Question 1

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays __________.

Accepted Answer

A)  increasing returns to scale 
B)  constant returns to scale 
C)  decreasing returns to scale 
D)  constant average fixed costs 
A)  increasing returns to scale 
B)  constant returns to scale 
C)  decreasing returns to scale 
D)  constant average fixed costs

Question 2

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the sixth carpenter is eight chairs,what is the marginal product of the seventh carpenter?

Accepted Answer

A)  Negative 
B)  Less than eight chairs 
C)  More than eight chairs 
D)  Zero 
A)  Negative 
B)  Less than eight chairs 
C)  More than eight chairs 
D)  Zero

Question 3

Table 6.1
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Mushrooms per } \
\text { Day (metrics) }
\end{array} \
\hline 1 & 12 \
\hline 2 & 30 \
\hline 3 & 45 \
\hline 4 & 50 \
\hline 5 & 54 \
\hline 6 & 56 \
\hline
\end{array}$$ Table 6.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 6.1.The marginal product of the fourth worker is _________.

Accepted Answer

A)  137 metrics 
B)  50 metrics 
C)  12.5 metrics 
D)  5 metrics 
A)  137 metrics 
B)  50 metrics 
C)  12.5 metrics 
D)  5 metrics

Question 4

If,when a firm doubles all its inputs,its average cost of production decreases,then production displays ________.

Accepted Answer

A)  diminishing returns 
B)  economies of scale 
C)  diseconomies of scale 
D)  declining fixed costs 
A)  diminishing returns 
B)  economies of scale 
C)  diseconomies of scale 
D)  declining fixed costs

Question 5

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlour.
a.The payment he makes to buy tattoo ink.
b.The wages he pays his employees.
c.The $500-per-month payment he makes to advertise his shop on highway billboards.
d.The lease payment he makes to the landlord who owns the building where his shop is located.
e.The payment he makes on his liability insurance policy.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

c,d,and e are fixed costs because they d

Question 6

Figure 6.7   Figure 6.7 shows the cost structure for a firm.
-Refer to Figure 6.7.When output level is 100,the total cost of production is ________.

Accepted Answer

A)  $20 
B)  $1 000 
C)  $1 200 
D)  $2 000 
A)  $20 
B)  $1 000 
C)  $1 200 
D)  $2 000

Question 7

Figure 6.9  
-Refer to Figure 6.9 above to solve the following problems.
a.Calculate the fixed cost of production.
b.Calculate the average total cost of production when the firm produces 20 units of output.
c.Calculate the average variable cost of production when the firm produces 20 units of output.
d.Calculate the average fixed cost of production when the firm produces 20 units of output.
e.Calculate the average fixed cost of production when the firm produces 15 units of output.
f.If the firm increases output from 15 to 20 units what is the marginal cost of output?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.$100
b.$

Question 8

If,when a firm doubles all its inputs,its average cost of production increases,then production displays ________.

Accepted Answer

A)  diminishing returns 
B)  economies of scale 
C)  diseconomies of scale 
D)  declining fixed costs 
A)  diminishing returns 
B)  economies of scale 
C)  diseconomies of scale 
D)  declining fixed costs

Question 9

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into ________.

Accepted Answer

A)  morning and evening 
B)  6 months or less; 6 months to 1 year; more than 1 year 
C)  a fixed period and a variable period 
D)  the short run and the long run 
A)  morning and evening 
B)  6 months or less; 6 months to 1 year; more than 1 year 
C)  a fixed period and a variable period 
D)  the short run and the long run

Question 10

Which statement is true about the law of diminishing marginal returns?

Accepted Answer

A)  It sets in because not all workers are equally productive. 
B)  It applies only in the short run. 
C)  It holds even when there are no fixed factors. 
D)  It ultimately explains why production displays diseconomies of scale. 
A)  It sets in because not all workers are equally productive. 
B)  It applies only in the short run. 
C)  It holds even when there are no fixed factors. 
D)  It ultimately explains why production displays diseconomies of scale.

Question 11

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 12

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 13

Damian owns a tattoo parlour and has hired three tattoo artists to work for him.The marginal product of labour is 8 for the first artist,12 for the second artist,and 7 for the third artist.What is Damian's average product of labour for these three tattoo artists?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The average product of labour

Question 14

In the long run _________.

Accepted Answer

A)  the firm's fixed costs are greater than its fixed costs in the short run. 
B)  all of the firm's costs are explicit costs; there are no implicit costs of production. 
C)  the firm is more profitable than it is in the short run. 
D)  all of the firm's costs are variable costs. 
A)  the firm's fixed costs are greater than its fixed costs in the short run. 
B)  all of the firm's costs are explicit costs; there are no implicit costs of production. 
C)  the firm is more profitable than it is in the short run. 
D)  all of the firm's costs are variable costs.

Question 15

Table 6.2
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Apples per Day } \
\text { (bushels) }
\end{array} \
\hline 1 & 50 \
\hline 2 & 120 \
\hline 3 & 180 \
\hline 4 & 230 \
\hline 5 & 270 \
\hline 6 & 300 \
\hline
\end{array}$$ Table 6.2 summarises production at the Crunchy Apple Orchard for the month of April 2005.
-Refer to Table 6.2.The marginal product of the fourth worker is ________.

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 16

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.Constant returns to scale __________.

Accepted Answer

A)  occur for output rates greater than 5 000 picture frames 
B)  occur between 5 000 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 5 000 picture frames 
B)  occur between 5 000 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 17

What is true at the minimum efficient scale?

Accepted Answer

A)  All possible economies of scale have not been exhausted. 
B)  The firm has achieved the lowest possible average cost of production. 
C)  Any increases in the scale of operation will encounter further economies of scale. 
D)  Marginal cost is at its minimum. 
A)  All possible economies of scale have not been exhausted. 
B)  The firm has achieved the lowest possible average cost of production. 
C)  Any increases in the scale of operation will encounter further economies of scale. 
D)  Marginal cost is at its minimum.

Question 18

In the short run,marginal product of labour increases at first and then falls because _________.

Accepted Answer

A)  as more labour is hired, they are not as skilled as the first ones hired 
B)  there are fewer opportunities for division of labour and specialisation when fewer workers are hired 
C)  managerial inefficiency sets in when a firm gets too large 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive 
A)  as more labour is hired, they are not as skilled as the first ones hired 
B)  there are fewer opportunities for division of labour and specialisation when fewer workers are hired 
C)  managerial inefficiency sets in when a firm gets too large 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive

Question 19

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays __________.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the sixth carpenter is eight chairs,what is the marginal product of the seventh carpenter?

Table 6.1 Number of Workers Mushrooms per Day (metrics) 1 12 2 30 3 45 4 50 5 54 6 56 Table 6.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 6.1.The marginal product of the fourth worker is _________.

If,when a firm doubles all its inputs,its average cost of production decreases,then production displays ________.

Figure 6.7 Figure 6.7 shows the cost structure for a firm. -Refer to Figure 6.7.When output level is 100,the total cost of production is ________.

If,when a firm doubles all its inputs,its average cost of production increases,then production displays ________.

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into ________.

Which statement is true about the law of diminishing marginal returns?

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

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 ________.

In the long run _________.

Table 6.2 Number of Workers Apples per Day (bushels) 1 50 2 120 3 180 4 230 5 270 6 300 Table 6.2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 6.2.The marginal product of the fourth worker is ________.

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: ATC_a, ATC_b_, and ATC_c. -Refer to Figure 6.11.Constant returns to scale __________.

What is true at the minimum efficient scale?

In the short run,marginal product of labour increases at first and then falls because _________.

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

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

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

Exam 6: Technology,production and Costs

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays __________.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the sixth carpenter is eight chairs,what is the marginal product of the seventh carpenter?

Table 6.1 Number of Workers Mushrooms per Day (metrics) 1 12 2 30 3 45 4 50 5 54 6 56 Table 6.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 6.1.The marginal product of the fourth worker is _________.

If,when a firm doubles all its inputs,its average cost of production decreases,then production displays ________.

Figure 6.7 Figure 6.7 shows the cost structure for a firm. -Refer to Figure 6.7.When output level is 100,the total cost of production is ________.

If,when a firm doubles all its inputs,its average cost of production increases,then production displays ________.

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into ________.

Which statement is true about the law of diminishing marginal returns?

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

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 ________.

In the long run _________.

Table 6.2 Number of Workers Apples per Day (bushels) 1 50 2 120 3 180 4 230 5 270 6 300 Table 6.2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 6.2.The marginal product of the fourth worker is ________.

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: ATCa, ATCb, and ATCc. -Refer to Figure 6.11.Constant returns to scale __________.

What is true at the minimum efficient scale?

In the short run,marginal product of labour increases at first and then falls because _________.

An important reason why diseconomies of scale arise is because firms may have to hire lower-skilled workers as firms expand.

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

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

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: ATC_a, ATC_b_, and ATC_c. -Refer to Figure 6.11.Constant returns to scale __________.