Question 1

Which of the following statements is possible?

Accepted Answer

A)  AVC can be falling when ATC is rising. 
B)  ATC can be falling when AVC is rising. 
C)  ATC cuts AVC at its minimum. 
D)  AVC falls when ATC falls, and rises when ATC rises. 
A)  AVC can be falling when ATC is rising. 
B)  ATC can be falling when AVC is rising. 
C)  ATC cuts AVC at its minimum. 
D)  AVC falls when ATC falls, and rises when ATC rises.

Question 2

Narrbegin Exhibit 6.5 Cost schedule for a firm
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Tatal cost (\$) } & \text { Marginal cost (\$) } \
\hline 0 & 200 & \
\hline 1 & 900 & \
\hline 2 & & 900 \
\hline 3 & 3000 & \
\hline
\end{array}$$
-In Exhibit 6.5, by filling in the blanks it can be determined that the total cost of the second unit of output is:

Accepted Answer

A)  $0. 
B)  $700. 
C)  $1000. 
D)  $1800. 
A)  $0. 
B)  $700. 
C)  $1000. 
D)  $1800.

Question 3

The short run is a period of time:

Accepted Answer

A)  in which a firm uses at least one fixed input. 
B)  that is long enough to permit changes in the firm's plant size. 
C)  in which production occurs within one year. 
D)  in which production occurs within six months. 
A)  in which a firm uses at least one fixed input. 
B)  that is long enough to permit changes in the firm's plant size. 
C)  in which production occurs within one year. 
D)  in which production occurs within six months.

Question 4

The decreasing portion of a firm's long-run average cost curve is attributable to:

Accepted Answer

A)  diminishing returns to scale. 
B)  increasing marginal cost. 
C)  economies of scale. 
D)  diseconomies of scale. 
A)  diminishing returns to scale. 
B)  increasing marginal cost. 
C)  economies of scale. 
D)  diseconomies of scale.

Question 5

Economic profit equals total revenue minus:

Accepted Answer

A)  total explicit costs. 
B)  implicit costs. 
C)  total opportunity costs. 
D)  variable costs. 
A)  total explicit costs. 
B)  implicit costs. 
C)  total opportunity costs. 
D)  variable costs.

Question 6

Economic profit is:

Accepted Answer

A)  always zero. 
B)  always less than accounting profit. 
C)  always more than accounting profit. 
D)  accounting profit less implicit costs. 
A)  always zero. 
B)  always less than accounting profit. 
C)  always more than accounting profit. 
D)  accounting profit less implicit costs.

Question 7

Marginal product measures the change in:

Accepted Answer

A)  total cost brought about by changing production by one unit. 
B)  product price brought about by changing production by one unit. 
C)  a firm's revenue brought about by changing production by one unit. 
D)  the firm's additional output brought about by employing one additional unit of input. 
A)  total cost brought about by changing production by one unit. 
B)  product price brought about by changing production by one unit. 
C)  a firm's revenue brought about by changing production by one unit. 
D)  the firm's additional output brought about by employing one additional unit of input.

Question 8

If MC is less than ATC, we know that:

Accepted Answer

A)  ATC must be rising. 
B)  AVC must be falling. 
C)  ATC must be falling. 
D)  ATC could be rising or falling. 
A)  ATC must be rising. 
B)  AVC must be falling. 
C)  ATC must be falling. 
D)  ATC could be rising or falling.

Question 9

Narrbegin Exhibit 6.3 A marginal product curve   
-As shown in Exhibit 6.3, what was the marginal product of labour when only one worker was hired?

Accepted Answer

A)  50. 
B)  100. 
C)  150. 
D)  175. 
A)  50. 
B)  100. 
C)  150. 
D)  175.

Question 10

Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit.

Accepted Answer

A) True 
 B)False

Question 11

Narrbegin Exhibit 6.9 Cost curves   
-In Exhibit 6.9, constant returns to scale only exist for output levels between:

Accepted Answer

A)  0 and 1000. 
B)  1000 and 2000. 
C)  2000 and 3000. 
D)  3000 and 4000. 
A)  0 and 1000. 
B)  1000 and 2000. 
C)  2000 and 3000. 
D)  3000 and 4000.

Question 12

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200 000 and business expenses of $100 000. She made a/an:

Accepted Answer

A)  economic profit. 
B)  economic loss. 
C)  implicit profit. 
D)  zero economic profit. 
A)  economic profit. 
B)  economic loss. 
C)  implicit profit. 
D)  zero economic profit.

Question 13

If the wage rate is constant:

Accepted Answer

A)  the marginal cost rises as the marginal product of a variable input rises. 
B)  the marginal cost is constant as the marginal product of a variable input rises. 
C)  the marginal cost follows the shape of the marginal product curve. 
D)  the minimum of the marginal cost curve corresponds to the maximum of the marginal product curve. 
A)  the marginal cost rises as the marginal product of a variable input rises. 
B)  the marginal cost is constant as the marginal product of a variable input rises. 
C)  the marginal cost follows the shape of the marginal product curve. 
D)  the minimum of the marginal cost curve corresponds to the maximum of the marginal product curve.

Question 14

Narrbegin Exhibit 6.2 Production of pizza data
 $$\begin{array} { | c | c | } 
\hline \text { Warkers } & \text { Pizzas } \
\hline 0 & 0 \
\hline 1 & 4 \
\hline 2 & 10 \
\hline 3 & 15 \
\hline 4 & 18 \
\hline 5 & 19 \
\hline
\end{array}$$ 
-Exhibit 6.2 shows the change in the production of pizzas as more workers are hired. The marginal product of the fifth worker is.

Accepted Answer

A)  0 
B)  1 
C)  4 
D)  6 
A)  0 
B)  1 
C)  4 
D)  6

Question 15

The main reason why the slope of the production function decreases is because of:

Accepted Answer

A)  increasing returns to the variable factor. 
B)  constant returns to an increasing factor. 
C)  diminishing returns to the variable factor of production. 
D)  diseconomies of scale. 
E)  the fact that all factors are variable. 
A)  increasing returns to the variable factor. 
B)  constant returns to an increasing factor. 
C)  diminishing returns to the variable factor of production. 
D)  diseconomies of scale. 
E)  the fact that all factors are variable.

Question 16

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:

Accepted Answer

A)  the firm should try to produce less output. 
B)  total fixed costs are constant along the LRAC curve. 
C)  there are economies of scale. 
D)  the firm is probably having significant management problems. 
A)  the firm should try to produce less output. 
B)  total fixed costs are constant along the LRAC curve. 
C)  there are economies of scale. 
D)  the firm is probably having significant management problems.

Question 17

Which of the following statements is true?

Accepted Answer

A)  Economic profit equals accounting profit plus implicit costs. 
B)  The short run is any period of time in which there is at least one fixed input. 
C)  A fixed input is any resource for which the quantity can change during the period under consideration. 
D)  In the long run there are no implicit costs. 
A)  Economic profit equals accounting profit plus implicit costs. 
B)  The short run is any period of time in which there is at least one fixed input. 
C)  A fixed input is any resource for which the quantity can change during the period under consideration. 
D)  In the long run there are no implicit costs.

Question 18

Narrbegin Exhibit 6.4 Workers and output data
 $$\begin{array} { | c | c | } 
\hline \text { Labourers } & \begin{array} { c } 
\text { Total } \
\text { product }
\end{array} \
\hline0 & 0 \
\hline 1 &8 \
\hline 2 & 20 \
\hline 3 & 25 \
\hline 4 & 28 \
\hline 5 & 29 \
\hline
\end{array}$$ 
-In Exhibit 6.4, the marginal returns are largest when the _____ worker is hired.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth 
A)  first 
B)  second 
C)  third 
D)  fourth

Question 19

Marginal cost initially decreases because:

Accepted Answer

A)  marginal product is decreasing. 
B)  additional workers add to the complexity of production. 
C)  the extra cost of producing one more unit of output increases. 
D)  of the specialisation of workers. 
A)  marginal product is decreasing. 
B)  additional workers add to the complexity of production. 
C)  the extra cost of producing one more unit of output increases. 
D)  of the specialisation of workers.

Question 20

Narrbegin Exhibit 6.9 Cost curves   
-In Exhibit 6.9, economies of scale only exist for output levels up to:

Accepted Answer

A) 1000. 
B) 2000. 
C) 3000. 
D)  4000. 
A) 1000. 
B) 2000. 
C) 3000. 
D)  4000.

Which of the following statements is possible?

The short run is a period of time:

The decreasing portion of a firm's long-run average cost curve is attributable to:

Economic profit equals total revenue minus:

Economic profit is:

Marginal product measures the change in:

If MC is less than ATC, we know that:

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, what was the marginal product of labour when only one worker was hired?

Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit.

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, constant returns to scale only exist for output levels between:

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200 000 and business expenses of $100 000. She made a/an:

If the wage rate is constant:

Narrbegin Exhibit 6.2 Production of pizza data Warkers Pizzas 0 0 1 4 2 10 3 15 4 18 5 19 -Exhibit 6.2 shows the change in the production of pizzas as more workers are hired. The marginal product of the fifth worker is.

The main reason why the slope of the production function decreases is because of:

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:

Which of the following statements is true?

Narrbegin Exhibit 6.4 Workers and output data Labourers Total product 0 0 1 8 2 20 3 25 4 28 5 29 -In Exhibit 6.4, the marginal returns are largest when the _____ worker is hired.

Marginal cost initially decreases because:

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, economies of scale only exist for output levels up to:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 7: Production Costs

Which of the following statements is possible?

The short run is a period of time:

The decreasing portion of a firm's long-run average cost curve is attributable to:

Economic profit equals total revenue minus:

Economic profit is:

Marginal product measures the change in:

If MC is less than ATC, we know that:

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, what was the marginal product of labour when only one worker was hired?

Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit.

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, constant returns to scale only exist for output levels between:

An economist left her $100 000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200 000 and business expenses of $100 000. She made a/an:

If the wage rate is constant:

Narrbegin Exhibit 6.2 Production of pizza data Warkers Pizzas 0 0 1 4 2 10 3 15 4 18 5 19 -Exhibit 6.2 shows the change in the production of pizzas as more workers are hired. The marginal product of the fifth worker is.

The main reason why the slope of the production function decreases is because of:

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:

Which of the following statements is true?

Narrbegin Exhibit 6.4 Workers and output data Labourers Total product 0 0 1 8 2 20 3 25 4 28 5 29 -In Exhibit 6.4, the marginal returns are largest when the _____ worker is hired.

Marginal cost initially decreases because:

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, economies of scale only exist for output levels up to:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters