasing supplies for your house-cleaning business
C. the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above 
A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above

Question 11

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Accepted Answer

A)  postage and supplies 
B)  travel 
C)  rent 
D)  wages and salaries 
A)  postage and supplies 
B)  travel 
C)  rent 
D)  wages and salaries

Question 12

If the marginal cost curve is below the average variable cost curve, then

Accepted Answer

A)  average variable cost is increasing. 
B)  average variable cost is decreasing. 
C)  marginal cost must be decreasing. 
D)  average variable cost could either be increasing or decreasing. 
A)  average variable cost is increasing. 
B)  average variable cost is decreasing. 
C)  marginal cost must be decreasing. 
D)  average variable cost could either be increasing or decreasing.

Question 13

The division of labour and specialisation explain

Accepted Answer

A)  why, when the marginal product of labour increases, so does the average product of labour. 
B)  why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labour rises as a firm hires its first units of labour. 
D)  why firms may find it profitable to use more workers when the marginal product of labour is negative. 
A)  why, when the marginal product of labour increases, so does the average product of labour. 
B)  why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labour rises as a firm hires its first units of labour. 
D)  why firms may find it profitable to use more workers when the marginal product of labour is negative.

Question 14

Which of the following describes how output changes in the short run? Because of specialisation and the division of labour, as more workers are hired

Accepted Answer

A)  output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B)  output will first decrease at an increasing rate, then increase at a decreasing rate. 
C)  the marginal product of labour will first decrease, then increase at a decreasing rate. 
D)  the marginal product of labour will first be negative and then will be positive. 
A)  output will first increase at an increasing rate, then output will increase at a decreasing rate. 
B)  output will first decrease at an increasing rate, then increase at a decreasing rate. 
C)  the marginal product of labour will first decrease, then increase at a decreasing rate. 
D)  the marginal product of labour will first be negative and then will be positive.

Question 15

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an example of positive technological change?

Accepted Answer

A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards. 
B)  A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. 
A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards. 
B)  A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Question 17

Which of the following is not a reason why firms experience economies of scale?

Accepted Answer

A)  Technology can make it possible to increase production with a smaller increase in at least one input. 
B)  Workers and managers can become more specialised, enabling them to be more productive. 
C)  Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D)  As output increases, the managers can begin to have difficulty coordinating the operations of their firms. 
A)  Technology can make it possible to increase production with a smaller increase in at least one input. 
B)  Workers and managers can become more specialised, enabling them to be more productive. 
C)  Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D)  As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Question 18

If marginal product is equal to average product, then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 19

Suppose the price of capital and labour remain constant but that the average educational level of workers has increased and therefore, productivity of labour increases. This would lead a firm

Accepted Answer

A)  to adopt a more capital-intensive production technology. 
B)  to adopt a more labour-intensive technology. 
C)  to keep its output and production technology unchanged but use fewer units of labour. 
D)  to use only labour to produce the product. 
A)  to adopt a more capital-intensive production technology. 
B)  to adopt a more labour-intensive technology. 
C)  to keep its output and production technology unchanged but use fewer units of labour. 
D)  to use only labour to produce the product.

Question 20

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

Accepted Answer

A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units. 
A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units.

An isoquant shows

-Refer to Table 7-2. What is the marginal product of the 4th worker?

The slope of an isocost line determines the marginal rate of substitution.

A downward-sloping marginal product of labour curve demonstrates the law of diminishing marginal returns.

The marginal product of labour is defined as

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

-Refer to Figure 7-1. The marginal product of the 7th worker is

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

If the marginal cost curve is below the average variable cost curve, then

The division of labour and specialisation explain

Which of the following describes how output changes in the short run? Because of specialisation and the division of labour, as more workers are hired

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Which of the following is an example of positive technological change?

Which of the following is not a reason why firms experience economies of scale?

If marginal product is equal to average product, then total product is at a maximum.

Suppose the price of capital and labour remain constant but that the average educational level of workers has increased and therefore, productivity of labour increases. This would lead a firm

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

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

An isoquant shows

-Refer to Table 7-2. What is the marginal product of the 4th worker?

The slope of an isocost line determines the marginal rate of substitution.

A downward-sloping marginal product of labour curve demonstrates the law of diminishing marginal returns.

The marginal product of labour is defined as

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

-Refer to Figure 7-1. The marginal product of the 7th worker is

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

If the marginal cost curve is below the average variable cost curve, then

The division of labour and specialisation explain

Which of the following describes how output changes in the short run? Because of specialisation and the division of labour, as more workers are hired

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Which of the following is an example of positive technological change?

Which of the following is not a reason why firms experience economies of scale?

If marginal product is equal to average product, then total product is at a maximum.

Suppose the price of capital and labour remain constant but that the average educational level of workers has increased and therefore, productivity of labour increases. This would lead a firm

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

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