Question 1

An isocost line shows

Accepted Answer

A) combinations of two inputs that result in the same total cost for a firm. 
B) combinations of two inputs that result in the same total output for a firm. 
C) combinations of the two inputs that result in the same profit for a firm. 
D) the different levels of total cost that result from various combinations of two inputs. 
A) combinations of two inputs that result in the same total cost for a firm. 
B) combinations of two inputs that result in the same total output for a firm. 
C) combinations of the two inputs that result in the same profit for a firm. 
D) the different levels of total cost that result from various combinations of two inputs.

Question 2

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 3

If marginal product is equal to average product,then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s.Bill took out a loan from his bank to pay for his store and its initial inventory.Bill pays the bank $900 per week for his loan.The $900 bank payment

Accepted Answer

A) is a long-run implicit cost. 
B) is a fixed cost. 
C) is a short-run implicit cost. 
D) is a variable cost. 
A) is a long-run implicit cost. 
B) is a fixed cost. 
C) is a short-run implicit cost. 
D) is a variable cost.

Question 6

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can

Question 7

A "stockout" occurs when

Accepted Answer

A) brokers run out of shares of stock to sell of a particular company. 
B) a disruption due to a power outage,etc.,causes a temporary production shutdown. 
C) a company holds too many goods in inventories. 
D) a firm loses sales because goods consumers want are not available. 
A) brokers run out of shares of stock to sell of a particular company. 
B) a disruption due to a power outage,etc.,causes a temporary production shutdown. 
C) a company holds too many goods in inventories. 
D) a firm loses sales because goods consumers want are not available.

Question 8

The marginal product of labor is defined as

Accepted Answer

A) the change in total revenue that results when an additional unit of a labor is hired. 
B) the additional labor required to produce one more unit of output. 
C) the additional labor cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker. 
A) the change in total revenue that results when an additional unit of a labor is hired. 
B) the additional labor required to produce one more unit of output. 
C) the additional labor cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker.

Question 9

An explicit cost is defined as

Accepted Answer

A) a cost that does not change as output changes. 
B) a nonmonetary opportunity cost. 
C) a cost that involves spending money. 
D) a nonmonetary accounting cost. 
A) a cost that does not change as output changes. 
B) a nonmonetary opportunity cost. 
C) a cost that involves spending money. 
D) a nonmonetary accounting cost.

Question 10

Figure 11-1   Fancy Footwear manufactures shoes.Figure 11-1 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run.
-Refer to Figure 11-1.For what quantity of labor does production display diminishing returns?

Accepted Answer

A) for more than 1 units of labor 
B) for more than 4 unit of labor 
C) for more than 5 units of labor 
D) for more than 8 units of labor 
A) for more than 1 units of labor 
B) for more than 4 unit of labor 
C) for more than 5 units of labor 
D) for more than 8 units of labor

Question 11

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 12

Economies of scale occur when

Accepted Answer

A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases. 
A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases.

Question 13

Figure 11-6   Figure 11-6 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 11-6.For output rates greater than 20,000 picture frames per month

Accepted Answer

A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production. 
A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production.

Question 14

As a firm moves to higher isocost lines,

Accepted Answer

A) its profits increase. 
B) its revenue increases. 
C) its input price ratio increases. 
D) its total cost increases. 
A) its profits increase. 
B) its revenue increases. 
C) its input price ratio increases. 
D) its total cost increases.

Question 15

Suppose a firm uses labor and capital to produce output.The last unit of labor hired has a marginal product of 12 units of output,and the last unit of capital employed has a marginal product of 20 units.Use the optimal combination of inputs rule to calculate the price of capital if the price of labor is $6 per unit.The price of capital is

Accepted Answer

A) $2. 
B) $10. 
C) $20. 
D) impossible to determine with the information given. 
A) $2. 
B) $10. 
C) $20. 
D) impossible to determine with the information given.

Question 16

The slope of a typical isoquant is negative because to produce a given output,a producer

Accepted Answer

A) will use more of one input only if it uses more of another. 
B) can use less of one input only if the productivity of that input increases 
C) can use less of one input only if it uses more of another. 
D) will use more of one input only if the price of that input falls. 
A) will use more of one input only if it uses more of another. 
B) can use less of one input only if the productivity of that input increases 
C) can use less of one input only if it uses more of another. 
D) will use more of one input only if the price of that input falls.

Question 17

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function. 
A) the marginal cost curve. 
B) the average fixed cost curve. 
C) the average product curve. 
D) the firm's production function.

Question 18

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Accepted Answer

A) opportunity cost of inputs. 
B) marginal rate of technical substitution. 
C) input trade-off rate. 
D) isoquant substitution rate. 
A) opportunity cost of inputs. 
B) marginal rate of technical substitution. 
C) input trade-off rate. 
D) isoquant substitution rate.

Question 19

Marginal cost is calculated for a particular increase in output by

Accepted Answer

A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output. 
A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output.

Question 20

Table 11-6
  
-Refer to Table 11-6.Clock It To Me manufactures clock radios.The table above shows estimates of fixed cost per period and average variable cost for three possible plant sizes.
a.You are employed as the company's cost accountant and have been asked to prepare cost estimates for various output levels for each of the three possible plant sizes.Record your calculations in the table below.
Average Cost of Production
   b.For each of the three output levels,which plant size will generate the lowest average total cost of production?
c.Suppose the firm currently sells 8,000 clock radios per period (using the optimal plant size for this output level).Now,however,it has just secured a long-term contract to supply 20,000 clock radios per period.In the short run,what is the average total cost of producing 20,000 clock radios? Provide a numerical value based on your answer in part a.
d.What happens to average total cost of production in the long run? Provide a numerical value based on your answer in part a.

Accepted Answer

a. Average Cost of Production @#IMG-DLM& b.For an

An isocost line shows

The long run refers to a time period

If marginal product is equal to average product,then total product is at a maximum.

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

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s.Bill took out a loan from his bank to pay for his store and its initial inventory.Bill pays the bank $900 per week for his loan.The $900 bank payment

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

A "stockout" occurs when

The marginal product of labor is defined as

An explicit cost is defined as

Figure 11-1 Fancy Footwear manufactures shoes.Figure 11-1 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. -Refer to Figure 11-1.For what quantity of labor does production display diminishing returns?

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

Economies of scale occur when

Figure 11-6 Figure 11-6 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 11-6.For output rates greater than 20,000 picture frames per month

As a firm moves to higher isocost lines,

The slope of a typical isoquant is negative because to produce a given output,a producer

The shape of the average total cost curve is determined by the shape of

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Marginal cost is calculated for a particular increase in output by

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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Exam 11: Technology, production, and Costs

An isocost line shows

The long run refers to a time period

If marginal product is equal to average product,then total product is at a maximum.

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

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s.Bill took out a loan from his bank to pay for his store and its initial inventory.Bill pays the bank $900 per week for his loan.The $900 bank payment

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

A "stockout" occurs when

The marginal product of labor is defined as

An explicit cost is defined as

Figure 11-1 Fancy Footwear manufactures shoes.Figure 11-1 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. -Refer to Figure 11-1.For what quantity of labor does production display diminishing returns?

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

Economies of scale occur when

Figure 11-6 Figure 11-6 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 11-6.For output rates greater than 20,000 picture frames per month

As a firm moves to higher isocost lines,

The slope of a typical isoquant is negative because to produce a given output,a producer

The shape of the average total cost curve is determined by the shape of

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Marginal cost is calculated for a particular increase in output by

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters