Question 1

Figure 6.2  
-Refer to Figure 6.2.The average product of labour declines after L2 because _________.

Accepted Answer

A)  the marginal product of labour is below the average product of labour 
B)  the marginal product of labour is falling 
C)  the marginal product of labour is negative 
D)  the marginal product of labour is positive 
A)  the marginal product of labour is below the average product of labour 
B)  the marginal product of labour is falling 
C)  the marginal product of labour is negative 
D)  the marginal product of labour is positive

Question 2

Diminishing marginal product of labour occurs when adding another unit of labour __________.

Accepted Answer

A)  decreases output 
B)  changes output by an amount smaller than the output added by the previous unit of labour 
C)  increases output by an amount larger than the output added by the previous unit of labour 
D)  decreases output by an amount smaller than the output added by the previous unit of labour 
A)  decreases output 
B)  changes output by an amount smaller than the output added by the previous unit of labour 
C)  increases output by an amount larger than the output added by the previous unit of labour 
D)  decreases output by an amount smaller than the output added by the previous unit of labour

Question 3

What happens when a firm experiences a positive technological change?

Accepted Answer

A)  The price of a share of the firm's stock rises. 
B)  The firm is able to produce more output using the same inputs, or the same output using fewer inputs. 
C)  The value of the firm's assets rises. 
D)  The firm will hire additional workers in order to increase production. 
A)  The price of a share of the firm's stock rises. 
B)  The firm is able to produce more output using the same inputs, or the same output using fewer inputs. 
C)  The value of the firm's assets rises. 
D)  The firm will hire additional workers in order to increase production.

Question 4

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 5

What is marginal cost?

Accepted Answer

A)  Change in average cost when an additional unit of output is produced 
B)  Additional output when total cost is increased by one dollar 
C)  Additional cost of producing an additional unit of output 
D)  Change in the price of inputs if a firm buys more inputs to produce an additional unit of output 
A)  Change in average cost when an additional unit of output is produced 
B)  Additional output when total cost is increased by one dollar 
C)  Additional cost of producing an additional unit of output 
D)  Change in the price of inputs if a firm buys more inputs to produce an additional unit of output

Question 6

In the short run,why does a production function eventually display diminishing returns to labour?

Accepted Answer

A)  As the number of workers increases, it becomes difficult to monitor them. 
B)  As a firm hires more workers, the skills and the work ethic of the additional workers will eventually decline. 
C)  As the number of workers increases, eventually the gains from the division of labour and specialisation are used up. 
D)  The opportunity cost of hiring additional workers must eventually rise. 
A)  As the number of workers increases, it becomes difficult to monitor them. 
B)  As a firm hires more workers, the skills and the work ethic of the additional workers will eventually decline. 
C)  As the number of workers increases, eventually the gains from the division of labour and specialisation are used up. 
D)  The opportunity cost of hiring additional workers must eventually rise.

Question 7

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of _________.

Accepted Answer

A)  the marginal product of labour 
B)  the division of labour 
C)  the average product of labour 
D)  the average cost of production 
A)  the marginal product of labour 
B)  the division of labour 
C)  the average product of labour 
D)  the average cost of production

Question 8

Average total cost is equal to __________.

Accepted Answer

A)  average fixed cost minus average variable cost 
B)  total cost divided by the level of output 
C)  marginal cost plus variable cost 
D)  total cost divided by the number of workers 
A)  average fixed cost minus average variable cost 
B)  total cost divided by the level of output 
C)  marginal cost plus variable cost 
D)  total cost divided by the number of workers

Question 9

Figure 6.6   Figure 6.6 contains information about the short-run cost structure of a firm.
-Refer to Figure 6.6.In the figure above,which letter represents the average fixed cost curve?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 10

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

Accepted Answer

Economies of scale occur when

Question 11

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 housecleaning 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 12

Figure 6.6   Figure 6.6 contains information about the short-run cost structure of a firm.
-Refer to Figure 6.6.In the figure above,which letter represents the marginal cost curve?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

Figure 6.2  
-Refer to Figure 6.2.Diminishing returns to labour set in _________.

Accepted Answer

A)  after L1 
B)  after L2 
C)  after L3. 
D)  immediately 
A)  after L1 
B)  after L2 
C)  after L3. 
D)  immediately

Question 14

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,the marginal product of the 12th worker is ___________.

Accepted Answer

A)  0.16 
B)  3 
C)  4.67 
D)  36 
A)  0.16 
B)  3 
C)  4.67 
D)  36

Question 15

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 16

What does the law of diminishing marginal return state?

Accepted Answer

A)  That at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B)  That at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C)  That in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D)  That average total costs of production initially fall and after some point start to rise at a decreasing rate as output increases. 
A)  That at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B)  That at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C)  That in the presence of a fixed factor, at some point average product of labour starts to fall as more and more variable inputs are added. 
D)  That average total costs of production initially fall and after some point start to rise at a decreasing rate as output increases.

Question 17

In economics,what is the difference between the short run and the long run?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

In economics,the short run refers to the

Question 18

What is the relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs?

Accepted Answer

A)  Production function 
B)  Supply curve, or supply schedule 
C)  Marginal product of labour 
D)  Average product of labour 
A)  Production function 
B)  Supply curve, or supply schedule 
C)  Marginal product of labour 
D)  Average product of labour

Question 19

Table 6.5
 $$\begin{array} { | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (boxes) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Product of } \
\text { Labour }
\end{array} & \begin{array} { c } 
\text { Office } \
\text { Rent } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Labour } \
\text { Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & - - & & & \
\hline 1 & 220 & & 400 & 200 & \
\hline 2 & & 250 & & & 800 \
\hline 3 & 680 & & & & \
\hline 4 & & 160 & & & 1200 \
\hline 5 & 940 & & & 1000 & \
\hline 6 & 980 & & & & 1600 \
\hline
\end{array}$$
-Refer to Table 6.5.Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business.Suzette rents space for her factory for $400 a week in a nearby strip mall.She can hire temporary workers for $200 a week.Table 6.5 above shows her output and cost data.Use the table to answer questions a-e.
a.Complete the table.
b.In the last week of summer Suzette closes her business to go on a family vacation.What are her costs during that week?
c.In one week Suzette exactly breaks even.If her revenue for the week is $1 200,how many boxes of fruit and nuts did she produce?
d.Judging from the marginal product of labour data,would you say that Suzette had to settle for increasingly unproductive workers? Explain your answer.
e.Suzette has received an order for 1 500 boxes of nuts per week for the next 3 months.If she expects the trend in the marginal product of labour will continue in the same direction,what do you think she should do? Should she not commit until she can move to a larger space or should she just hire more workers? Explain your answer.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.
 \[\begin{array} { | c | c | c | c |

Question 20

The division of labour and specialisation explains _________.

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

Figure 6.2 -Refer to Figure 6.2.The average product of labour declines after L₂ because _________.

Diminishing marginal product of labour occurs when adding another unit of labour __________.

What happens when a firm experiences a positive technological change?

If average product is decreasing,then marginal product must be negative.

What is marginal cost?

In the short run,why does a production function eventually display diminishing returns to labour?

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of _________.

Average total cost is equal to __________.

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the average fixed cost curve?

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

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the marginal cost curve?

Figure 6.2 -Refer to Figure 6.2.Diminishing returns to labour set in _________.

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,the marginal product of the 12th worker is ___________.

What does the law of diminishing marginal return state?

In economics,what is the difference between the short run and the long run? __________________________________________________________________________________________________________________________________________________________________________________________

What is the relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs?

The division of labour and specialisation explains _________.

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

Figure 6.2 -Refer to Figure 6.2.The average product of labour declines after L2 because _________.

Diminishing marginal product of labour occurs when adding another unit of labour __________.

What happens when a firm experiences a positive technological change?

If average product is decreasing,then marginal product must be negative.

What is marginal cost?

In the short run,why does a production function eventually display diminishing returns to labour?

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of _________.

Average total cost is equal to __________.

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the average fixed cost curve?

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

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the marginal cost curve?

Figure 6.2 -Refer to Figure 6.2.Diminishing returns to labour set in _________.

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,the marginal product of the 12th worker is ___________.

What does the law of diminishing marginal return state?

In economics,what is the difference between the short run and the long run? __________________________________________________________________________________________________________________________________________________________________________________________

What is the relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs?

The division of labour and specialisation explains _________.

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 6.2 -Refer to Figure 6.2.The average product of labour declines after L₂ because _________.