Question 1

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 2

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced. 
A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced.

Question 3

Which of the following statements is false?

Accepted Answer

A) When marginal cost equals average total cost,average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as "spreading the overhead." 
A) When marginal cost equals average total cost,average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as "spreading the overhead."

Question 4

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

Accepted Answer

A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor 
A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The basic activity of a firm is

Accepted Answer

A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services. 
A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services.

Question 7

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

Accepted Answer

A) The marginal product of the 8th worker is negative. 
B) The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C) Suzie's profits would be greater if she did not hire the 8th worker. 
D) The average product of labor is negative. 
A) The marginal product of the 8th worker is negative. 
B) The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C) Suzie's profits would be greater if she did not hire the 8th worker. 
D) The average product of labor is negative.

Question 8

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is false?

Accepted Answer

A) Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B) When marginal cost is less than average total cost,average total cost will fall. 
C) When marginal cost is greater than average total cost,average total cost will rise. 
D) Marginal cost will equal average total cost when average total cost is at its lowest point. 
A) Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B) When marginal cost is less than average total cost,average total cost will fall. 
C) When marginal cost is greater than average total cost,average total cost will rise. 
D) Marginal cost will equal average total cost when average total cost is at its lowest point.

Question 10

A firm's expansion path

Accepted Answer

A) is the same thing as its long-run average cost curve. 
B) is a curve that shows a firm's cost-minimizing combination of inputs for every level of output,holding input prices constant. 
C) shows the targeted growth rate in sales over the long run. 
D) is a curve that shows expected profits at various price levels. 
A) is the same thing as its long-run average cost curve. 
B) is a curve that shows a firm's cost-minimizing combination of inputs for every level of output,holding input prices constant. 
C) shows the targeted growth rate in sales over the long run. 
D) is a curve that shows expected profits at various price levels.

Question 11

Average fixed cost is equal to

Accepted Answer

A) the amount of total cost that does not change as output changes in the short run. 
B) fixed cost divided by the quantity of output produced. 
C) fixed cost multiplied by the quantity of output produced. 
D) average total cost plus average variable cost. 
A) the amount of total cost that does not change as output changes in the short run. 
B) fixed cost divided by the quantity of output produced. 
C) fixed cost multiplied by the quantity of output produced. 
D) average total cost plus average variable cost.

Question 12

The marginal product of labor is calculated using the formula

Accepted Answer

A) L/Q. 
B) ΔL/ΔQ. 
C) ΔQ/ΔL. 
D) Q/L. 
A) L/Q. 
B) ΔL/ΔQ. 
C) ΔQ/ΔL. 
D) Q/L.

Question 13

On an isoquant/isocost graph,the least cost input combination of producing a given output is

Accepted Answer

A) any point on the isoquant curve. 
B) any point on the isocost curve. 
C) given by the tangency between the isoquant curve and the isocost line. 
D) one of the intercept values on the graph. 
A) any point on the isoquant curve. 
B) any point on the isocost curve. 
C) given by the tangency between the isoquant curve and the isocost line. 
D) one of the intercept values on the graph.

Question 14

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 15

Which of the following statements correctly describes the distinction between technology and technological change?

Accepted Answer

A) Technology refers to the processes used by a firm to transform inputs into output of goods and services 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 refers to the ability of a firm to increase its maximum output from a given quantity of inputs and technological change is the process by which the firm achieves this productivity gain. 
C) Technology is product-centered; its refers to developing new products with limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D) Technology involves research and development while technological change involves the use of more efficient machinery. 
A) Technology refers to the processes used by a firm to transform inputs into output of goods and services 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 refers to the ability of a firm to increase its maximum output from a given quantity of inputs and technological change is the process by which the firm achieves this productivity gain. 
C) Technology is product-centered; its refers to developing new products with limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D) Technology involves research and development while technological change involves the use of more efficient machinery.

Question 16

Figure 11-2   Figure 11-2 contains information about the short run cost structure of a firm.
-Refer to Figure 11-2.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 17

If marginal product is greater than average product,then

Accepted Answer

A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing. 
A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing.

Question 18

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

Accepted Answer

A) True 
 B)False

Question 19

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 20

Table 11-3
  
-Refer to Table 11-3.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 11-3. 
b.Characterize the production function,i.e.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 labor (L).Treating the boat and the fishing pole as fixed inputs and using the data above,graph Juan's Total Product of Labor 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 pound 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. @#IMG-DLM& 
b.The production displays diminishi

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

Minimum efficient scale is defined as the level of output at which

Which of the following statements is false?

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

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

The basic activity of a firm is

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Which of the following statements is false?

A firm's expansion path

Average fixed cost is equal to

The marginal product of labor is calculated using the formula

On an isoquant/isocost graph,the least cost input combination of producing a given output is

Average total cost is equal to

Which of the following statements correctly describes the distinction between technology and technological change?

Figure 11-2 Figure 11-2 contains information about the short run cost structure of a firm. -Refer to Figure 11-2.In the figure above which letter represents the average fixed cost curve?

If marginal product is greater than average product,then

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

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

Exam 11: Technology, production, and Costs

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

Minimum efficient scale is defined as the level of output at which

Which of the following statements is false?

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

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

The basic activity of a firm is

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Which of the following statements is false?

A firm's expansion path

Average fixed cost is equal to

The marginal product of labor is calculated using the formula

On an isoquant/isocost graph,the least cost input combination of producing a given output is

Average total cost is equal to

Which of the following statements correctly describes the distinction between technology and technological change?

Figure 11-2 Figure 11-2 contains information about the short run cost structure of a firm. -Refer to Figure 11-2.In the figure above which letter represents the average fixed cost curve?

If marginal product is greater than average product,then

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

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