Question 1

An isoquant shows

Accepted Answer

A)  the combinations of two goods that yield the same total satisfaction. 
B)  the combinations of two inputs that yield the same total product. 
C)  the combinations of two inputs that cost the same total quantity of money. 
D)  the combination of two goods that cost the same amount of money. 
A)  the combinations of two goods that yield the same total satisfaction. 
B)  the combinations of two inputs that yield the same total product. 
C)  the combinations of two inputs that cost the same total quantity of money. 
D)  the combination of two goods that cost the same amount of money.

Question 2

Which of the following is the best example of a short run adjustment?

Accepted Answer

A)  A local bakery purchases another commercial oven as part of its capacity expansion. 
B)  Your local Wal-Mart hires two more associates. 
C)  Smith University completed negotiations to acquire a large piece of land to build its new library. 
D)  Toyota builds a new assembly plant in Texas. 
A)  A local bakery purchases another commercial oven as part of its capacity expansion. 
B)  Your local Wal-Mart hires two more associates. 
C)  Smith University completed negotiations to acquire a large piece of land to build its new library. 
D)  Toyota builds a new assembly plant in Texas.

Question 3

Figure 11-6   Figure 11-6 contains information about the short run cost structure of a firm.
-Refer to Figure 11-6.In the figure above which letter represents the average fixed cost curve?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 4

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

Accepted Answer

A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs 
A)  economies of scale 
B)  diseconomies of scale 
C)  higher average costs but lower total costs 
D)  higher marginal costs but lower total costs

Question 5

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

Accepted Answer

A)  the relationship between the marginal and average product of labor 
B)  the law of diminishing returns 
C)  why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D)  the division of labor 
A)  the relationship between the marginal and average product of labor 
B)  the law of diminishing returns 
C)  why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D)  the division of labor

Question 6

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Accepted Answer

Yes.As long as the marginal co

Question 7

Figure 11-1  
-Refer to Figure 11-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

Accepted Answer

A)  never intersects the horizontal axis. 
B)  intersects the horizontal axis at a point corresponding to the 5th worker. 
C)  intersects the horizontal axis at a point corresponding to the 6th worker. 
D)  intersects the horizontal axis at a point corresponding to the 8th worker. 
A)  never intersects the horizontal axis. 
B)  intersects the horizontal axis at a point corresponding to the 5th worker. 
C)  intersects the horizontal axis at a point corresponding to the 6th worker. 
D)  intersects the horizontal axis at a point corresponding to the 8th worker.

Question 8

Figure 11-5  
-Refer to Figure 11-5.The vertical difference between curves F and G measures

Accepted Answer

A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs. 
A)  average fixed costs. 
B)  marginal costs. 
C)  fixed costs. 
D)  sunk costs.

Question 9

The long run refers to a time period

Accepted Answer

A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs. 
A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs.

Question 10

Average total cost is

Accepted Answer

A)  total cost divided by the quantity of output produced. 
B)  total explicit costs divided by the quantity of output produced. 
C)  variable cost divided by the quantity of output produced. 
D)  the change in fixed plus variable cost divided by the quantity of output produced. 
A)  total cost divided by the quantity of output produced. 
B)  total explicit costs divided by the quantity of output produced. 
C)  variable cost divided by the quantity of output produced. 
D)  the change in fixed plus variable cost divided by the quantity of output produced.

Question 11

Marginal cost is equal to the

Accepted Answer

A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output. 
A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output.

Question 12

An expansion path shows

Accepted Answer

A)  the level of sales necessary for a firm if it wants to expand. 
B)  the level of long-run average cost at different scales of operation. 
C)  the least-cost combination of inputs for each level of output. 
D)  the returns to scale at each level of output. 
A)  the level of sales necessary for a firm if it wants to expand. 
B)  the level of long-run average cost at different scales of operation. 
C)  the least-cost combination of inputs for each level of output. 
D)  the returns to scale at each level of output.

Question 13

Table 11-6
  
-Refer to Table 11-6.Alicia Gregory owns a foot massage business.She leases 4 computer-controlled massage booths,for which she pays $125 per day.She cannot increase the number machines she leases without giving the manufacturer 3 months notice.She can hire as many workers as she wants at a cost of $75 per day per worker.These are the only two inputs she uses in her business.Use this information to fill in the columns in the above table.

Accepted Answer

The answer of Table 11-6
  
-Refer to Table 11-6.Alicia...

Question 14

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor.This is an example of

Accepted Answer

A)  investment in human capital. 
B)  economies of scale. 
C)  positive technological change. 
D)  inspired management. 
A)  investment in human capital. 
B)  economies of scale. 
C)  positive technological change. 
D)  inspired management.

Question 15

The production function shows

Accepted Answer

A)  the total cost of producing a given quantity of output. 
B)  the maximum output that can be produced from each possible quantity of inputs. 
C)  the technology used to produce output. 
D)  the incremental output gained by improving the production process. 
A)  the total cost of producing a given quantity of output. 
B)  the maximum output that can be produced from each possible quantity of inputs. 
C)  the technology used to produce output. 
D)  the incremental output gained by improving the production process.

Question 16

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting 
A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting

Question 17

In the long run the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 18

Academic book publishers hire editors,designers,and production and marketing managers who help prepare books for publication.Because these employees work on several books simultaneously,the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year.The salaries and benefits of people in these job categories will be included in

Accepted Answer

A)  fixed cost and marginal cost but not variable cost. 
B)  fixed cost but not variable cost and total cost. 
C)  marginal cost and total cost but not fixed cost. 
D)  fixed cost and total cost but not variable cost. 
A)  fixed cost and marginal cost but not variable cost. 
B)  fixed cost but not variable cost and total cost. 
C)  marginal cost and total cost but not fixed cost. 
D)  fixed cost and total cost but not variable cost.

Question 19

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory.In the following graph,the relationship between costs and output for the smaller factory is represented by the curve ATC1,and the relationship between costs and output for the larger factory is represented by the curve ATC2.   a.If Argyle expects to produce 3,600 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain?
b.If Argyle expects to produce 5,000 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain.
c.If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6,500 sweaters per week,why isn't it also lower when Argyle produces 4,000 sweaters per week?

Accepted Answer

a.Argyle's costs will be lower with a sm

Question 20

Which of the following statements correctly describes the distinction between technology and technological change?

Accepted Answer

A)  Technology refers to the processes used by a firm to transform inputs into output of goods and services while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs and technological change is the process by which the firm achieves this productivity gain. 
C)  Technology is product-centered; its refers to developing new products with limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D)  Technology involves research and development while technological change involves the use of more efficient machinery. 
A)  Technology refers to the processes used by a firm to transform inputs into output of goods and services while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B)  Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs and technological change is the process by which the firm achieves this productivity gain. 
C)  Technology is product-centered; its refers to developing new products with limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D)  Technology involves research and development while technological change involves the use of more efficient machinery.

An isoquant shows

Which of the following is the best example of a short run adjustment?

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average fixed cost curve?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Figure 11-1 -Refer to Figure 11-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

Figure 11-5 -Refer to Figure 11-5.The vertical difference between curves F and G measures

The long run refers to a time period

Average total cost is

Marginal cost is equal to the

An expansion path shows

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor.This is an example of

The production function shows

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.

In the long run the relevant cost is total cost.

Which of the following statements correctly describes the distinction between technology and technological change?

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

An isoquant shows

Which of the following is the best example of a short run adjustment?

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average fixed cost curve?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Figure 11-1 -Refer to Figure 11-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

Figure 11-5 -Refer to Figure 11-5.The vertical difference between curves F and G measures

The long run refers to a time period

Average total cost is

Marginal cost is equal to the

An expansion path shows

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor.This is an example of

The production function shows

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

In the long run the relevant cost is total cost.

Which of the following statements correctly describes the distinction between technology and technological change?

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

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.