Question 1

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 2

Figure 11-3  
-Refer to Figure 11-3.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost. 
A)  It remains constant. 
B)  It rises. 
C)  It falls. 
D)  It could rise or fall depending on what happens to total cost.

Question 3

A firm's cost of production is determined by all of the following except

Accepted Answer

A)  the technology used to produce its output. 
B)  the productivity of its workers. 
C)  the cost of raw material used in production. 
D)  the amount of corporate taxes it must pay on its profit. 
A)  the technology used to produce its output. 
B)  the productivity of its workers. 
C)  the cost of raw material used in production. 
D)  the amount of corporate taxes it must pay on its profit.

Question 4

A downward sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Accepted Answer

A) True 
 B)False

Question 5

If a firm experiences positive technological change,it is able to produce more output using the same inputs.

Accepted Answer

A) True 
 B)False

Question 6

Long-run cost curves are U-shaped because

Accepted Answer

A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply. 
A)  of the law of demand. 
B)  of the law of diminishing returns. 
C)  of economies and diseconomies of scale. 
D)  of the law of supply.

Question 7

Which of the following is a factor of production that generally is fixed in the short run?

Accepted Answer

A)  raw materials 
B)  labor 
C)  a factory building 
D)  water 
A)  raw materials 
B)  labor 
C)  a factory building 
D)  water

Question 8

Figure 11-1  
-Refer to Figure 11-1.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 9

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Accepted Answer

A)  $100 
B)  $124.40 
C)  $220 
D)  $340 
A)  $100 
B)  $124.40 
C)  $220 
D)  $340

Question 10

What is the difference between total cost and variable cost in the long run?

Accepted Answer

In the short run,total cost =

Question 11

Figure 11-1  
-Refer to Figure 11-1.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 12

What are economies of scale? What are diseconomies of scale?

Accepted Answer

Economies of scale occur when

Question 13

Improvements in inventory control represent a positive technological change because they allow firms to produce the same output with fewer inputs.In recent years,many firms have adopted an inventory system in which firms accept shipments from suppliers as close as possible to the time they will be needed.Wal-Mart has been a pioneer in using inventory control systems to this in its stores.This type of inventory system is called a ________ inventory system.

Accepted Answer

A)  first-in-first-out 
B)  cash-and-carry 
C)  just-in-time 
D)  buy-now-pay-later 
A)  first-in-first-out 
B)  cash-and-carry 
C)  just-in-time 
D)  buy-now-pay-later

Question 14

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.

Exam 11: Technology, production, and Costs

Average fixed costs of production

Figure 11-3 -Refer to Figure 11-3.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

A firm's cost of production is determined by all of the following except

A downward sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

If a firm experiences positive technological change,it is able to produce more output using the same inputs.

Long-run cost curves are U-shaped because

Which of the following is a factor of production that generally is fixed in the short run?

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

What is the difference between total cost and variable cost in the long run?

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 7th worker is

What are economies of scale? What are diseconomies of scale?

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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