Question 1

The minimum efficient scale is

Accepted Answer

A)  the level of output where diminishing returns have not set in yet. 
B)  the plant size that yields the most profit. 
C)  the level of operation where long-run average costs are lowest. 
D)  the smallest output level where the firm finally reaches productive efficiency. 
A)  the level of output where diminishing returns have not set in yet. 
B)  the plant size that yields the most profit. 
C)  the level of operation where long-run average costs are lowest. 
D)  the smallest output level where the firm finally reaches productive efficiency.

Question 2

Which of the following would be categorised as an opportunity cost? 
a.not being able to spend your $10 000 savings if you sink the money into your business
b.the cost of purchasing supplies for your house-cleaning business
c.the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above 
A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above

Question 3

Table 6-1
   Table 6-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 6-1.What is the average product of labour when the farm hires 5 workers?

Accepted Answer

A)  4 kilograms 
B)  10.8 kilograms 
C)  38.2 kilograms 
D)  54 kilograms 
A)  4 kilograms 
B)  10.8 kilograms 
C)  38.2 kilograms 
D)  54 kilograms

Question 4

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 5

As output increases,average fixed cost gets smaller and smaller.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an example of market 'production',as used by economists?

Accepted Answer

A)  Garvey takes out a low-cost government loan to start his pet-sitting business. 
B)  Heidi makes a pizza for her family's dinner. 
C)  Katrina works as a cashier at the local produce stand. 
D)  The theatre and film studies department in Fine Arts University stages a play at the local theatre. 
A)  Garvey takes out a low-cost government loan to start his pet-sitting business. 
B)  Heidi makes a pizza for her family's dinner. 
C)  Katrina works as a cashier at the local produce stand. 
D)  The theatre and film studies department in Fine Arts University stages a play at the local theatre.

Question 7

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

Accepted Answer

A)  $65 
B)  $50 
C)  $15 
D)  It is impossible to determine without additional information. 
A)  $65 
B)  $50 
C)  $15 
D)  It is impossible to determine without additional information.

Question 8

The division of labour and specialisation explain

Accepted Answer

A)  why, when the marginal product of labour increases, so does the average product of labour. 
B)  why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labour rises as a firm hires its first units of labour. 
D)  why firms may find it profitable to use more workers when the marginal product of labour is negative. 
A)  why, when the marginal product of labour increases, so does the average product of labour. 
B)  why the average product of labour falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labour rises as a firm hires its first units of labour. 
D)  why firms may find it profitable to use more workers when the marginal product of labour is negative.

Question 9

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Accepted Answer

A)  its labour is more productive in a smaller plant. 
B)  its diseconomies of scale are less. 
C)  the firm should reduce its plant size even more. 
D)  the firm is now profitable. 
A)  its labour is more productive in a smaller plant. 
B)  its diseconomies of scale are less. 
C)  the firm should reduce its plant size even more. 
D)  the firm is now profitable.

Question 10

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 labour

Question 11

Stan owns a software design business.He does not have time to expand his office space or redesign the layout of his office.He can increase the amount of work he does by working more hours,asking his current employees to work more hours,or hiring more employees.The relationship between Stan's inputs and the maximum output his firm can produce is called his

Accepted Answer

A)  long-run production function. 
B)  production possibility frontier. 
C)  short-run production function. 
D)  cost function. 
A)  long-run production function. 
B)  production possibility frontier. 
C)  short-run production function. 
D)  cost function.

Question 12

If a firm experiences diminishing returns,its marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 13

Table 6-7
   Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 6-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

Accepted Answer

A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44 
A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44

Question 14

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in

Question 15

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-10  
-Refer to Figure 6-10.Identify the minimum efficient scale of production.

Accepted Answer

A)  Qa 
B)  Qb 
C)  Qc 
D)  Qd 
A)  Qa 
B)  Qb 
C)  Qc 
D)  Qd

Question 17

Table 6-7
   Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 6-7.What is the variable cost of production when the firm produces 115 lanterns?

Accepted Answer

A)  $1556 
B)  $1157 
C)  $956 
D)  $10.05 
A)  $1556 
B)  $1157 
C)  $956 
D)  $10.05

Question 18

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Accepted Answer

Yes.As long as the marginal co

Question 19

Figure 6-1  
-Refer to Figure 6-1.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 20

Which of the following is an implicit cost of production?

Accepted Answer

A)  The loss in the value of capital equipment due to wear and tear 
B)  The salary you pay yourself for running your business 
C)  The utility bill paid to water, electricity, and natural gas companies 
D)  The interest you pay your mother for the money she loaned you to start your business 
A)  The loss in the value of capital equipment due to wear and tear 
B)  The salary you pay yourself for running your business 
C)  The utility bill paid to water, electricity, and natural gas companies 
D)  The interest you pay your mother for the money she loaned you to start your business

The minimum efficient scale is

Table 6-1 Table 6-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 6-1.What is the average product of labour when the farm hires 5 workers?

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

As output increases,average fixed cost gets smaller and smaller.

Which of the following is an example of market 'production',as used by economists?

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

The division of labour and specialisation explain

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

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

If a firm experiences diminishing returns,its marginal product must be negative.

Table 6-7 Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

State the law of diminishing marginal returns.

Economic costs include implicit costs but not explicit costs.

Figure 6-10 -Refer to Figure 6-10.Identify the minimum efficient scale of production.

Table 6-7 Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6-7.What is the variable cost of production when the firm produces 115 lanterns?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Figure 6-1 -Refer to Figure 6-1.The marginal product of the 7th worker is

Which of the following is an implicit cost of production?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 6: Firms,the Stock Market,and Corporate Governance

The minimum efficient scale is

Table 6-1 Table 6-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 6-1.What is the average product of labour when the farm hires 5 workers?

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

As output increases,average fixed cost gets smaller and smaller.

Which of the following is an example of market 'production',as used by economists?

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

The division of labour and specialisation explain

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

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

If a firm experiences diminishing returns,its marginal product must be negative.

Table 6-7 Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

State the law of diminishing marginal returns.

Economic costs include implicit costs but not explicit costs.

Figure 6-10 -Refer to Figure 6-10.Identify the minimum efficient scale of production.

Table 6-7 Table 6-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6-7.What is the variable cost of production when the firm produces 115 lanterns?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Figure 6-1 -Refer to Figure 6-1.The marginal product of the 7th worker is

Which of the following is an implicit cost of production?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters