Question 1

The law of diminishing marginal returns:

Accepted Answer

A) is relevant in both the short and the long-run. 
B) says that increasing fixed inputs eventually results in smaller and smaller increases in total output. 
C) says that increasing variable inputs eventually results in smaller and smaller increases in total output. 
D) says that increasing variable inputs eventually results in smaller and smaller increases in total cost. 
A) is relevant in both the short and the long-run. 
B) says that increasing fixed inputs eventually results in smaller and smaller increases in total output. 
C) says that increasing variable inputs eventually results in smaller and smaller increases in total output. 
D) says that increasing variable inputs eventually results in smaller and smaller increases in total cost.

Question 2

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

Accepted Answer

A) 10 
B) 100 
C) 1,000 
D) 1,100 
A) 10 
B) 100 
C) 1,000 
D) 1,100

Question 3

Which of the following statements about marginal cost is correct?

Accepted Answer

A) When the marginal product of a variable input is rising,the marginal cost will fall. 
B) When marginal cost equals average cost,average cost is at its maximum. 
C) In the short-run,the marginal cost curve is parallel to the average variable cost curve. 
D) When marginal cost is falling,total fixed cost is rising. 
A) When the marginal product of a variable input is rising,the marginal cost will fall. 
B) When marginal cost equals average cost,average cost is at its maximum. 
C) In the short-run,the marginal cost curve is parallel to the average variable cost curve. 
D) When marginal cost is falling,total fixed cost is rising.

Question 4

Which of the following statements regarding the relationship between average cost and marginal cost is not true?

Accepted Answer

A) When marginal cost is below average total cost,average total cost falls. 
B) When marginal cost is above average variable cost,average variable cost rises. 
C) When marginal cost is equal to average total cost,average total cost is minimized. 
D) When marginal cost is above average fixed cost,average fixed cost rises. 
A) When marginal cost is below average total cost,average total cost falls. 
B) When marginal cost is above average variable cost,average variable cost rises. 
C) When marginal cost is equal to average total cost,average total cost is minimized. 
D) When marginal cost is above average fixed cost,average fixed cost rises.

Question 5

If there are no fixed costs and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be after 1 unit of output is produced?

Accepted Answer

A) $0 
B) $1 
C) $1.50 
D) $2 
A) $0 
B) $1 
C) $1.50 
D) $2

Question 6

A total product curve whose slope is continually rising at an increasing rate:

Accepted Answer

A) indicates that an infinite amount of labor is needed to produce a given level of output. 
B) does not reflect diminishing marginal returns. 
C) does not reflect increasing marginal returns. 
D) describes a production function where labor is the only input. 
A) indicates that an infinite amount of labor is needed to produce a given level of output. 
B) does not reflect diminishing marginal returns. 
C) does not reflect increasing marginal returns. 
D) describes a production function where labor is the only input.

Question 7

Which of the following determines the shape of the marginal cost curve in the short run?

Accepted Answer

A) The marginal product of labor is first increasing and then decreasing 
B) The wage rate first decreases and then increases throughout the range of output 
C) The price of output produced by labor is first decreasing and then increasing 
D) The presence of economies of scale in the product market 
A) The marginal product of labor is first increasing and then decreasing 
B) The wage rate first decreases and then increases throughout the range of output 
C) The price of output produced by labor is first decreasing and then increasing 
D) The presence of economies of scale in the product market

Question 8

A firm's costs are determined by:

Accepted Answer

A) its production function. 
B) the market price of its product. 
C) the market demand curve. 
D) its production possibility frontier. 
A) its production function. 
B) the market price of its product. 
C) the market demand curve. 
D) its production possibility frontier.

Question 9

In the short-run,diminishing marginal returns are associated with:

Accepted Answer

A) declining average variable costs. 
B) rising marginal cost. 
C) rising average fixed cost. 
D) falling average total cost. 
A) declining average variable costs. 
B) rising marginal cost. 
C) rising average fixed cost. 
D) falling average total cost.

Question 10

If constant returns to scale apply to the entire range of production,then the long-run total cost curve would most likely:

Accepted Answer

A) be a straight line from the origin. 
B) to increase at a decreasing rate initially,and then increase at an increasing rate. 
C) to increase at an increasing rate initially,and then increase at a decreasing rate. 
D) be U-shaped. 
A) be a straight line from the origin. 
B) to increase at a decreasing rate initially,and then increase at an increasing rate. 
C) to increase at an increasing rate initially,and then increase at a decreasing rate. 
D) be U-shaped.

Question 11

The monetary cost of the space a restaurant rents to produce meals can be categorized as a:

Accepted Answer

A) variable cost. 
B) marginal cost. 
C) fixed cost. 
D) opportunity cost. 
A) variable cost. 
B) marginal cost. 
C) fixed cost. 
D) opportunity cost.

Question 12

Learning by doing:

Accepted Answer

A) is synonymous with economies of scale. 
B) causes the average cost curve to shift down. 
C) causes the firm's marginal cost curve to shift up and to the left. 
D) occurs when output increases in greater proportion to the increase in inputs. 
A) is synonymous with economies of scale. 
B) causes the average cost curve to shift down. 
C) causes the firm's marginal cost curve to shift up and to the left. 
D) occurs when output increases in greater proportion to the increase in inputs.

Question 13

Which of the following explains the shape of the long-run average cost curve?

Accepted Answer

A) Returns to scale 
B) Returns to labor 
C) Returns to capital 
D) Rental rate on capital 
A) Returns to scale 
B) Returns to labor 
C) Returns to capital 
D) Rental rate on capital

Question 14

When average costs fall as output increases,it is due to _____;when they fall at a given level of output it is due to _____.

Accepted Answer

A) economies of scale;learning by doing 
B) economies of scale;diseconomies of scale 
C) learning by doing;economies of scale 
D) learning by doing;diseconomies of scale 
A) economies of scale;learning by doing 
B) economies of scale;diseconomies of scale 
C) learning by doing;economies of scale 
D) learning by doing;diseconomies of scale

Question 15

Suppose labor is on the horizontal axis and capital is on the vertical axis.If the wage rate is $15 per worker per hour and the rental rate of capital is $10 per unit per hour,what is the slope of the isocost curve?

Accepted Answer

A) -0.667 
B) -1.5 
C) -10 
D) -15 
A) -0.667 
B) -1.5 
C) -10 
D) -15

Question 16

The slope of the total variable cost curve equals the:

Accepted Answer

A) average variable cost. 
B) marginal cost. 
C) average cost. 
D) marginal physical product. 
A) average variable cost. 
B) marginal cost. 
C) average cost. 
D) marginal physical product.

Question 17

Learning by doing:

Accepted Answer

A) results in higher costs in the long run than in the short run. 
B) is a result of technological progress. 
C) increases productivity of the inputs. 
D) results from the increased use of inputs in production. 
A) results in higher costs in the long run than in the short run. 
B) is a result of technological progress. 
C) increases productivity of the inputs. 
D) results from the increased use of inputs in production.

Question 18

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

Accepted Answer

Oil refineries are large scale plants,pr

Question 19

The long-run expansion path for a firm:

Accepted Answer

A) is not necessarily linear,but always slopes upward. 
B) may be backward-bending,if a firm uses less of one input as output increases. 
C) may be backward-bending,if the firm uses more of both inputs as output increases. 
D) is always linear,but not necessarily upward-sloping. 
A) is not necessarily linear,but always slopes upward. 
B) may be backward-bending,if a firm uses less of one input as output increases. 
C) may be backward-bending,if the firm uses more of both inputs as output increases. 
D) is always linear,but not necessarily upward-sloping.

Question 20

On the following per-unit cost graph,show two ways to identify total fixed cost.Explain your answer.

Accepted Answer

@#IMG-DLM&_TB1826_00 Rectangles "abcd" and "efq₁O"

The law of diminishing marginal returns:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

Which of the following statements about marginal cost is correct?

Which of the following statements regarding the relationship between average cost and marginal cost is not true?

If there are no fixed costs and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be after 1 unit of output is produced?

A total product curve whose slope is continually rising at an increasing rate:

Which of the following determines the shape of the marginal cost curve in the short run?

A firm's costs are determined by:

In the short-run,diminishing marginal returns are associated with:

If constant returns to scale apply to the entire range of production,then the long-run total cost curve would most likely:

The monetary cost of the space a restaurant rents to produce meals can be categorized as a:

Learning by doing:

Which of the following explains the shape of the long-run average cost curve?

When average costs fall as output increases,it is due to _;when they fall at a given level of output it is due to _.

Suppose labor is on the horizontal axis and capital is on the vertical axis.If the wage rate is $15 per worker per hour and the rental rate of capital is $10 per unit per hour,what is the slope of the isocost curve?

The slope of the total variable cost curve equals the:

Learning by doing:

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

The long-run expansion path for a firm:

On the following per-unit cost graph,show two ways to identify total fixed cost.Explain your answer.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 8: The Cost of Production

The law of diminishing marginal returns:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

Which of the following statements about marginal cost is correct?

Which of the following statements regarding the relationship between average cost and marginal cost is not true?

If there are no fixed costs and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be after 1 unit of output is produced?

A total product curve whose slope is continually rising at an increasing rate:

Which of the following determines the shape of the marginal cost curve in the short run?

A firm's costs are determined by:

In the short-run,diminishing marginal returns are associated with:

If constant returns to scale apply to the entire range of production,then the long-run total cost curve would most likely:

The monetary cost of the space a restaurant rents to produce meals can be categorized as a:

Learning by doing:

Which of the following explains the shape of the long-run average cost curve?

When average costs fall as output increases,it is due to _____;when they fall at a given level of output it is due to _____.

Suppose labor is on the horizontal axis and capital is on the vertical axis.If the wage rate is $15 per worker per hour and the rental rate of capital is $10 per unit per hour,what is the slope of the isocost curve?

The slope of the total variable cost curve equals the:

Learning by doing:

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

The long-run expansion path for a firm:

On the following per-unit cost graph,show two ways to identify total fixed cost.Explain your answer.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

When average costs fall as output increases,it is due to _;when they fall at a given level of output it is due to _.