Question 1

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 2

The formula for total fixed cost is

Accepted Answer

A)  TFC = TC + TVC. 
B)  TFC = TVC - TC. 
C)  TFC = TC/TVC. 
D)  TFC = TC - TVC. 
A)  TFC = TC + TVC. 
B)  TFC = TVC - TC. 
C)  TFC = TC/TVC. 
D)  TFC = TC - TVC.

Question 3

Figure 11-12  
-Refer to Figure 11-12.Which of the following statements about the input combinations shown in the diagram is false?

Accepted Answer

A)  The firm produces a higher output level when it uses input combination b compared to input combination a. 
B)  The firm produces a lower output level when it uses input combination d compared to input combination a. 
C)  The firm produces the same output level when it uses input combination a or c. 
D)  The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output. 
A)  The firm produces a higher output level when it uses input combination b compared to input combination a. 
B)  The firm produces a lower output level when it uses input combination d compared to input combination a. 
C)  The firm produces the same output level when it uses input combination a or c. 
D)  The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output.

Question 4

In the long run which of the following is true?

Accepted Answer

A)  Total cost = fixed cost + variable cost. 
B)  The size of a firm's physical plant can be changed but the firm cannot adopt new technology. 
C)  There are no fixed costs. 
D)  The firm can vary its explicit costs but not its implicit costs. 
A)  Total cost = fixed cost + variable cost. 
B)  The size of a firm's physical plant can be changed but the firm cannot adopt new technology. 
C)  There are no fixed costs. 
D)  The firm can vary its explicit costs but not its implicit costs.

Question 5

Marginal cost is the

Accepted Answer

A)  change in average cost when an additional unit of output is produced. 
B)  the additional output when total cost is increased by one dollar. 
C)  additional cost of producing an additional unit of output. 
D)  change in the price of inputs if a firm buys more inputs to produce an additional unit of output. 
A)  change in average cost when an additional unit of output is produced. 
B)  the additional output when total cost is increased by one dollar. 
C)  additional cost of producing an additional unit of output. 
D)  change in the price of inputs if a firm buys more inputs to produce an additional unit of output.

Question 6

Table 11-3
  
-Refer to Table 11-3.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.Diminishing returns to labor are first observed in this example after Manny hires the ________ worker.

Accepted Answer

A)  second 
B)  third 
C)  fourth 
D)  fifth 
A)  second 
B)  third 
C)  fourth 
D)  fifth

Question 7

Figure 11-14   Figure 11-14 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China.
-Refer to Figure 11-14.Consider the following statements: 
a.For each country,the marginal product per dollar spent on labor equals to the marginal product per dollar spent on capital.
b.The price of labor is relatively higher in the United States than in China and the price of capital is relatively lower in the United States than in China.
c.The price of labor and the price of capital are relatively higher in the United States than in China.Based on the figure,which of the statements above is true?

Accepted Answer

A)  All of the statements are true. 
B)  statements a and c only 
C)  statements a and b only 
D)  statements b and c only 
A)  All of the statements are true. 
B)  statements a and c only 
C)  statements a and b only 
D)  statements b and c only

Question 8

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

Accepted Answer

A)  the first workers hired get to use the best equipment. 
B)  specialization 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 skillful. 
D)  beyond some point, a firm has hired too many workers. 
A)  the first workers hired get to use the best equipment. 
B)  specialization 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 skillful. 
D)  beyond some point, a firm has hired too many workers.

Question 9

Which of the following is an example of a long run adjustment?

Accepted Answer

A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter. 
A)  Your university offers Saturday morning classes next fall. 
B)  Ford Motor Company lays off 2,000 assembly line workers. 
C)  A soybean farmer turns on the irrigation system after a month long dry spell. 
D)  Wal-Mart builds another Supercenter.

Question 10

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accepted Answer

A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145. 
A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145.

Question 11

Accounting costs exclude implicit costs.

Accepted Answer

A) True 
 B)False

Question 12

Article Summary
Due to falling sales and lower profit margins, clothing retailer Aeropostale announced it would be closing more stores than originally planned. In August, the company announced it would be closing between 30 and 40 locations in 2013, up from the previously announced 15 to 20. Compared to the previous year, net sales fell 6 percent and the company reported a loss of $33.7 million for the second quarter of 2013, and the trend was expected to continue into the third quarter. Explaining the downturn, Aeropostale chief executive Thomas P. Johnson stated "Our business was pressured by a challenging teen retail environment with weak traffic trends and high levels of promotional activity."
Source: Andrew Klips, "Aeropostale Losses Accelerate, Closing More Stores," equities.com, August 23, 2013.
-Refer to the Article Summary.Use a graph to illustrate average total cost curves for Aeropostale before and after closing the 30 to 40 stores.Assume that after closing the stores,Aeropostale will be producing at minimum average total cost.

Accepted Answer

@#IMG-DLM& Before closing the stores,Aeropostale w

Question 13

Average total cost is equal to

Accepted Answer

A)  average fixed cost minus average variable cost. 
B)  total cost divided by the level of output. 
C)  marginal cost plus variable cost. 
D)  total cost divided by the number of workers. 
A)  average fixed cost minus average variable cost. 
B)  total cost divided by the level of output. 
C)  marginal cost plus variable cost. 
D)  total cost divided by the number of workers.

Question 14

Which of the following is an implicit cost of production?

Accepted Answer

A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm 
A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm

Question 15

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A)  better trained workers 
B)  more efficient physical capital 
C)  higher skill level of managers 
D)  outsourcing some aspect of production 
A)  better trained workers 
B)  more efficient physical capital 
C)  higher skill level of managers 
D)  outsourcing some aspect of production

Question 16

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 17

The basic activity of a firm is

Accepted Answer

A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services. 
A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services.

Question 18

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 
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 
D)  costs of raw materials

Question 19

In the short run,marginal product of labor increases at first and then falls because

Accepted Answer

A)  as more labor is hired, they are not as skilled as the first ones hired. 
B)  there are fewer opportunities for division of labor and specialization when fewer workers are hired. 
C)  managerial inefficiency sets in when a firm gets too large. 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive. 
A)  as more labor is hired, they are not as skilled as the first ones hired. 
B)  there are fewer opportunities for division of labor and specialization when fewer workers are hired. 
C)  managerial inefficiency sets in when a firm gets too large. 
D)  the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive.

Question 20

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be true?

Accepted Answer

A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative. 
A)  The marginal product of the 8th worker is negative. 
B)  The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. 
C)  Suzie's profits would be greater if she did not hire the 8th worker. 
D)  The average product of labor is negative.

Long-run cost curves are U-shaped because

The formula for total fixed cost is

Figure 11-12 -Refer to Figure 11-12.Which of the following statements about the input combinations shown in the diagram is false?

In the long run which of the following is true?

Marginal cost is the

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

Which of the following is an example of a long run adjustment?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accounting costs exclude implicit costs.

Average total cost is equal to

Which of the following is an implicit cost of production?

Which of the following is not a source of technological advancement for a producer?

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

The basic activity of a firm is

Which of the following is a fixed cost?

In the short run,marginal product of labor increases at first and then falls because

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be 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

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Exam 11: Technology, production, and Costs

Long-run cost curves are U-shaped because

The formula for total fixed cost is

Figure 11-12 -Refer to Figure 11-12.Which of the following statements about the input combinations shown in the diagram is false?

In the long run which of the following is true?

Marginal cost is the

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

Which of the following is an example of a long run adjustment?

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accounting costs exclude implicit costs.

Average total cost is equal to

Which of the following is an implicit cost of production?

Which of the following is not a source of technological advancement for a producer?

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

The basic activity of a firm is

Which of the following is a fixed cost?

In the short run,marginal product of labor increases at first and then falls because

After Suzie,owner of Suzie's Sweet Shop,hires her 8th worker the average product of labor declines.Which of the following statements must be 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

Filters