Question 1

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Accepted Answer

A)  negative returns to scale. 
B)  diminishing returns. 
C)  inverse return to labour. 
D)  demand. 
A)  negative returns to scale. 
B)  diminishing returns. 
C)  inverse return to labour. 
D)  demand.

Question 2

A fixed input is any resource for which the quantity can:

Accepted Answer

A)  change any time. 
B)  change during a specific time. 
C)  not change at all. 
D)  not change during a specific time. 
A)  change any time. 
B)  change during a specific time. 
C)  not change at all. 
D)  not change during a specific time.

Question 3

Narrbegin Exhibit 6.1: The production function   
-In Exhibit 6.1, the marginal product of labour is equal to zero at point:

Accepted Answer

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

Question 4

In the long run, total fixed cost will:

Accepted Answer

A)  remain constant. 
B)  increase. 
C)  decrease. 
D)  not exist by definition. 
A)  remain constant. 
B)  increase. 
C)  decrease. 
D)  not exist by definition.

Question 5

Narrbegin Exhibit 6.10 Long-run average cost   Narrend
-If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Accepted Answer

A)  500 units per week. 
B)  1000 units per week. 
C)  1500 units per week. 
D)  2000 units per week. 
A)  500 units per week. 
B)  1000 units per week. 
C)  1500 units per week. 
D)  2000 units per week.

Question 6

Suppose the cost to produce an additional unit of output is $20. What is the change in total variable cost?

Accepted Answer

A)  $10. 
B)  $20. 
C)  $30. 
D)  $40. 
A)  $10. 
B)  $20. 
C)  $30. 
D)  $40.

Question 7

Narrbegin Exhibit 6.9 Cost curves   
-In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Accepted Answer

A)  Diseconomies of scale; constant returns to scale; economies of scale. 
B)  Constant returns to scale; economies of scale; diseconomies of scale. 
C)  Economies of scale; constant returns to scale; diseconomies of scale. 
D)  Diseconomies of scale; economies of scale; constant returns to scale. 
A)  Diseconomies of scale; constant returns to scale; economies of scale. 
B)  Constant returns to scale; economies of scale; diseconomies of scale. 
C)  Economies of scale; constant returns to scale; diseconomies of scale. 
D)  Diseconomies of scale; economies of scale; constant returns to scale.

Question 8

For a typical firm, the long-run average total cost curve:

Accepted Answer

A)  is a tangent to the minimum point of each possible short-run average total cost curve. 
B)  is a tangent to each possible short-run average total cost curve at one point. 
C)  intersects each possible short-run average total cost curve at two points. 
D)  passes through the minimum points of all possible short-run average total cost curves. 
A)  is a tangent to the minimum point of each possible short-run average total cost curve. 
B)  is a tangent to each possible short-run average total cost curve at one point. 
C)  intersects each possible short-run average total cost curve at two points. 
D)  passes through the minimum points of all possible short-run average total cost curves.

Question 9

The vertical distance between the TC and TVC is:

Accepted Answer

A)  AVC. 
B)  MC. 
C)  TFC. 
D)  ATC. 
E)  TMC. 
A)  AVC. 
B)  MC. 
C)  TFC. 
D)  ATC. 
E)  TMC.

Question 10

Marginal product can be:

Accepted Answer

A)  positive, zero or negative. 
B)  only positive. 
C)  only negative. 
D)  positive or zero. 
A)  positive, zero or negative. 
B)  only positive. 
C)  only negative. 
D)  positive or zero.

Question 11

Which of the following is not a source of economies of scale?

Accepted Answer

A)  Division and specialisation of labour. 
B)  Increase in output. 
C)  More efficient use of capital. 
D)  All of these. 
A)  Division and specialisation of labour. 
B)  Increase in output. 
C)  More efficient use of capital. 
D)  All of these.

Question 12

Total cost is equal to total fixed costs plus total variable cost.

Accepted Answer

A) True 
 B)False

Question 13

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 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 14

The shape of the total cost curve is:

Accepted Answer

A)  completely following the shape of TFC. 
B)  always upwards sloping. 
C)  intersecting the TVC at its minimum. 
D)  mimicing the shape of the TVC. 
A)  completely following the shape of TFC. 
B)  always upwards sloping. 
C)  intersecting the TVC at its minimum. 
D)  mimicing the shape of the TVC.

Question 15

Marginal cost is defined as the increase in total cost resulting from an increase in:

Accepted Answer

A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labour. 
A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labour.

Question 16

If MC is greater 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 17

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 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 18

As a firm expands its output from zero:

Accepted Answer

A)  marginal wage of labour increases. 
B)  it suffers from the diseconomies of scale. 
C)  it has to pay wages, rent and electricity to cover the variable costs. 
D)  no change in the cost is occurring. 
A)  marginal wage of labour increases. 
B)  it suffers from the diseconomies of scale. 
C)  it has to pay wages, rent and electricity to cover the variable costs. 
D)  no change in the cost is occurring.

Question 19

Narrbegin Exhibit 6.3 A marginal product curve   
-As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C):

Accepted Answer

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

Question 20

When marginal product is rising, marginal cost will be:

Accepted Answer

A)  falling. 
B)  rising. 
C)  rising or falling. 
D)  constant. 
A)  falling. 
B)  rising. 
C)  rising or falling. 
D)  constant.

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

A fixed input is any resource for which the quantity can:

Narrbegin Exhibit 6.1: The production function -In Exhibit 6.1, the marginal product of labour is equal to zero at point:

In the long run, total fixed cost will:

Narrbegin Exhibit 6.10 Long-run average cost Narrend -If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Suppose the cost to produce an additional unit of output is $20. What is the change in total variable cost?

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

For a typical firm, the long-run average total cost curve:

The vertical distance between the TC and TVC is:

Marginal product can be:

Which of the following is not a source of economies of scale?

Total cost is equal to total fixed costs plus total variable cost.

The shape of the total cost curve is:

Marginal cost is defined as the increase in total cost resulting from an increase in:

If MC is greater than ATC, we know that:

As a firm expands its output from zero:

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C):

When marginal product is rising, marginal cost will be:

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

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

A fixed input is any resource for which the quantity can:

Narrbegin Exhibit 6.1: The production function -In Exhibit 6.1, the marginal product of labour is equal to zero at point:

In the long run, total fixed cost will:

Narrbegin Exhibit 6.10 Long-run average cost Narrend -If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Suppose the cost to produce an additional unit of output is $20. What is the change in total variable cost?

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

For a typical firm, the long-run average total cost curve:

The vertical distance between the TC and TVC is:

Marginal product can be:

Which of the following is not a source of economies of scale?

Total cost is equal to total fixed costs plus total variable cost.

The shape of the total cost curve is:

Marginal cost is defined as the increase in total cost resulting from an increase in:

If MC is greater than ATC, we know that:

As a firm expands its output from zero:

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C):

When marginal product is rising, marginal cost will be:

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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