Question 1

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

Accepted Answer

A)  Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable. 
B)  Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable. 
C)  Diminishing marginal returns, which applies only in the short run when at least one factor is fixed, explains why marginal cost increases, while diseconomies of scale, which applies in the long run when all factors are variable, explains why average cost increases. 
D)  Diminishing marginal returns,which applies only in the long run when all factors are variable, explains why average variable cost increases, while diseconomies of scale, which applies in the short run when at least one factor is fixed, explains why average total cost increases. 
A)  Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable. 
B)  Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor, while diseconomies of scale applies in the long run when all factors are variable. 
C)  Diminishing marginal returns, which applies only in the short run when at least one factor is fixed, explains why marginal cost increases, while diseconomies of scale, which applies in the long run when all factors are variable, explains why average cost increases. 
D)  Diminishing marginal returns,which applies only in the long run when all factors are variable, explains why average variable cost increases, while diseconomies of scale, which applies in the short run when at least one factor is fixed, explains why average total cost increases.

Question 2

Figure 11-5  
-Refer to Figure 11-5.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 3

If average total cost is falling marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 4

Table 11-7
   Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 11-7.What is the variable cost of production when the firm produces 115 lanterns?

Accepted Answer

A)  $1,556 
B)  $1,157 
C)  $956 
D)  $10.05 
A)  $1,556 
B)  $1,157 
C)  $956 
D)  $10.05

Question 5

Table 11-5
  
-Refer to Table 11-5.Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business.Suzette rents space for her factory for $400 a week in a nearby strip mall.She can hire temporary workers for $200 a week.Table 11-5 above shows her output and cost data.Use the table to answer questions a-e.
a.Complete the table.
b.In the last week of summer Suzette closes her business to go on a family vacation.What are her costs during that week?
c.In one week Suzette exactly breaks even.If her revenue for the week is $1,200,how many boxes of fruit and nuts did she produce?
d.Judging from the marginal product of labor data,would you say that Suzette had to settle for increasingly unproductive workers? Explain your answer.
e.Suzette has received an order for 1,500 boxes of nuts per week for the next 3 months.If she expects the trend in the marginal product of labor will continue in the same direction,what do you think she should do? Should she not commit until she can move to a larger space or should she just hire more workers? Explain your answer.

Accepted Answer

a.
 @#IMG-DLM& b.$400
c.840 boxes
d.Diminishing ma

Question 6

Describe the difference between technology and positive technological change.

Accepted Answer

A firm's technology refers to the proces

Question 7

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Accepted Answer

A)  negative. 
B)  less than 8 chairs. 
C)  more than 8 chairs. 
D)  zero. 
A)  negative. 
B)  less than 8 chairs. 
C)  more than 8 chairs. 
D)  zero.

Question 8

Average variable cost can be calculated using any of the formulas below except

Accepted Answer

A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC. 
A)  TVC/Q. 
B)  (TC - F
C) /Q. 
C)  Δ(TC - F
C) /ΔQ. 
D)  (TC/Q) - AFC.

Question 9

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 10

Figure 11-17  
-Refer to Figure 11-17.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Accepted Answer

A)  point a to point b 
B)  point a to point c 
C)  point b to point c 
D)  point b to point d 
A)  point a to point b 
B)  point a to point c 
C)  point b to point c 
D)  point b to point d

Question 11

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Accepted Answer

A)  David Ricardo 
B)  Arthur C. Pigou 
C)  Ronald Coase 
D)  Adam Smith 
A)  David Ricardo 
B)  Arthur C. Pigou 
C)  Ronald Coase 
D)  Adam Smith

Question 12

Jill Johnson owns a pizzeria.She currently produces 10,000 pizzas per month at a total cost of $500.If she produced one more pizza her total cost rises to $500.11.What does this tell us about Jill's marginal cost of producing pizzas?

Accepted Answer

A)  The marginal cost of producing pizzas is constant. 
B)  The marginal cost of producing pizzas is falling. 
C)  The marginal cost of producing pizzas cannot be determined without more information. 
D)  The marginal cost of producing pizzas is rising. 
A)  The marginal cost of producing pizzas is constant. 
B)  The marginal cost of producing pizzas is falling. 
C)  The marginal cost of producing pizzas cannot be determined without more information. 
D)  The marginal cost of producing pizzas is rising.

Question 13

Average fixed cost is equal to

Accepted Answer

A)  the amount of total cost that does not change as output changes in the short run. 
B)  fixed cost divided by the quantity of output produced. 
C)  fixed cost multiplied by the quantity of output produced. 
D)  average total cost plus average variable cost. 
A)  the amount of total cost that does not change as output changes in the short run. 
B)  fixed cost divided by the quantity of output produced. 
C)  fixed cost multiplied by the quantity of output produced. 
D)  average total cost plus average variable cost.

Question 14

Table 11-1
   Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Accepted Answer

A)  4 pounds 
B)  10.8 bushels 
C)  38.2 pounds 
D)  54 pounds 
A)  4 pounds 
B)  10.8 bushels 
C)  38.2 pounds 
D)  54 pounds

Question 15

Figure 11-13  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labor while the price of capital remains unchanged?

Accepted Answer

A)  the movement from AF to BD 
B)  the movement from AF to CE 
C)  the movement from BF to BD 
D)  the movement from BF to CE 
A)  the movement from AF to BD 
B)  the movement from AF to CE 
C)  the movement from BF to BD 
D)  the movement from BF to CE

Question 16

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Accepted Answer

A) True 
 B)False

Question 17

Table 11-7
   Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 11-7.What is the average total cost of production when the firm produces 120 lanterns?

Accepted Answer

A)  $1,680 
B)  $72 
C)  $14 
D)  $12.3 
A)  $1,680 
B)  $72 
C)  $14 
D)  $12.3

Question 18

When the marginal product of labor rises

Accepted Answer

A)  the marginal cost of production will exceed the average total cost. 
B)  the marginal cost of production also rises. 
C)  the marginal cost of production falls. 
D)  the average total cost of production also rises. 
A)  the marginal cost of production will exceed the average total cost. 
B)  the marginal cost of production also rises. 
C)  the marginal cost of production falls. 
D)  the average total cost of production also rises.

Question 19

Table 11-1
   Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1.Diminishing marginal returns sets in when the ________ worker is hired.

Accepted Answer

A)  2nd 
B)  3rd 
C)  4th 
D)  None of the above; the production function displays increasing marginal returns. 
A)  2nd 
B)  3rd 
C)  4th 
D)  None of the above; the production function displays increasing marginal returns.

Question 20

A characteristic of the long run is

Accepted Answer

A)  there are fixed inputs. 
B)  all inputs can be varied. 
C)  plant capacity cannot be increased or decreased. 
D)  there are both fixed and variable inputs 
A)  there are fixed inputs. 
B)  all inputs can be varied. 
C)  plant capacity cannot be increased or decreased. 
D)  there are both fixed and variable inputs

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

Figure 11-5 -Refer to Figure 11-5.Identify the curves in the diagram.

If average total cost is falling marginal cost must also be falling.

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the variable cost of production when the firm produces 115 lanterns?

Describe the difference between technology and positive technological change.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Average variable cost can be calculated using any of the formulas below except

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

Figure 11-17 -Refer to Figure 11-17.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Jill Johnson owns a pizzeria.She currently produces 10,000 pizzas per month at a total cost of $500.If she produced one more pizza her total cost rises to $500.11.What does this tell us about Jill's marginal cost of producing pizzas?

Average fixed cost is equal to

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labor while the price of capital remains unchanged?

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the average total cost of production when the firm produces 120 lanterns?

When the marginal product of labor rises

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.Diminishing marginal returns sets in when the ________ worker is hired.

A characteristic of the long run is

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

Exam 11: Technology, production, and Costs

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

Figure 11-5 -Refer to Figure 11-5.Identify the curves in the diagram.

If average total cost is falling marginal cost must also be falling.

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the variable cost of production when the firm produces 115 lanterns?

Describe the difference between technology and positive technological change.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Average variable cost can be calculated using any of the formulas below except

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

Figure 11-17 -Refer to Figure 11-17.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Who was the economist who first analyzed the advantages of specialization and the division of labor?

Jill Johnson owns a pizzeria.She currently produces 10,000 pizzas per month at a total cost of $500.If she produced one more pizza her total cost rises to $500.11.What does this tell us about Jill's marginal cost of producing pizzas?

Average fixed cost is equal to

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labor while the price of capital remains unchanged?

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the average total cost of production when the firm produces 120 lanterns?

When the marginal product of labor rises

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.Diminishing marginal returns sets in when the ________ worker is hired.

A characteristic of the long run is

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