Question 1

Economic costs of production differ from accounting costs in that

Accepted Answer

A)  economic costs include expenditures for hired resources while accounting costs do not. 
B)  economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C)  accounting costs include expenditures for hired resources while economic costs do not. 
D)  accounting costs are always larger than economic cost. 
A)  economic costs include expenditures for hired resources while accounting costs do not. 
B)  economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C)  accounting costs include expenditures for hired resources while economic costs do not. 
D)  accounting costs are always larger than economic cost.

Question 2

What is the marginal product of labor and what is the average product of labor.

Accepted Answer

The marginal product of labor is the add

Question 3

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 4

Which of the following is an example of a long-run adjustment?

Accepted Answer

A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter. 
A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter.

Question 5

If we have information about workers' marginal products, then total and average product can be found by

Accepted Answer

A)  dividing marginal costs by the number of workers. 
B)  multiplying the average marginal product times the number of workers. 
C)  summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D)  summing the marginal values to find the total and dividing it by the number of workers to get the average. 
A)  dividing marginal costs by the number of workers. 
B)  multiplying the average marginal product times the number of workers. 
C)  summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D)  summing the marginal values to find the total and dividing it by the number of workers to get the average.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Figure 11-5  
-Refer to Figure 11-5. The vertical difference between curves F and G measures

Accepted Answer

A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs. 
A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs.

Question 8

Costs that change as output changes are called incremental costs.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Long-run cost curves are U-shaped because

Accepted Answer

A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply. 
A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply.

Question 11

Which of the following are examples of a firm experiencing a positive technological change?
a. A firm is able to reduce its inputs by 15 percent and still produce the same level of output.
b. A seminar attended by the firm's workers makes them more productive.
c. A firm adds 5 percent to its workforce and is able to maintain its initial level of output.
d. A firm restructures its distribution system and is able to save on its shipping times.
e. A firm rearranges its warehouse and finds that it can use fewer workers to maintain its productivity level.

Accepted Answer

Examples a., b., d., and e. are examples

Question 12

A firm has successfully adopted a positive technological change when

Accepted Answer

A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity. 
A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity.

Question 13

Figure 11-5  
-Refer to Figure 11-5. Identify the curves in the diagram.

Accepted Answer

A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve; H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve; H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve; H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve 
A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve; H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve; H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve; H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve

Question 14

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 15

An avocado orchard employs five full-time workers. Currently, the average product of labor is 120 pounds of avocados per day. The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados. The average product of the six workers will now be

Accepted Answer

A)  more than 120 pounds. 
B)  less than 120 pounds. 
C)  equal to 120 pounds. 
D)  less than the marginal product of labor. 
A)  more than 120 pounds. 
B)  less than 120 pounds. 
C)  equal to 120 pounds. 
D)  less than the marginal product of labor.

Question 16

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

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

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 19

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

Accepted Answer

A) True 
 B)False

Question 20

If average total cost is falling, marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Exam 11: Technology, Production, and Costs

Economic costs of production differ from accounting costs in that

What is the marginal product of labor and what is the average product of labor.

Average total cost is equal to

Which of the following is an example of a long-run adjustment?

If we have information about workers' marginal products, then total and average product can be found by

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

Figure 11-5 -Refer to Figure 11-5. The vertical difference between curves F and G measures

Costs that change as output changes are called incremental costs.

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

Long-run cost curves are U-shaped because

A firm has successfully adopted a positive technological change when

Figure 11-5 -Refer to Figure 11-5. Identify the curves in the diagram.

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

An avocado orchard employs five full-time workers. Currently, the average product of labor is 120 pounds of avocados per day. The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados. The average product of the six workers will now be

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

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

An explicit cost is defined as

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

If average total cost is falling, marginal cost must also be falling.

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

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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