Question 1

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Accepted Answer

A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labor. 
D)  average product of labor. 
A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labor. 
D)  average product of labor.

Question 2

All of the following cost curves are U-shaped except one. Which curve is not U-shaped?

Accepted Answer

A)  the marginal cost curve 
B)  the average fixed cost curve 
C)  the average total cost curve 
D)  the average variable cost curve 
A)  the marginal cost curve 
B)  the average fixed cost curve 
C)  the average total cost curve 
D)  the average variable cost curve

Question 3

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

Accepted Answer

A)  Average cost increases as more is produced. 
B)  Average cost will fall. 
C)  Average cost could increase or decrease depending on what happens to variable cost. 
D)  Average cost could increase or decrease depending on what happens to fixed cost. 
A)  Average cost increases as more is produced. 
B)  Average cost will fall. 
C)  Average cost could increase or decrease depending on what happens to variable cost. 
D)  Average cost could increase or decrease depending on what happens to fixed cost.

Question 4

Figure 11-6   Figure 11-6 contains information about the short-run cost structure of a firm.
-Refer to Figure 11-6. In the figure above, which letter represents the average variable cost curve?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 5

In the short run, why does a production function eventually display diminishing returns to labor?

Accepted Answer

A)  As the number of workers increases it becomes difficult to monitor them. 
B)  As a firm hires more workers the skills and the work ethic of the additional workers will eventually decline. 
C)  As the number of workers increases, eventually the gains from the division of labor and specialization are used up. 
D)  The opportunity cost of hiring additional workers must eventually rise. 
A)  As the number of workers increases it becomes difficult to monitor them. 
B)  As a firm hires more workers the skills and the work ethic of the additional workers will eventually decline. 
C)  As the number of workers increases, eventually the gains from the division of labor and specialization are used up. 
D)  The opportunity cost of hiring additional workers must eventually rise.

Question 6

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes. These costs are sometimes called ________ costs.

Accepted Answer

A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting 
A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting

Question 7

In the short run, if marginal product is at its maximum, then

Accepted Answer

A)  average cost is at its minimum. 
B)  average variable cost is at its minimum. 
C)  marginal cost is at its minimum. 
D)  total cost is at its maximum. 
A)  average cost is at its minimum. 
B)  average variable cost is at its minimum. 
C)  marginal cost is at its minimum. 
D)  total cost is at its maximum.

Question 8

Table 11-3
  
-Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. The average product of labor will equal 60 boxes when Manny hires

Accepted Answer

A)  the second worker. 
B)  the third worker. 
C)  the fourth worker. 
D)  the fifth worker. 
A)  the second worker. 
B)  the third worker. 
C)  the fourth worker. 
D)  the fifth worker.

Question 9

In the long run, the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 10

If production displays economies of scale, the long-run average cost curve is

Accepted Answer

A)  above the short-run average total cost curve. 
B)  downward sloping. 
C)  upward sloping. 
D)  below the long-run marginal cost curve. 
A)  above the short-run average total cost curve. 
B)  downward sloping. 
C)  upward sloping. 
D)  below the long-run marginal cost curve.

Question 11

Figure 11-1  
-Refer to Figure 11-1. The marginal product of the 7th worker is

Accepted Answer

A)  66. 
B)  9.43. 
C)  2. 
D)  -2. 
A)  66. 
B)  9.43. 
C)  2. 
D)  -2.

Question 12

In a diagram showing the average total cost and average variable cost curves, the minimum point of the average total cost is

Accepted Answer

A)  at the same level of output as the minimum point of the average variable cost. 
B)  at a larger level of output than the minimum point of the average variable cost. 
C)  at a lower level of output than the minimum point of the average variable cost. 
D)  at the same level of output as the maximum of the total product curve. 
A)  at the same level of output as the minimum point of the average variable cost. 
B)  at a larger level of output than the minimum point of the average variable cost. 
C)  at a lower level of output than the minimum point of the average variable cost. 
D)  at the same level of output as the maximum of the total product curve.

Question 13

Explain why the marginal cost of production must increase if the marginal product of a variable resource is decreasing.

Accepted Answer

Consider a variable input such as labor.

Question 14

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 15

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in

Question 16

Figure 11-10  
-If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

Accepted Answer

A)  minimum efficient scale. 
B)  more than minimum efficient scale. 
C)  less than minimum efficient scale. 
D)  minimum capacity. 
A)  minimum efficient scale. 
B)  more than minimum efficient scale. 
C)  less than minimum efficient scale. 
D)  minimum capacity.

Question 17

If production displays increasing marginal returns, then

Accepted Answer

A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns. 
A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns.

Question 18

Which of the following equations is incorrect?

Accepted Answer

A)  ATC - AFC = AVC 
B)  AVC + AFC = ATC 
C)  AFC = ATC - AVC 
D)  ATC = AVC - AFC 
A)  ATC - AFC = AVC 
B)  AVC + AFC = ATC 
C)  AFC = ATC - AVC 
D)  ATC = AVC - AFC

Question 19

Which of the following are implicit costs for a typical firm?

Accepted Answer

A)  the cost of labor 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee 
A)  the cost of labor 
B)  the opportunity cost of capital owned and used by the firm 
C)  the cost of energy used in production 
D)  a business licensing fee

Question 20

In economics, technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Exam 11: Technology, Production, and Costs

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

All of the following cost curves are U-shaped except one. Which curve is not U-shaped?

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

Figure 11-6 Figure 11-6 contains information about the short-run cost structure of a firm. -Refer to Figure 11-6. In the figure above, which letter represents the average variable cost curve?

In the short run, why does a production function eventually display diminishing returns to labor?

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes. These costs are sometimes called ________ costs.

In the short run, if marginal product is at its maximum, then

In the long run, the relevant cost is total cost.

If production displays economies of scale, the long-run average cost curve is

Figure 11-1 -Refer to Figure 11-1. The marginal product of the 7th worker is

In a diagram showing the average total cost and average variable cost curves, the minimum point of the average total cost is

Explain why the marginal cost of production must increase if the marginal product of a variable resource is decreasing.

Economic costs include implicit costs but not explicit costs.

State the law of diminishing marginal returns.

Figure 11-10 -If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

If production displays increasing marginal returns, then

Which of the following equations is incorrect?

Which of the following are implicit costs for a typical firm?

In economics, technology only refers to the development of new products.

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

Filters

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes. These costs are sometimes called costs.