Question 1

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5
  
-In the long run,

Accepted Answer

A) some resources are variable and some resources are fixed. 
B) all the resources can be varied. 
C) all resources are fixed. 
D) at least one resource is fixed. 
E) there are no explicit costs. 
A) some resources are variable and some resources are fixed. 
B) all the resources can be varied. 
C) all resources are fixed. 
D) at least one resource is fixed. 
E) there are no explicit costs.

Question 2

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-The long run is referred to as a planning horizon because:

Accepted Answer

A) the firm has committed to a fixed quantity of at least one resource and the other resources are variable. 
B) the manager has selected the size of the firm that appears to be the least profitable and does not have the option of selecting any other plant size. 
C) the firm has not committed to a fixed quantity of any resource and has all options available to it. 
D) the manager has selected a scale of production. 
E) the firm is operating along a specific average-cost curve. 
A) the firm has committed to a fixed quantity of at least one resource and the other resources are variable. 
B) the manager has selected the size of the firm that appears to be the least profitable and does not have the option of selecting any other plant size. 
C) the firm has not committed to a fixed quantity of any resource and has all options available to it. 
D) the manager has selected a scale of production. 
E) the firm is operating along a specific average-cost curve.

Question 3

The figure given below shows cost curves of a firm.Figure: 8.2
   In the figure,
|: Marginal cost curve
||: Average total cost curve
|||: Average variable cost curve
-Refer to Figure 8.2. At an output level of G:

Accepted Answer

A) both average total cost and average variable cost are falling. 
B) average fixed cost is equal to the distance JK. 
C) average variable cost exceeds marginal cost by the amount LJ. 
D) average total cost exceeds marginal cost by the amount KJ. 
E) total cost is equal to the area 0AJG. 
A) both average total cost and average variable cost are falling. 
B) average fixed cost is equal to the distance JK. 
C) average variable cost exceeds marginal cost by the amount LJ. 
D) average total cost exceeds marginal cost by the amount KJ. 
E) total cost is equal to the area 0AJG.

Question 4

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
  
-If the average variable cost of a firm is falling, then the:

Accepted Answer

A) average fixed cost must be rising. 
B) marginal cost must be falling. 
C) marginal cost must be rising. 
D) marginal cost lies below the average variable cost. 
E) marginal cost lies above the average variable cost. 
A) average fixed cost must be rising. 
B) marginal cost must be falling. 
C) marginal cost must be rising. 
D) marginal cost lies below the average variable cost. 
E) marginal cost lies above the average variable cost.

Question 5

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-The marginal cost curve intersects the average total cost curve at the firm's most efficient point of production.

Accepted Answer

A) True 
 B)False

Question 6

The table given below shows the total fixed and variable costs of a firm.Table 8.3
  
-In Table 8.3, the average fixed cost of the first unit of output is ____ while the average fixed cost of producing 8 units of output is ____.

Accepted Answer

A) $30; $40 
B) $40; $5 
C) $40; $40 
D) $40; $280 
E) $40; $320 
A) $30; $40 
B) $40; $5 
C) $40; $40 
D) $40; $280 
E) $40; $320

Question 7

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-Every firm has to bear its fixed costs even when it produces nothing.

Accepted Answer

A) True 
 B)False

Question 8

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5
  
-The long-run average total cost curve is U-shaped because:

Accepted Answer

A) a firm initially experiences economies of scale and then diseconomies of scale. 
B) the law of diminishing returns to a factor sets in beyond a certain level of output. 
C) a firm initially experiences diseconomies of scale and then economies of scale. 
D) division of labor keeps labor productivity constant irrespective of expansion or contraction in production. 
E) the efficiency of capital increases over a period of time. 
A) a firm initially experiences economies of scale and then diseconomies of scale. 
B) the law of diminishing returns to a factor sets in beyond a certain level of output. 
C) a firm initially experiences diseconomies of scale and then economies of scale. 
D) division of labor keeps labor productivity constant irrespective of expansion or contraction in production. 
E) the efficiency of capital increases over a period of time.

Question 9

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-Refer to the Figure 8.3. In the long run, an increase in production from Q1 to Q3 would:

Accepted Answer

A) increase average cost by C4 - C1. 
B) increase average cost by C3 - C1. 
C) increase average cost by C3 - C2. 
D) decrease average cost by C3 - C1. 
E) decrease average cost by C3 - C2. 
A) increase average cost by C4 - C1. 
B) increase average cost by C3 - C1. 
C) increase average cost by C3 - C2. 
D) decrease average cost by C3 - C1. 
E) decrease average cost by C3 - C2.

Question 10

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-If a firm experiences economies of scale throughout, it will have a horizontal long-run average-total-cost curve.

Accepted Answer

A) True 
 B)False

Question 11

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
  
-Which of these is true of the law of diminishing marginal returns?

Accepted Answer

A) It is a long run phenomena where all inputs are variable. 
B) It applies mostly to the short run because some inputs remain fixed. 
C) It is a long run phenomena experienced under monopoly. 
D) It applies to fixed inputs in the long run. 
E) It applies to fixed inputs in the short run. 
A) It is a long run phenomena where all inputs are variable. 
B) It applies mostly to the short run because some inputs remain fixed. 
C) It is a long run phenomena experienced under monopoly. 
D) It applies to fixed inputs in the long run. 
E) It applies to fixed inputs in the short run.

Question 12

The table given below shows the total fixed and variable costs of a firm.Table 8.3
  
-If the firm described in Table 8.3 decides to produce nothing, its:

Accepted Answer

A) total cost will fall to zero. 
B) total variable cost will be equal to $30. 
C) total cost will equal $40. 
D) average total cost will equal zero. 
E) marginal cost will equal $10. 
A) total cost will fall to zero. 
B) total variable cost will be equal to $30. 
C) total cost will equal $40. 
D) average total cost will equal zero. 
E) marginal cost will equal $10.

Question 13

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a positively sloped line implies _____.

Accepted Answer

A) constant returns to scale 
B) economies of scale 
C) diseconomies of scale 
D) an increase in capital-labor ratio 
E) a decrease in cost-output ratio 
A) constant returns to scale 
B) economies of scale 
C) diseconomies of scale 
D) an increase in capital-labor ratio 
E) a decrease in cost-output ratio

Question 14

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
  
-If the total cost of producing 6 units is $228 and the total cost of producing 7 units is $245, what is the marginal cost of producing the seventh unit?

Accepted Answer

A) $35 
B) $245 
C) $3 
D) $38 
E) $17 
A) $35 
B) $245 
C) $3 
D) $38 
E) $17

Question 15

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-Overhead costs are identical to fixed costs.

Accepted Answer

A) True 
 B)False

Question 16

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
  
-When a firm expands in size such that its workers can specialize in any one activity, the long-run average total cost of the firm gradually increases.

Accepted Answer

A) True 
 B)False

Question 17

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
  
-Which of the following reflects the correct relationship between average total cost (ATC) and marginal cost (MC)?

Accepted Answer

A) When MC > ATC; ATC is falling. B) When ATC is minimum; ATC < MC. C) When MC < ATC; ATC is falling. D) When MC < ATC; ATC is constant. E) When ATC < MC; MC is falling. A) When MC > ATC; ATC is falling. B) When ATC is minimum; ATC < MC. C) When MC < ATC; ATC is falling. D) When MC < ATC; ATC is constant. E) When ATC < MC; MC is falling.

Question 18

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5
  
-As the output produced by a firm increases, the average fixed cost:

Accepted Answer

A) continues to decline. 
B) initially increases, and then declines. 
C) quickly drops to zero. 
D) becomes constant. 
E) declines and finally becomes negative. 
A) continues to decline. 
B) initially increases, and then declines. 
C) quickly drops to zero. 
D) becomes constant. 
E) declines and finally becomes negative.

Question 19

The following table shows the cost of producing different units of ball point pens by a firm.Table 8.1
  
-Refer to Table 8.1. What will be the average fixed cost of producing five ball point pens?

Accepted Answer

A) $2 
B) $5 
C) $4 
D) $3.33 
E) $10 
A) $2 
B) $5 
C) $4 
D) $3.33 
E) $10

Question 20

The following table shows the cost of producing different units of ball point pens by a firm.Table 8.1
  
-If the average total cost of producing 2 pounds of cheese is $4 and the average total cost of producing 3 pounds of cheese is $4.2, then the marginal cost of producing third pound of cheese is equal to:

Accepted Answer

A) $4.2. 
B) $8. 
C) $4.5. 
D) $4.6. 
E) $4.1. 
A) $4.2. 
B) $8. 
C) $4.5. 
D) $4.6. 
E) $4.1.

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -In the long run,

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -The long run is referred to as a planning horizon because:

The figure given below shows cost curves of a firm.Figure: 8.2 In the figure, |: Marginal cost curve ||: Average total cost curve |||: Average variable cost curve -Refer to Figure 8.2. At an output level of G:

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -If the average variable cost of a firm is falling, then the:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -The marginal cost curve intersects the average total cost curve at the firm's most efficient point of production.

The table given below shows the total fixed and variable costs of a firm.Table 8.3 -In Table 8.3, the average fixed cost of the first unit of output is while the average fixed cost of producing 8 units of output is .

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Every firm has to bear its fixed costs even when it produces nothing.

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -The long-run average total cost curve is U-shaped because:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Refer to the Figure 8.3. In the long run, an increase in production from Q₁ to Q₃ would:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -If a firm experiences economies of scale throughout, it will have a horizontal long-run average-total-cost curve.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -Which of these is true of the law of diminishing marginal returns?

The table given below shows the total fixed and variable costs of a firm.Table 8.3 -If the firm described in Table 8.3 decides to produce nothing, its:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a positively sloped line implies _____.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -If the total cost of producing 6 units is $228 and the total cost of producing 7 units is $245, what is the marginal cost of producing the seventh unit?

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Overhead costs are identical to fixed costs.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -Which of the following reflects the correct relationship between average total cost (ATC) and marginal cost (MC)?

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -As the output produced by a firm increases, the average fixed cost:

The following table shows the cost of producing different units of ball point pens by a firm.Table 8.1 -Refer to Table 8.1. What will be the average fixed cost of producing five ball point pens?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Elasticity: Demand and Supply

Demand: Consumer Choice

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 8: Supply: the Costs of Doing Business

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -In the long run,

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -The long run is referred to as a planning horizon because:

The figure given below shows cost curves of a firm.Figure: 8.2 In the figure, |: Marginal cost curve ||: Average total cost curve |||: Average variable cost curve -Refer to Figure 8.2. At an output level of G:

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -If the average variable cost of a firm is falling, then the:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -The marginal cost curve intersects the average total cost curve at the firm's most efficient point of production.

The table given below shows the total fixed and variable costs of a firm.Table 8.3 -In Table 8.3, the average fixed cost of the first unit of output is ____ while the average fixed cost of producing 8 units of output is ____.

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Every firm has to bear its fixed costs even when it produces nothing.

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -The long-run average total cost curve is U-shaped because:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Refer to the Figure 8.3. In the long run, an increase in production from Q1 to Q3 would:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -If a firm experiences economies of scale throughout, it will have a horizontal long-run average-total-cost curve.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -Which of these is true of the law of diminishing marginal returns?

The table given below shows the total fixed and variable costs of a firm.Table 8.3 -If the firm described in Table 8.3 decides to produce nothing, its:

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a positively sloped line implies _____.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -If the total cost of producing 6 units is $228 and the total cost of producing 7 units is $245, what is the marginal cost of producing the seventh unit?

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Overhead costs are identical to fixed costs.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3 -Which of the following reflects the correct relationship between average total cost (ATC) and marginal cost (MC)?

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5 -As the output produced by a firm increases, the average fixed cost:

The following table shows the cost of producing different units of ball point pens by a firm.Table 8.1 -Refer to Table 8.1. What will be the average fixed cost of producing five ball point pens?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Elasticity: Demand and Supply

Demand: Consumer Choice

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The table given below shows the total fixed and variable costs of a firm.Table 8.3 -In Table 8.3, the average fixed cost of the first unit of output is while the average fixed cost of producing 8 units of output is .

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3 -Refer to the Figure 8.3. In the long run, an increase in production from Q₁ to Q₃ would: