Question 1

When the average total cost is $16 and the total cost is $800,how many units is the firm producing?

Accepted Answer

A)  Impossible to determine with the information given. 
B)  12 800 
C)  784 
D)  50 
A)  Impossible to determine with the information given. 
B)  12 800 
C)  784 
D)  50

Question 2

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 3

Is it possible for technological change to be negative? If so,give an example.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Technological change could be negative,f

Question 4

The long run refers to a time period _________.

Accepted Answer

A)  during which a firm is able to purchase all of its inputs, including its plant and equipment 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant 
C)  long enough for a firm to pay all of its creditors in full 
D)  long enough for a firm to change the use of its variable inputs 
A)  during which a firm is able to purchase all of its inputs, including its plant and equipment 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant 
C)  long enough for a firm to pay all of its creditors in full 
D)  long enough for a firm to change the use of its variable inputs

Question 5

If a firm experiences diminishing returns,its marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6.4  
-Refer to Figure 6.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost. 
A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost.

Question 7

Which of the following is true if production displays increasing marginal returns?

Accepted Answer

A)  Total product rises by a constant amount throughout. 
B)  Each new worker hired adds more to output than previous hires. 
C)  The firm must be adding new capital to keep boosting productivity. 
D)  Total product reaches a maximum sooner than if production displayed decreasing returns. 
A)  Total product rises by a constant amount throughout. 
B)  Each new worker hired adds more to output than previous hires. 
C)  The firm must be adding new capital to keep boosting productivity. 
D)  Total product reaches a maximum sooner than if production displayed decreasing returns.

Question 8

Table 6.7
 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Lanterns }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Cost } \
\text { (dollars) }
\end{array} \
\hline 75 & 200 & 170 & 370 & 4.93 \
\hline 80 & 200 & 230 & 430 & 5.36 \
\hline 90 & 200 & & & 7.67 \
\hline 100 & 200 & 810 & & \
\hline 115 & 200 & & & 11.8 \
\hline 117 & 200 & 1264 & 1464 & 12.5 \
\hline 120 & 200 & 1480 & & \
\hline
\end{array}$$ Table 6.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 6.7.The average total variable cost per unit of production when the firm produces 90 lanterns is _________.

Accepted Answer

A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44 
A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44

Question 9

Table 6.4
 $$\begin{array} { | c | c | c | } 
\hline \text { Labour (hours) } & \begin{array} { c } 
\text { Quantity of } \
\text { Fish (metrics) }
\end{array} & \begin{array} { c } 
\text { Marginal Product } \
\text { (metrics) }
\end{array} \
\hline 1 & 10 & \
\hline 2 & 18 & \
\hline 3 & 24 & \
\hline 4 & 28 & \
\hline 5 & 30 & \
\hline 6 & 32 & \
\hline
\end{array}$$
-Refer to Table 6.4.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 6.4.
b.Characterise the production function,that is,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 metric 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

a.
b. The production displays diminishin

Question 10

If the firm is producing no output in the short run,then its total costs are zero.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following can a firm do in the long run but not in the short run?

Accepted Answer

A)  Decrease the size of its physical plant 
B)  Reduce its rate of output by laying off workers 
C)  Increase its variable costs 
D)  Increase its use of raw materials 
A)  Decrease the size of its physical plant 
B)  Reduce its rate of output by laying off workers 
C)  Increase its variable costs 
D)  Increase its use of raw materials

Question 12

A firm has successfully adopted a positive technological change when _________.

Accepted Answer

A)  it can produce more output using the same inputs 
B)  it produces less pollution in its production process 
C)  it can pay its workers less yet increase its output 
D)  it sees an increase in worker productivity 
A)  it can produce more output using the same inputs 
B)  it produces less pollution in its production process 
C)  it can pay its workers less yet increase its output 
D)  it sees an increase in worker productivity

Question 13

What is the difference between technology and technological change?

Accepted Answer

A)  Technology refers to the processes used by a firm to transform inputs into output, 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 is carried out by firms producing physical goods, but technological change is an intellectual exercise in seeking ways to improve production. 
C)  Technology is product centred, that is, developing new products with our limited resources, while technological change is process centred in that it focuses on developing new production techniques. 
D)  Technology involves the use of capital equipment, while technological change requires the use of brain power. 
A)  Technology refers to the processes used by a firm to transform inputs into output, 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 is carried out by firms producing physical goods, but technological change is an intellectual exercise in seeking ways to improve production. 
C)  Technology is product centred, that is, developing new products with our limited resources, while technological change is process centred in that it focuses on developing new production techniques. 
D)  Technology involves the use of capital equipment, while technological change requires the use of brain power.

Question 14

Table 6.8
 $$\begin{array} { | c | c | } 
\hline \text { Quantity (sets) } & \begin{array} { c } 
\text { Long Run } \
\text { Average Cost } \
\text { (dollars) }
\end{array} \
\hline 100 & 40 \
\hline 200 & 35 \
\hline 300 & 30 \
\hline 400 & 30 \
\hline 500 & 35 \
\hline
\end{array}$$ Elegant Settings manufactures stainless steel cutlery. Table 6.8 shows the company's cost data.
-Refer to Table 6.8.The minimum efficient scale of production is _________.

Accepted Answer

A)  100 units 
B)  200 units 
C)  300 units 
D)  400 units 
A)  100 units 
B)  200 units 
C)  300 units 
D)  400 units

Question 15

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1 000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3 000 routers each month.Therefore,_________.

Accepted Answer

A)  ABC is experiencing diseconomies of scale 
B)  ABC is experiencing diminishing returns 
C)  to reach minimum efficient scale, ABC would have to sell at least 3 000 routers each month 
D)  ABC will soon go out of business 
A)  ABC is experiencing diseconomies of scale 
B)  ABC is experiencing diminishing returns 
C)  to reach minimum efficient scale, ABC would have to sell at least 3 000 routers each month 
D)  ABC will soon go out of business

Question 16

If fixed costs do not change,then marginal cost _________.

Accepted Answer

A)  also remains constant 
B)  equals the change in variable cost divided by the change in output 
C)  equals the change in average variable cost divided by the change in output 
D)  equals the change in average fixed cost divided by the change in output 
A)  also remains constant 
B)  equals the change in variable cost divided by the change in output 
C)  equals the change in average variable cost divided by the change in output 
D)  equals the change in average fixed cost divided by the change in output

Question 17

Explain how the listed events (a-d)would affect the following at Hilton Hotels.
i.Marginal cost
ii.Average variable cost
iii.Average fixed cost
iv.Average total cost
a.Hilton decides on an across-the-board 5 per cent increase in executive salaries.
b.Hilton decides to eliminate all print advertising.
c.Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers.
d.The federal government starts to levy a $5 room tax on all hotel rooms.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.Average fixed cost and average total c

Question 18

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 average product of labour when the farm hires 5 workers is ________.

Accepted Answer

A)  4 metrics 
B)  10.8 metrics 
C)  38.2 metrics 
D)  54 metrics 
A)  4 metrics 
B)  10.8 metrics 
C)  38.2 metrics 
D)  54 metrics

Question 19

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 20

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Yes.As long as the marginal co

When the average total cost is $16 and the total cost is $800,how many units is the firm producing?

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

Is it possible for technological change to be negative? If so,give an example. __________________________________________________________________________________________________________________________________________________________________________________________

The long run refers to a time period _________.

If a firm experiences diminishing returns,its marginal product must be negative.

Figure 6.4 -Refer to Figure 6.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Which of the following is true if production displays increasing marginal returns?

If the firm is producing no output in the short run,then its total costs are zero.

Which of the following can a firm do in the long run but not in the short run?

A firm has successfully adopted a positive technological change when _________.

What is the difference between technology and technological change?

Table 6.8 Quantity (sets) Long Run Average Cost (dollars) 100 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery. Table 6.8 shows the company's cost data. -Refer to Table 6.8.The minimum efficient scale of production is _________.

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1 000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3 000 routers each month.Therefore,_________.

If fixed costs do not change,then marginal cost _________.

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 average product of labour when the farm hires 5 workers is ________.

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

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

When the average total cost is $16 and the total cost is $800,how many units is the firm producing?

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

Is it possible for technological change to be negative? If so,give an example. __________________________________________________________________________________________________________________________________________________________________________________________

The long run refers to a time period _________.

If a firm experiences diminishing returns,its marginal product must be negative.

Figure 6.4 -Refer to Figure 6.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Which of the following is true if production displays increasing marginal returns?

If the firm is producing no output in the short run,then its total costs are zero.

Which of the following can a firm do in the long run but not in the short run?

A firm has successfully adopted a positive technological change when _________.

What is the difference between technology and technological change?

Table 6.8 Quantity (sets) Long Run Average Cost (dollars) 100 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery. Table 6.8 shows the company's cost data. -Refer to Table 6.8.The minimum efficient scale of production is _________.

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1 000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3 000 routers each month.Therefore,_________.

If fixed costs do not change,then marginal cost _________.

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 average product of labour when the farm hires 5 workers is ________.

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

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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