Question 1

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 2

At the minimum efficient scale,

Accepted Answer

A)  all possible economies of scale have not been exhausted. 
B)  the firm has achieved the lowest possible average cost of production. 
C)  any increases in the scale of operation will encounter further economies of scale. 
D)  marginal cost is at its minimum. 
A)  all possible economies of scale have not been exhausted. 
B)  the firm has achieved the lowest possible average cost of production. 
C)  any increases in the scale of operation will encounter further economies of scale. 
D)  marginal cost is at its minimum.

Question 3

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is

Accepted Answer

A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145. 
A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145.

Question 4

Marginal cost is equal to the

Accepted Answer

A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output. 
A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output.

Question 5

Damian owns a tattoo parlor and has hired three tattoo artists to work for him. The marginal product of labor is 8 for the first artist, 12 for the second artist, and 7 for the third artist. What is Damian's average product of labor for these three tattoo artists?

Accepted Answer

The average product of labor i

Question 6

Table 11-1
   Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

Accepted Answer

A)  4 pounds 
B)  10.8 bushels 
C)  38.2 pounds 
D)  54 pounds 
A)  4 pounds 
B)  10.8 bushels 
C)  38.2 pounds 
D)  54 pounds

Question 7

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 8

Figure 11-15  
-Refer to Figure 11-15. Suppose Hilda produces 100 gooseberry pies. What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

Accepted Answer

A)  1 unit of capital 
B)  10 units of capital 
C)  14 units of capital 
D)  24 units of capital 
A)  1 unit of capital 
B)  10 units of capital 
C)  14 units of capital 
D)  24 units of capital

Question 9

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

Accepted Answer

A)  negative. 
B)  less than 8 chairs. 
C)  more than 8 chairs. 
D)  zero. 
A)  negative. 
B)  less than 8 chairs. 
C)  more than 8 chairs. 
D)  zero.

Question 10

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor.
a. The payment he makes to buy tattoo ink.
b. The wages he pays his employees.
c. The $500-per-month payment he makes to advertise his shop on highway billboards.
d. The lease payment he makes to the landlord who owns the building where his shop is located.
e. The payment he makes on his liability insurance policy.

Accepted Answer

c., d., and e. are fixed costs because t

Question 11

Average variable cost can be calculated using any of the formulas below except

Accepted Answer

A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC. 
A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC.

Question 12

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Accepted Answer

A)  the marginal product of labor. 
B)  the division of labor. 
C)  the average product of labor. 
D)  the average cost of production. 
A)  the marginal product of labor. 
B)  the division of labor. 
C)  the average product of labor. 
D)  the average cost of production.

Question 13

Sam Lewis owns a firm in New York City's garment district. If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way. At this point

Accepted Answer

A)  the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B)  Sam should encourage his workers to share their sewing machines. 
C)  Sam's business will be in violation of safety rules that have been established by the New York City government. 
D)  Sam should begin using a division of labor in his business. 
A)  the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B)  Sam should encourage his workers to share their sewing machines. 
C)  Sam's business will be in violation of safety rules that have been established by the New York City government. 
D)  Sam should begin using a division of labor in his business.

Question 14

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 15

Figure 11-4  
-Refer to Figure 11-4. What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost. 
A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost.

Question 16

Which of the following is an implicit cost of production?

Accepted Answer

A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm 
A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm

Question 17

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 18

Which of the following explains why the marginal cost curve has a U shape?

Accepted Answer

A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls. 
A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls.

Question 19

Figure 11-2  
-Refer to Figure 11-2. The curve labeled "E" is

Accepted Answer

A)  the total product curve. 
B)  the average product curve. 
C)  the marginal product curve. 
D)  the output supply curve. 
A)  the total product curve. 
B)  the average product curve. 
C)  the marginal product curve. 
D)  the output supply curve.

Question 20

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

Accepted Answer

A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units. 
A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units.

Exam 11: Technology, Production, and Costs

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

At the minimum efficient scale,

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is

Marginal cost is equal to the

Damian owns a tattoo parlor and has hired three tattoo artists to work for him. The marginal product of labor is 8 for the first artist, 12 for the second artist, and 7 for the third artist. What is Damian's average product of labor for these three tattoo artists?

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

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

Figure 11-15 -Refer to Figure 11-15. Suppose Hilda produces 100 gooseberry pies. What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

Average variable cost can be calculated using any of the formulas below except

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Sam Lewis owns a firm in New York City's garment district. If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way. At this point

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Figure 11-4 -Refer to Figure 11-4. What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Which of the following is an implicit cost of production?

The basic activity of a firm is

Which of the following explains why the marginal cost curve has a U shape?

Figure 11-2 -Refer to Figure 11-2. The curve labeled "E" is

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

Economics: Foundations and Models

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Monopoly and Antitrust Policy

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Monetary Policy

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