Question 1

If marginal cost is above the average variable cost,then average variable cost is decreasing.

Accepted Answer

A) True 
 B)False

Question 2

If a producer is not able to expand its plant capacity immediately,it is

Accepted Answer

A)  bankrupt. 
B)  operating in the long run. 
C)  operating in the short run. 
D)  losing money. 
A)  bankrupt. 
B)  operating in the long run. 
C)  operating in the short run. 
D)  losing money.

Question 3

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 4

What is an isoquant? What is the slope of an isoquant?

Accepted Answer

An isoquant is curve that shows all the

Question 5

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

Accepted Answer

A)  ABC is experiencing diseconomies of scale. 
B)  ABC is experiencing diminishing returns. 
C)  to reach minimum efficient scale ABC would have to sell at least 3,000 routers each month. 
D)  ABC will soon go out of business. 
A)  ABC is experiencing diseconomies of scale. 
B)  ABC is experiencing diminishing returns. 
C)  to reach minimum efficient scale ABC would have to sell at least 3,000 routers each month. 
D)  ABC will soon go out of business.

Question 6

Which of the following equations is correct?

Accepted Answer

A)  AVC - ATC = AFC 
B)  AVC + ATC = AFC 
C)  AFC + AVC = ATC 
D)  ATC + AVC = AFC 
A)  AVC - ATC = AFC 
B)  AVC + ATC = AFC 
C)  AFC + AVC = ATC 
D)  ATC + AVC = AFC

Question 7

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

Accepted Answer

As the level of output increases,the val

Question 8

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 variable cost per unit of production when the firm produces 90 lanterns?

Accepted Answer

A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44 
A)  $490 
B)  $33.67 
C)  $7.67 
D)  $5.44

Question 9

Which of the following explains why the marginal cost curve has a U shape?

Accepted Answer

A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls. 
A)  Initially, the marginal product of labor falls, then rises. 
B)  Initially, the average product of labor rises, then falls. 
C)  Initially, the marginal product of labor rises, then falls. 
D)  Initially, the average cost of production rises, then falls.

Question 10

Is it possible for technological change to be negative? If so,give an example.

Accepted Answer

Technological change could be negative,f

Question 11

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

Accepted Answer

A)  TFC/Q. 
B)  (TC - V
C) /Q. 
C)  Δ(TC - V
C) /ΔQ. 
D)  (TC/Q) - AVC. 
A)  TFC/Q. 
B)  (TC - V
C) /Q. 
C)  Δ(TC - V
C) /ΔQ. 
D)  (TC/Q) - AVC.

Question 12

Figure 11-2  
-Refer to Figure 11-2.The curve labeled "E" is

Accepted Answer

A)  the total product curve. 
B)  the average product curve. 
C)  the marginal product curve. 
D)  the output supply curve. 
A)  the total product curve. 
B)  the average product curve. 
C)  the marginal product curve. 
D)  the output supply curve.

Question 13

In the short-run,changes in output can only be brought about by a change in the quantity of variable inputs.

Accepted Answer

A) True 
 B)False

Question 14

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees,each of whom is paid $4,000 per month.Because his business has been successful,next month he will increase employee wages to $5,000.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 15

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 16

As output increases,the distance between average total cost and average variable cost increases.

Accepted Answer

A) True 
 B)False

Question 17

Table 11-8
   Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data.
-Refer to Table 11-8.Elegant Settings experiences

Accepted Answer

A)  economies of scale up to an output level of 400. 
B)  diminishing returns up to an output level of 400. 
C)  increasing returns beyond an output level of 400. 
D)  economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400. 
A)  economies of scale up to an output level of 400. 
B)  diminishing returns up to an output level of 400. 
C)  increasing returns beyond an output level of 400. 
D)  economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400.

Question 18

Which of the following is an implicit cost of production?

Accepted Answer

A)  the loss in the value of capital equipment due to wear and tear 
B)  the salary you pay yourself for running your business 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  the interest you pay your mother for the money she loaned you to start your business 
A)  the loss in the value of capital equipment due to wear and tear 
B)  the salary you pay yourself for running your business 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  the interest you pay your mother for the money she loaned you to start your business

Question 19

Firms in different countries that face different input prices may produce the same good using different combinations of inputs,even though they have access to the same technology.

Accepted Answer

A) True 
 B)False

Question 20

The law of diminishing marginal returns states

Accepted Answer

A)  that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B)  that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C)  that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. 
D)  average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. 
A)  that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B)  that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C)  that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. 
D)  average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

If marginal cost is above the average variable cost,then average variable cost is decreasing.

If a producer is not able to expand its plant capacity immediately,it is

As output increases

What is an isoquant? What is the slope of an isoquant?

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

Which of the following equations is correct?

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

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 variable cost per unit of production when the firm produces 90 lanterns?

Which of the following explains why the marginal cost curve has a U shape?

Is it possible for technological change to be negative? If so,give an example.

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

Figure 11-2 -Refer to Figure 11-2.The curve labeled "E" is

In the short-run,changes in output can only be brought about by a change in the quantity of variable inputs.

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

As output increases,the distance between average total cost and average variable cost increases.

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.Elegant Settings experiences

Which of the following is an implicit cost of production?

Firms in different countries that face different input prices may produce the same good using different combinations of inputs,even though they have access to the same technology.

The law of diminishing marginal returns states

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

If marginal cost is above the average variable cost,then average variable cost is decreasing.

If a producer is not able to expand its plant capacity immediately,it is

As output increases

What is an isoquant? What is the slope of an isoquant?

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

Which of the following equations is correct?

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

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 variable cost per unit of production when the firm produces 90 lanterns?

Which of the following explains why the marginal cost curve has a U shape?

Is it possible for technological change to be negative? If so,give an example.

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

Figure 11-2 -Refer to Figure 11-2.The curve labeled "E" is

In the short-run,changes in output can only be brought about by a change in the quantity of variable inputs.

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

As output increases,the distance between average total cost and average variable cost increases.

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.Elegant Settings experiences

Which of the following is an implicit cost of production?

Firms in different countries that face different input prices may produce the same good using different combinations of inputs,even though they have access to the same technology.

The law of diminishing marginal returns states

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