Question 1

If production displays increasing marginal returns,then

Accepted Answer

A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns. 
A)  total product rises by a constant amount throughout. 
B)  each new worker hired adds more to output than previous hires. 
C)  the firm must be adding new capital to keep boosting productivity. 
D)  total product reaches a maximum sooner than if production displayed decreasing returns.

Question 2

Figure 6-8  
-Refer to Figure 6-8 above to answer the following questions.
a.Identify the curves in the diagram.
A ________
B ________
C ________
b.What is the numerical value of fixed cost when the quantity of output = 10?
c.What is the numerical value of variable cost when the quantity of output = 10?
d.What is the numerical value of total cost when the quantity of output = 10?
e.What is the numerical value of average fixed cost when the quantity of output = 10?
f.What is the numerical value of average total cost when the quantity of output = 10?
g.On the graph,identify the area that represents the total variable cost of production when the quantity of output = 10.
h.On the graph,identify the area that represents the fixed cost of production when the quantity of output = 10.

Accepted Answer

a.A=Marginal cost curve; B = A

Question 3

Figure 6-2  
-Refer to Figure 6-2.The average product of labour declines after L2 because

Accepted Answer

A)  the marginal product of labour is below the average product of labour. 
B)  the marginal product of labour is falling. 
C)  the marginal product of labour is negative. 
D)  the marginal product of labour is positive. 
A)  the marginal product of labour is below the average product of labour. 
B)  the marginal product of labour is falling. 
C)  the marginal product of labour is negative. 
D)  the marginal product of labour is positive.

Question 4

The short run is the time period during which a firm has at least one input constraint.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is false?

Accepted Answer

A)  When marginal cost equals average total cost, average total cost is at its highest value. 
B)  The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C)  The difference between average total cost and average fixed cost is average variable cost. 
D)  Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.' 
A)  When marginal cost equals average total cost, average total cost is at its highest value. 
B)  The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C)  The difference between average total cost and average fixed cost is average variable cost. 
D)  Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.'

Question 6

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Accepted Answer

A)  $1000. 
B)  $700. 
C)  $300. 
D)  impossible to determine without additional information. 
A)  $1000. 
B)  $700. 
C)  $300. 
D)  impossible to determine without additional information.

Question 7

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 8

What is the difference between total costs,variable costs and fixed costs?

Accepted Answer

Total costs are the costs of all inputs

Question 9

A firm has successfully adopted a positive technological change when

Accepted Answer

A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity. 
A)  it can produce more output using the same inputs. 
B)  it produces less pollution in its production process. 
C)  it can pay its workers less yet increase its output. 
D)  it sees an increase in worker productivity.

Question 10

If the average variable cost curve is above the marginal cost curve,then

Accepted Answer

A)  marginal costs must be decreasing. 
B)  average variable costs must be increasing. 
C)  marginal costs must be increasing. 
D)  marginal costs can be either increasing or decreasing. 
A)  marginal costs must be decreasing. 
B)  average variable costs must be increasing. 
C)  marginal costs must be increasing. 
D)  marginal costs can be either increasing or decreasing.

Question 11

Which of the following is a fixed cost?

Accepted Answer

A)  Payment to hire a security worker to guard the gate to the factory around the clock 
B)  Wages to hire assembly line workers 
C)  Payments to an electric utility company 
D)  Costs of raw materials 
A)  Payment to hire a security worker to guard the gate to the factory around the clock 
B)  Wages to hire assembly line workers 
C)  Payments to an electric utility company 
D)  Costs of raw materials

Question 12

Which of the following is a reason why a firm would experience diseconomies of scale?

Accepted Answer

A)  To finance an increase in the size of its plant, a firm must borrow more money or sell more shares of stock. 
B)  As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C)  As the size of the firm increases, it becomes more difficult to coordinate the operations of its manufacturing plants. 
D)  As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs. 
A)  To finance an increase in the size of its plant, a firm must borrow more money or sell more shares of stock. 
B)  As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C)  As the size of the firm increases, it becomes more difficult to coordinate the operations of its manufacturing plants. 
D)  As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs.

Question 13

In economics,technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-1  
-Refer to Figure 6-1.The marginal product of the 3rd worker is

Accepted Answer

A)  57. 
B)  19. 
C)  15. 
D)  11. 
A)  57. 
B)  19. 
C)  15. 
D)  11.

Question 15

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Accepted Answer

A)  Postage and supplies 
B)  Travel 
C)  Rent 
D)  Wages and salaries 
A)  Postage and supplies 
B)  Travel 
C)  Rent 
D)  Wages and salaries

Question 16

Average fixed costs of production

Accepted Answer

A)  remain constant. 
B)  will rise at a fixed rate as more is produced. 
C)  graph as a U-shaped curve. 
D)  fall as long as output is increased. 
A)  remain constant. 
B)  will rise at a fixed rate as more is produced. 
C)  graph as a U-shaped curve. 
D)  fall as long as output is increased.

Question 17

In the long run,the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 18

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Accepted Answer

A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labour. 
D)  average product of labour. 
A)  production function. 
B)  supply curve, or supply schedule. 
C)  marginal product of labour. 
D)  average product of labour.

Question 19

Which of the following is true at the output level where average total cost is at its minimum?

Accepted Answer

A)  Marginal cost equals average total cost. 
B)  Average variable cost equals fixed cost. 
C)  Marginal cost equals average variable cost. 
D)  Average total cost equals average fixed cost. 
A)  Marginal cost equals average total cost. 
B)  Average variable cost equals fixed cost. 
C)  Marginal cost equals average variable cost. 
D)  Average total cost equals average fixed cost.

Question 20

If we have information about workers' marginal products,then total and average product can be found by

Accepted Answer

A)  dividing marginal costs by the number of workers. 
B)  multiplying the average marginal product times the number of workers. 
C)  summing the marginal values to find the total and multiplying it by the number of workers to get the average. 
D)  summing the marginal values to find the total and dividing it by the number of workers to get the average. 
A)  dividing marginal costs by the number of workers. 
B)  multiplying the average marginal product times the number of workers. 
C)  summing the marginal values to find the total and multiplying it by the number of workers to get the average. 
D)  summing the marginal values to find the total and dividing it by the number of workers to get the average.

If production displays increasing marginal returns,then

Figure 6-2 -Refer to Figure 6-2.The average product of labour declines after L₂because

The short run is the time period during which a firm has at least one input constraint.

Which of the following statements is false?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

What is the difference between total costs,variable costs and fixed costs?

A firm has successfully adopted a positive technological change when

If the average variable cost curve is above the marginal cost curve,then

Which of the following is a fixed cost?

Which of the following is a reason why a firm would experience diseconomies of scale?

In economics,technology only refers to the development of new products.

Figure 6-1 -Refer to Figure 6-1.The marginal product of the 3rd worker is

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Average fixed costs of production

In the long run,the relevant cost is total cost.

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Which of the following is true at the output level where average total cost is at its minimum?

If we have information about workers' marginal products,then total and average product can be found by

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

If production displays increasing marginal returns,then

Figure 6-2 -Refer to Figure 6-2.The average product of labour declines after L2 because

The short run is the time period during which a firm has at least one input constraint.

Which of the following statements is false?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

What is the difference between total costs,variable costs and fixed costs?

A firm has successfully adopted a positive technological change when

If the average variable cost curve is above the marginal cost curve,then

Which of the following is a fixed cost?

Which of the following is a reason why a firm would experience diseconomies of scale?

In economics,technology only refers to the development of new products.

Figure 6-1 -Refer to Figure 6-1.The marginal product of the 3rd worker is

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Average fixed costs of production

In the long run,the relevant cost is total cost.

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Which of the following is true at the output level where average total cost is at its minimum?

If we have information about workers' marginal products,then total and average product can be found by

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

Figure 6-2 -Refer to Figure 6-2.The average product of labour declines after L₂because