Question 1

Figure 6.7   Figure 6.7 shows the cost structure for a firm.
-Refer to Figure 6.7.If output is 100 units,fixed cost of production is ________.

Accepted Answer

A)  $8 
B)  $800 
C)  $1 000 
D)  This cannot be determined from the diagram. 
A)  $8 
B)  $800 
C)  $1 000 
D)  This cannot be determined from the diagram. B

Question 2

Which of the following statements is true?

Accepted Answer

A)  An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B)  Economic costs include both explicit costs and implicit costs. 
C)  An explicit cost is more important, dollar for dollar, than an implicit cost. 
D)  Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs. 
A)  An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B)  Economic costs include both explicit costs and implicit costs. 
C)  An explicit cost is more important, dollar for dollar, than an implicit cost. 
D)  Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs. B

Question 3

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Assume the two companies are on ATC₁.If they merge,they would move to ATC₂ and be on the section of the long-run average cost curve that exhibits diseconomies of scale.

Question 4

If average total cost is $50 and average fixed cost is $15 when output is 20 units,what is the firm's total variable cost at that level of output?

Accepted Answer

A)  $1 000 
B)  $700 
C)  $300 
D)  Impossible to determine without additional information. 
A)  $1 000 
B)  $700 
C)  $300 
D)  Impossible to determine without additional information.

Question 5

In economics,technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 6

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory.In the following graph,the relationship between costs and output for the smaller factory is represented by the curve ATC1,and the relationship between costs and output for the larger factory is represented by the curve ATC2.   a.If Argyle expects to produce 3 600 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain.
b.If Argyle expects to produce 5 000 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain.
c.If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6 500 sweaters per week,why isn't it also lower when Argyle produces 4 000 sweaters per week?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.Argyle's costs will be lower with a sm

Question 7

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm ________.

Accepted Answer

A)  experiences an increase in demand 
B)  experiences positive technological change 
C)  will hire more workers in order to produce more output 
D)  is operating in the short run 
A)  experiences an increase in demand 
B)  experiences positive technological change 
C)  will hire more workers in order to produce more output 
D)  is operating in the short run

Question 8

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

Accepted Answer

A)  the result of economies of scale 
B)  the definition of marginal product 
C)  the definition of marginal cost 
D)  impossible to observe in large firms with many manufacturing plants 
A)  the result of economies of scale 
B)  the definition of marginal product 
C)  the definition of marginal cost 
D)  impossible to observe in large firms with many manufacturing plants

Question 9

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Figure 6.11   Figure 6.11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCS1U1B1aS1U1B0, ATCS1U1B1bS1U1B0S1U1B1,S1U1B0 and ATCS1U1B1cS1U1B0.
-Refer to Figure 6.11.At what rate of output is the minimum efficient scale of output reached?

Accepted Answer

A)  10 000 workers 
B)  5 000 picture frames 
C)  20 000 picture frames 
D)  10 000 picture frames 
A)  10 000 workers 
B)  5 000 picture frames 
C)  20 000 picture frames 
D)  10 000 picture frames

Question 12

Figure 6.3   Fancy Footwear manufactures shoes. Figure 6.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 6.3.For what quantity of labour does production display diminishing returns?

Accepted Answer

A)  For more than 1 unit of labour 
B)  For more than 4 units of labour 
C)  For more than 5 units of labour 
D)  For more than 8 units of labour 
A)  For more than 1 unit of labour 
B)  For more than 4 units of labour 
C)  For more than 5 units of labour 
D)  For more than 8 units of labour

Question 13

Which of the following is a characteristic of the long run?

Accepted Answer

A)  There are fixed inputs. 
B)  All inputs can be varied. 
C)  Plant capacity cannot be increased or decreased. 
D)  There are both fixed and variable inputs. 
A)  There are fixed inputs. 
B)  All inputs can be varied. 
C)  Plant capacity cannot be increased or decreased. 
D)  There are both fixed and variable inputs.

Question 14

As output increases,average fixed cost gets smaller and smaller.

Accepted Answer

A) True 
 B)False

Question 15

The statement that correctly describes the distinction between technology and technological change is:

Accepted Answer

A)  Technology refers to the processes used by a firm to transform inputs into output of goods and services, while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs, and technological change is the process by which the firm achieves this productivity gain. 
C)  Technology is product-centred in that it refers to developing new products with limited resources, while technological change is process-centred in that it focuses on developing new production techniques. 
D)  Technology involves research and development, while technological change involves the use of more efficient machinery. 
A)  Technology refers to the processes used by a firm to transform inputs into output of goods and services, while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs, and technological change is the process by which the firm achieves this productivity gain. 
C)  Technology is product-centred in that it refers to developing new products with limited resources, while technological change is process-centred in that it focuses on developing new production techniques. 
D)  Technology involves research and development, while technological change involves the use of more efficient machinery.

Question 16

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

Accepted Answer

A)  Opportunity costs of capital owned and used by the firm 
B)  The cost of labour hired by the firm 
C)  Utilities cost 
D)  A business licensing fee 
A)  Opportunity costs of capital owned and used by the firm 
B)  The cost of labour hired by the firm 
C)  Utilities cost 
D)  A business licensing fee

Question 17

What is true,in the short run,if marginal product is at its maximum?

Accepted Answer

A)  Average cost is at its minimum. 
B)  Average variable cost is at its minimum. 
C)  Marginal cost is at its minimum. 
D)  Total cost is at its maximum. 
A)  Average cost is at its minimum. 
B)  Average variable cost is at its minimum. 
C)  Marginal cost is at its minimum. 
D)  Total cost is at its maximum.

Question 18

If a firm produces 20 units of output and incurs a total cost of $1 000,and the variable cost is $700,what is the firm's average fixed cost of production if it expands output to 25 units?

Accepted Answer

A)  $300 
B)  $15 
C)  $12 
D)  It is impossible to determine without additional information. 
A)  $300 
B)  $15 
C)  $12 
D)  It is impossible to determine without additional information.

Question 19

Consider a manufacturing operation that uses specialised machinery and labour to produce its output.In this case,the input that is not fixed in the short run is labour.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  $2.00 
B)  $2.40 
C)  $4.40 
D)  $6.80 
A)  $2.00 
B)  $2.40 
C)  $4.40 
D)  $6.80

Figure 6.7 Figure 6.7 shows the cost structure for a firm. -Refer to Figure 6.7.If output is 100 units,fixed cost of production is ________.

Which of the following statements is true?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,what is the firm's total variable cost at that level of output?

In economics,technology only refers to the development of new products.

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm ________.

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

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

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

Figure 6.3 Fancy Footwear manufactures shoes. Figure 6.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 6.3.For what quantity of labour does production display diminishing returns?

Which of the following is a characteristic of the long run?

As output increases,average fixed cost gets smaller and smaller.

The statement that correctly describes the distinction between technology and technological change is:

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

What is true,in the short run,if marginal product is at its maximum?

If a firm produces 20 units of output and incurs a total cost of $1 000,and the variable cost is $700,what is the firm's average fixed cost of production if it expands output to 25 units?

Consider a manufacturing operation that uses specialised machinery and labour to produce its output.In this case,the input that is not fixed in the short run is labour.

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's average fixed 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 From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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Exam 6: Technology,production and Costs

Figure 6.7 Figure 6.7 shows the cost structure for a firm. -Refer to Figure 6.7.If output is 100 units,fixed cost of production is ________.

Which of the following statements is true?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,what is the firm's total variable cost at that level of output?

In economics,technology only refers to the development of new products.

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm ________.

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

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

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

Figure 6.3 Fancy Footwear manufactures shoes. Figure 6.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 6.3.For what quantity of labour does production display diminishing returns?

Which of the following is a characteristic of the long run?

As output increases,average fixed cost gets smaller and smaller.

The statement that correctly describes the distinction between technology and technological change is:

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

What is true,in the short run,if marginal product is at its maximum?

If a firm produces 20 units of output and incurs a total cost of $1 000,and the variable cost is $700,what is the firm's average fixed cost of production if it expands output to 25 units?

Consider a manufacturing operation that uses specialised machinery and labour to produce its output.In this case,the input that is not fixed in the short run is labour.

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's average fixed 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 From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters