Question 1

Which of the following statements best describes the economic short run?

Accepted Answer

A)  It is a period of one year or less. 
B)  It is a period during which firms are free to vary all of their inputs. 
C)  It is a period during which at least one of the firm's inputs is fixed. 
D)  It is a period during which fixed inputs become variable inputs because of depreciation. 
A)  It is a period of one year or less. 
B)  It is a period during which firms are free to vary all of their inputs. 
C)  It is a period during which at least one of the firm's inputs is fixed. 
D)  It is a period during which fixed inputs become variable inputs because of depreciation.

Question 2

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per aeroplane landing,then the expansion would provide ________ to the airlines.

Accepted Answer

A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs 
A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs

Question 3

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1000 per month for interest on the loan.He has 10 employees,each of whom is paid $4000 per month.Because his business has been successful,next month he will increase employee wages to $5000.If the revenue from his business remains at its current level,Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

Accepted Answer

A)  The payments Stan makes to his employees are variable costs and explicit costs. 
B)  The monthly payment Stan makes for his bank loan is an implicit cost. 
C)  The monthly payment Stan makes for his bank loan is a fixed cost. 
D)  The time and effort Stan spends on his software design business is an implicit cost. 
A)  The payments Stan makes to his employees are variable costs and explicit costs. 
B)  The monthly payment Stan makes for his bank loan is an implicit cost. 
C)  The monthly payment Stan makes for his bank loan is a fixed cost. 
D)  The time and effort Stan spends on his software design business is an implicit cost.

Question 4

As output increases,

Accepted Answer

A)  average variable cost becomes smaller and smaller. 
B)  the difference between average total cost and average variable cost decreases. 
C)  marginal cost increases continuously. 
D)  the difference between average total cost and average variable cost becomes greater and greater. 
A)  average variable cost becomes smaller and smaller. 
B)  the difference between average total cost and average variable cost decreases. 
C)  marginal cost increases continuously. 
D)  the difference between average total cost and average variable cost becomes greater and greater.

Question 5

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

Accepted Answer

A) True 
 B)False

Question 6

An explicit cost is defined as

Accepted Answer

A)  a cost that does not change as output changes. 
B)  a non-monetary opportunity cost. 
C)  a cost that involves spending money. 
D)  a non-monetary accounting cost. 
A)  a cost that does not change as output changes. 
B)  a non-monetary opportunity cost. 
C)  a cost that involves spending money. 
D)  a non-monetary accounting cost.

Question 7

Table 6-2
   Table 6-2 summarises production at the Crunchy Apple Orchard for the month of April 2005.
-Refer to Table 6-2.What is the marginal product of the 4th worker?

Accepted Answer

A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels 
A)  230 bushels 
B)  57.4 bushels 
C)  50 bushels 
D)  12.4 bushels

Question 8

Describe the difference between technology and positive technological change.

Accepted Answer

A firm's technology refers to the proces

Question 9

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can

Question 10

Figure 6-5  
-Refer to Figure 6-5.The vertical difference between curves F and G measures

Accepted Answer

A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs. 
A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs.

Question 11

If production displays diseconomies of scale,the long-run average cost curve is

Accepted Answer

A)  above the short-run average total cost curve. 
B)  above the long-run marginal cost curve. 
C)  upward sloping. 
D)  downward sloping. 
A)  above the short-run average total cost curve. 
B)  above the long-run marginal cost curve. 
C)  upward sloping. 
D)  downward sloping.

Question 12

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

Accepted Answer

A)  the first workers hired get to use the best equipment. 
B)  specialisation allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C)  the best workers are hired first and later hires are not as skilled. 
D)  beyond some point, a firm has hired too many workers. 
A)  the first workers hired get to use the best equipment. 
B)  specialisation allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C)  the best workers are hired first and later hires are not as skilled. 
D)  beyond some point, a firm has hired too many workers.

Question 13

Average total cost is equal to average variable cost minus average fixed cost.

Accepted Answer

A) True 
 B)False

Question 14

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

Accepted Answer

A)  0.16 
B)  3 
C)  4.67 
D)  36 
A)  0.16 
B)  3 
C)  4.67 
D)  36

Question 15

Suppose a chain of convenience stores reorganised its system of supplying its stores with food.This led to a sharp reduction in the number of trucks that the company had to use and increased the amount of fresh food on store shelves.Which of the following statements best describes the chain stores' actions?

Accepted Answer

A)  The change implemented is not an example of technological change because it did not require the use of new machinery or equipment. 
B)  Technological change refers only to the introduction of new products or improvements to existing products. As such, the scenario described in the question is not technological change. 
C)  The firm is able to produce more output (increase its sales) using fewer inputs (less trucks). Therefore, the chain of convenience stores has implemented a positive technological change. 
D)  The scenario described is an example of management efficiency and not technological change. Essentially, the chain changes its way of operating its business. 
A)  The change implemented is not an example of technological change because it did not require the use of new machinery or equipment. 
B)  Technological change refers only to the introduction of new products or improvements to existing products. As such, the scenario described in the question is not technological change. 
C)  The firm is able to produce more output (increase its sales) using fewer inputs (less trucks). Therefore, the chain of convenience stores has implemented a positive technological change. 
D)  The scenario described is an example of management efficiency and not technological change. Essentially, the chain changes its way of operating its business.

Question 16

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Accepted Answer

A)  impossible to determine with the information given. 
B)  12 800. 
C)  784. 
D)  50. 
A)  impossible to determine with the information given. 
B)  12 800. 
C)  784. 
D)  50.

Question 17

Figure 6-7   Figure 6-7 shows the cost structure for a firm.
-Refer to Figure 6-7.If output is 100 units,what is the fixed cost of production?

Accepted Answer

A)  $8 
B)  $800 
C)  $1000 
D)  This cannot be determined from the diagram. 
A)  $8 
B)  $800 
C)  $1000 
D)  This cannot be determined from the diagram.

Question 18

The processes a firm uses to turn inputs into outputs of goods and services is called

Accepted Answer

A)  technology. 
B)  technological change. 
C)  marginal analysis. 
D)  positive economic analysis. 
A)  technology. 
B)  technological change. 
C)  marginal analysis. 
D)  positive economic analysis.

Question 19

Red Stone Creamery currently hires 5 workers.When it added a 6th worker,its output actually fell.Which of the following statements is true?

Accepted Answer

A)  The marginal product of the sixth worker must be negative. 
B)  The average product of the sixth worker is negative. 
C)  The sixth worker is not as skilled as the fifth worker. 
D)  The total product becomes negative. 
A)  The marginal product of the sixth worker must be negative. 
B)  The average product of the sixth worker is negative. 
C)  The sixth worker is not as skilled as the fifth worker. 
D)  The total product becomes negative.

Question 20

Which of the following can a firm do in the long run but not in the short run?

Accepted Answer

A)  Decrease the size of its physical plant 
B)  Reduce its rate of output by laying off workers 
C)  Increase its variable costs 
D)  Increase its use of raw materials 
A)  Decrease the size of its physical plant 
B)  Reduce its rate of output by laying off workers 
C)  Increase its variable costs 
D)  Increase its use of raw materials

Which of the following statements best describes the economic short run?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per aeroplane landing,then the expansion would provide ________ to the airlines.

As output increases,

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

An explicit cost is defined as

Table 6-2 Table 6-2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 6-2.What is the marginal product of the 4th worker?

Describe the difference between technology and positive technological change.

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Figure 6-5 -Refer to Figure 6-5.The vertical difference between curves F and G measures

If production displays diseconomies of scale,the long-run average cost curve is

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

Average total cost is equal to average variable cost minus average fixed cost.

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Figure 6-7 Figure 6-7 shows the cost structure for a firm. -Refer to Figure 6-7.If output is 100 units,what is the fixed cost of production?

The processes a firm uses to turn inputs into outputs of goods and services is called

Red Stone Creamery currently hires 5 workers.When it added a 6th worker,its output actually fell.Which of the following statements is true?

Which of the following can a firm do in the long run but not in the short run?

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

Which of the following statements best describes the economic short run?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per aeroplane landing,then the expansion would provide ________ to the airlines.

As output increases,

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

An explicit cost is defined as

Table 6-2 Table 6-2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 6-2.What is the marginal product of the 4th worker?

Describe the difference between technology and positive technological change.

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Figure 6-5 -Refer to Figure 6-5.The vertical difference between curves F and G measures

If production displays diseconomies of scale,the long-run average cost curve is

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

Average total cost is equal to average variable cost minus average fixed cost.

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output,what is the marginal product of the 12th worker?

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Figure 6-7 Figure 6-7 shows the cost structure for a firm. -Refer to Figure 6-7.If output is 100 units,what is the fixed cost of production?

The processes a firm uses to turn inputs into outputs of goods and services is called

Red Stone Creamery currently hires 5 workers.When it added a 6th worker,its output actually fell.Which of the following statements is true?

Which of the following can a firm do in the long run but not in the short run?

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