Question 1

Total fixed costs:

Accepted Answer

A)  vary as output varies. 
B)  are zero when the output is zero. 
C)  are the costs that do not vary with the output. 
D)  are the costs that increase with output. 
A)  vary as output varies. 
B)  are zero when the output is zero. 
C)  are the costs that do not vary with the output. 
D)  are the costs that increase with output.

Question 2

Average total cost is:

Accepted Answer

A)  average fixed cost added to average total cost. 
B)  total fixed cost divided by wages. 
C)  total variable cost divided by quantity. 
D)  average fixed cost added to average variable cost. 
A)  average fixed cost added to average total cost. 
B)  total fixed cost divided by wages. 
C)  total variable cost divided by quantity. 
D)  average fixed cost added to average variable cost.

Question 3

The marginal cost curve cuts to the:

Accepted Answer

A)  maximum point on the total cost curve. 
B)  minimum point on the total cost curve. 
C)  minimum point on the average variable cost curve. 
D)  midpoint of the total cost curve. 
A)  maximum point on the total cost curve. 
B)  minimum point on the total cost curve. 
C)  minimum point on the average variable cost curve. 
D)  midpoint of the total cost curve.

Question 4

If a firm has total revenue of $300 million, explicit costs of $200 million and implicit costs of $30 million, its accounting profit is:

Accepted Answer

A)  $200 million. 
B)  $100 million. 
C)  $70 million. 
D)  -$10 million. 
A)  $200 million. 
B)  $100 million. 
C)  $70 million. 
D)  -$10 million.

Question 5

The marginal cost:

Accepted Answer

A)  always rises in the short run. 
B)  always falls in the long run. 
C)  rises when the law of diminishing returns is being experienced. 
D)  falls when the law of diminishing returns is being experienced. 
A)  always rises in the short run. 
B)  always falls in the long run. 
C)  rises when the law of diminishing returns is being experienced. 
D)  falls when the law of diminishing returns is being experienced.

Question 6

The primary source of scale diseconomies appears to be:

Accepted Answer

A)  a firm's inability to adopt cost saving innovation. 
B)  too little demand for the firm's product. 
C)  consumers who resist dealing with large firms. 
D)  division of labour. 
A)  a firm's inability to adopt cost saving innovation. 
B)  too little demand for the firm's product. 
C)  consumers who resist dealing with large firms. 
D)  division of labour.

Question 7

Marginal-average rule states that:

Accepted Answer

A)  when marginal cost is above average cost, average cost will fall. 
B)  when marginal cost is above average cost, average cost will remain constant. 
C)  when marginal cost is below average cost, average cost will fall. 
D)  when marginal cost is below average cost, average cost will rise. 
A)  when marginal cost is above average cost, average cost will fall. 
B)  when marginal cost is above average cost, average cost will remain constant. 
C)  when marginal cost is below average cost, average cost will fall. 
D)  when marginal cost is below average cost, average cost will rise.

Question 8

If ATC = $10, AVC = $8, AFC = $2 and MC = $12, for a given level of output Q, then:

Accepted Answer

A)  the firm must be operating on the downward-sloping section of its ATC curve. 
B)  the firm must be operating on the upward-sloping section of its AFC curve. 
C)  the firm must be operating on the upward-sloping section of its ATC curve. 
D)  it is uncertain from the figures given where the firm is operating. 
A)  the firm must be operating on the downward-sloping section of its ATC curve. 
B)  the firm must be operating on the upward-sloping section of its AFC curve. 
C)  the firm must be operating on the upward-sloping section of its ATC curve. 
D)  it is uncertain from the figures given where the firm is operating.

Question 9

Narrbegin Exhibit 6.7 Short-run cost curves schedule for a pizzeria's hourly production
 $$\begin{array} {| c | c | c |} 
\hline \text { Tutal } & \text { Tutal } & \text { Tutal } \
\text { pizzas } & \text { variable cost (\$) } & \text { cost (\$) } \
\hline 0 & 0 & 20 \
10 & 50 & 70 \
20 & 80 & 100 \
30 & 130 & 150 \
40 & 230 & 250\
\hline
\end{array}$$ 
-In Exhibit 6.7, the pizzeria's fixed cost is equal to:

Accepted Answer

A)  $0. 
B)  $20. 
C)  $50. 
D)  $70. 
A)  $0. 
B)  $20. 
C)  $50. 
D)  $70.

Question 10

Narrbegin Exhibit 6.8 Cost schedule for producing pizzas
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Pizzas } & \begin{array} { c } 
\text { Fized } \
\text { cost (\$) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { cost (\$) }
\end{array} & \begin{array} { c } 
\text { Tatal } \
\text { cost (\$) }
\end{array} \
\hline 0 & & & \
\hline 1 & & & 48 \
\hline 2 & & 17 & \
\hline 3 & & 27 & \
\hline 4 & & & 78 \
\hline 5 & 40 & & \
\hline 6 & & 64 & \
\hline 7 & & 00 & \
\hline
\end{array}$$ 
-By filling in the blanks in Exhibit 6.8, the ATC of four pizzas is shown to be equal to:

Accepted Answer

A)  $9.50. 
B)  $10.00. 
C)  $19.50. 
D)  $40.00. 
A)  $9.50. 
B)  $10.00. 
C)  $19.50. 
D)  $40.00.

Question 11

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 labour input begins to fall with the employment of the _____ worker.

Accepted Answer

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

Question 12

Narrbegin Exhibit 6.8 Cost schedule for producing pizzas
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Pizzas } & \begin{array} { c } 
\text { Fized } \
\text { cost (\$) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { cost (\$) }
\end{array} & \begin{array} { c } 
\text { Tatal } \
\text { cost (\$) }
\end{array} \
\hline 0 & & & \
\hline 1 & & & 48 \
\hline 2 & & 17 & \
\hline 3 & & 27 & \
\hline 4 & & & 78 \
\hline 5 & 40 & & \
\hline 6 & & 64 & \
\hline 7 & & 00 & \
\hline
\end{array}$$ 
-By filling in the blanks in Exhibit 6.8, the AVC of three pizzas is shown to be equal to:

Accepted Answer

A)  $9.00. 
B)  $10.00. 
C)  $13.33. 
D)  $22.33. 
A)  $9.00. 
B)  $10.00. 
C)  $13.33. 
D)  $22.33.

Question 13

When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  diminishing returns. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  diminishing returns.

Question 14

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 marginal cost of the first unit of output is:

Accepted Answer

A)  $200. 
B)  $700. 
C)  $900. 
D)  $1000. 
A)  $200. 
B)  $700. 
C)  $900. 
D)  $1000.

Question 15

As output increases:

Accepted Answer

A)  ATC rises at first and then falls. 
B)  AFC falls at first and then rises. 
C)  AVC cuts ATC when MC is at its minimum. 
D)  AFC declines and the gap between ATC and AVC declines. 
A)  ATC rises at first and then falls. 
B)  AFC falls at first and then rises. 
C)  AVC cuts ATC when MC is at its minimum. 
D)  AFC declines and the gap between ATC and AVC declines.

Question 16

The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

Accepted Answer

A)  law of demand 
B)  law of diminishing supply 
C)  law of diminishing returns 
D)  law of returns to scale 
A)  law of demand 
B)  law of diminishing supply 
C)  law of diminishing returns 
D)  law of returns to scale

Question 17

When the cost curves have U-shapes, at the point where marginal cost equals average total cost:

Accepted Answer

A)  average variable cost is constant. 
B)  fixed cost is declining. 
C)  average total cost is at its maximum and the marginal cost is falling. 
D)  average total cost is at its minimum and the marginal cost is rising. 
A)  average variable cost is constant. 
B)  fixed cost is declining. 
C)  average total cost is at its maximum and the marginal cost is falling. 
D)  average total cost is at its minimum and the marginal cost is rising.

Question 18

The shape of the MC curve is inversely related to the shape of the marginal product curve.

Accepted Answer

A) True 
 B)False

Question 19

Long-run economies of scale exists when the long-run average cost curve:

Accepted Answer

A)  rises. 
B)  remains constant. 
C)  falls. 
D)  does not exist. 
A)  rises. 
B)  remains constant. 
C)  falls. 
D)  does not exist.

Question 20

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 product of the third worker is:

Accepted Answer

A)  0. 
B)  5. 
C)  10. 
D)  12. 
A)  0. 
B)  5. 
C)  10. 
D)  12.

Total fixed costs:

Average total cost is:

The marginal cost curve cuts to the:

If a firm has total revenue of $300 million, explicit costs of $200 million and implicit costs of $30 million, its accounting profit is:

The marginal cost:

The primary source of scale diseconomies appears to be:

Marginal-average rule states that:

If ATC = $10, AVC = $8, AFC = $2 and MC = $12, for a given level of output Q, then:

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 labour input begins to fall with the employment of the _____ worker.

When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are:

As output increases:

The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

When the cost curves have U-shapes, at the point where marginal cost equals average total cost:

The shape of the MC curve is inversely related to the shape of the marginal product curve.

Long-run economies of scale exists when the long-run average cost curve:

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 product of the third worker is:

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

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Exam 7: Production Costs

Total fixed costs:

Average total cost is:

The marginal cost curve cuts to the:

If a firm has total revenue of $300 million, explicit costs of $200 million and implicit costs of $30 million, its accounting profit is:

The marginal cost:

The primary source of scale diseconomies appears to be:

Marginal-average rule states that:

If ATC = $10, AVC = $8, AFC = $2 and MC = $12, for a given level of output Q, then:

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 labour input begins to fall with the employment of the _____ worker.

When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are:

As output increases:

The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

When the cost curves have U-shapes, at the point where marginal cost equals average total cost:

The shape of the MC curve is inversely related to the shape of the marginal product curve.

Long-run economies of scale exists when the long-run average cost curve:

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 product of the third worker is:

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