Question 1

Costs that change as output changes are called incremental costs.

Accepted Answer

A) True 
 B)False

Question 2

What is the marginal product of labour and what is the average product of labour?

Accepted Answer

The marginal product of labour is the ad

Question 3

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per aeroplane 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 4

Figure 6-3   Fancy Footwear manufactures shoes. Figure 6-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 6-3.Which of the following statements correctly describes the curves in the figure?

Accepted Answer

A)  The marginal product of labour curve is represented by curve A and the average product of labour curve is represented by curve B. 
B)  The marginal product of labour curve is represented by curve B and the average product of labour curve is represented by curve A. 
C)  Curve A could represent either the average product curve or the marginal product curve. Curve B represents the total product curve. 
D)  Curve B could represent either the average product curve or the marginal product curve. Curve A represents the total product curve. 
A)  The marginal product of labour curve is represented by curve A and the average product of labour curve is represented by curve B. 
B)  The marginal product of labour curve is represented by curve B and the average product of labour curve is represented by curve A. 
C)  Curve A could represent either the average product curve or the marginal product curve. Curve B represents the total product curve. 
D)  Curve B could represent either the average product curve or the marginal product curve. Curve A represents the total product curve.

Question 5

Figure 6-5  
-Refer to Figure 6-5.Identify the curves in the diagram.

Accepted Answer

A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve 
A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve

Question 6

The long-run average cost curve shows

Accepted Answer

A)  the lowest average cost of producing every level of output in the long run. 
B)  where the most profitable level of output occurs. 
C)  the average cost of producing where diminishing returns are not present. 
D)  the plant size or scale that the firm should build. 
A)  the lowest average cost of producing every level of output in the long run. 
B)  where the most profitable level of output occurs. 
C)  the average cost of producing where diminishing returns are not present. 
D)  the plant size or scale that the firm should build.

Question 7

The change in a firm's total cost from producing one more unit of a good or service is

Accepted Answer

A)  the result of economies of scale. 
B)  the definition of marginal product. 
C)  the definition of marginal cost. 
D)  impossible to observe in large firms with many manufacturing plants. 
A)  the result of economies of scale. 
B)  the definition of marginal product. 
C)  the definition of marginal cost. 
D)  impossible to observe in large firms with many manufacturing plants.

Question 8

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

Question 9

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  The cost of labour 
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 labour 
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 11

Table 6-3
  
-Refer to Table 6-3.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 highest value of the average product of labour is ________ when Manny hires ________ workers.

Accepted Answer

A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4 
A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4

Question 12

Figure 6-11   Figure 6-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc.
-Refer to Figure 6-11.The minimum efficient scale of output is reached at what rate of output?

Accepted Answer

A)  10 000 workers 
B)  5000 picture frames 
C)  20 000 picture frames 
D)  10 000 picture frames 
A)  10 000 workers 
B)  5000 picture frames 
C)  20 000 picture frames 
D)  10 000 picture frames

Question 13

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlour.
a.The payment he makes to buy tattoo ink.
b.The wages he pays his employees.
c.The $500-per-month payment he makes to advertise his shop on highway billboards.
d.The lease payment he makes to the landlord who owns the building where his shop is located.
e.The payment he makes on his liability insurance policy.

Accepted Answer

c,d,and e are fixed costs because they d

Question 14

Figure 6-2  
-Refer to Figure 6-2.Diminishing returns to labour set in

Accepted Answer

A)  after L1. 
B)  after L2. 
C)  after L3. 
D)  immediately. 
A)  after L1. 
B)  after L2. 
C)  after L3. 
D)  immediately.

Question 15

Table 6-3
  
-Refer to Table 6-3.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 labour 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 16

Which of the following is an example of positive technological change?

Accepted Answer

A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surfboards. 
B)  A firm buys an additional machine that it uses to make surfboards. As a result, the firm is able to increase its weekly production of surfboards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surfboards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surfboards they can produce per day. 
A)  A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surfboards. 
B)  A firm buys an additional machine that it uses to make surfboards. As a result, the firm is able to increase its weekly production of surfboards. 
C)  A firm conducts a new advertising campaign. As a result, the demand for the firm's surfboards increases. 
D)  A firm's workers participate in a training program designed to increase the number of surfboards they can produce per day.

Question 17

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A)  the marginal cost curve. 
B)  the average fixed cost curve. 
C)  the average product curve. 
D)  the firm's production function. 
A)  the marginal cost curve. 
B)  the average fixed cost curve. 
C)  the average product curve. 
D)  the firm's production function.

Question 18

Implicit costs can be defined as

Accepted Answer

A)  accounting profit minus explicit cost. 
B)  the non-monetary opportunity cost of using the firm's own resources. 
C)  the deferred cost of production. 
D)  total cost minus fixed costs. 
A)  accounting profit minus explicit cost. 
B)  the non-monetary opportunity cost of using the firm's own resources. 
C)  the deferred cost of production. 
D)  total cost minus fixed costs.

Question 19

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Accepted Answer

A)  explicit cost of production. 
B)  marginal cost of production. 
C)  average cost of production. 
D)  implicit cost of production. 
A)  explicit cost of production. 
B)  marginal cost of production. 
C)  average cost of production. 
D)  implicit cost of production.

Question 20

In the world oil market,oil is supplied up to the point where

Accepted Answer

A)  the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B)  the marginal cost of the last barrel is zero. 
C)  the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D)  the marginal cost of the last barrel is at a maximum. 
A)  the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B)  the marginal cost of the last barrel is zero. 
C)  the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D)  the marginal cost of the last barrel is at a maximum.

Costs that change as output changes are called incremental costs.

What is the marginal product of labour and what is the average product of labour?

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

Figure 6-3 Fancy Footwear manufactures shoes. Figure 6-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 6-3.Which of the following statements correctly describes the curves in the figure?

Figure 6-5 -Refer to Figure 6-5.Identify the curves in the diagram.

The long-run average cost curve shows

The change in a firm's total cost from producing one more unit of a good or service is

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

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

Figure 6-11 Figure 6-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc. -Refer to Figure 6-11.The minimum efficient scale of output is reached at what rate of output?

Figure 6-2 -Refer to Figure 6-2.Diminishing returns to labour set in

Which of the following is an example of positive technological change?

The shape of the average total cost curve is determined by the shape of

Implicit costs can be defined as

The change in a firm's total cost from producing one more unit of a good or service is the firm's

In the world oil market,oil is supplied up to the point where

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

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

Costs that change as output changes are called incremental costs.

What is the marginal product of labour and what is the average product of labour?

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

Figure 6-3 Fancy Footwear manufactures shoes. Figure 6-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 6-3.Which of the following statements correctly describes the curves in the figure?

Figure 6-5 -Refer to Figure 6-5.Identify the curves in the diagram.

The long-run average cost curve shows

The change in a firm's total cost from producing one more unit of a good or service is

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

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

Figure 6-2 -Refer to Figure 6-2.Diminishing returns to labour set in

Which of the following is an example of positive technological change?

The shape of the average total cost curve is determined by the shape of

Implicit costs can be defined as

The change in a firm's total cost from producing one more unit of a good or service is the firm's

In the world oil market,oil is supplied up to the point where

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