Question 1

Which of the following equations is incorrect?

Accepted Answer

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

Question 2

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

Accepted Answer

In the short run,total cost =

Question 3

Figure 11-10  
-Refer to Figure 11-10.Identify the minimum efficient scale of production.

Accepted Answer

A)  Qa 
B)  Qb 
C)  Qc 
D)  Qd 
A)  Qa 
B)  Qb 
C)  Qc 
D)  Qd

Question 4

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Accepted Answer

A)  Average cost increases as more is produced. 
B)  Average cost will fall. 
C)  Average cost could increase or decrease depending on what happens to variable cost. 
D)  Average cost could increase or decrease depending on what happens to fixed cost. 
A)  Average cost increases as more is produced. 
B)  Average cost will fall. 
C)  Average cost could increase or decrease depending on what happens to variable cost. 
D)  Average cost could increase or decrease depending on what happens to fixed cost.

Question 5

Figure 11-15  
-Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Accepted Answer

A)  $3,600 
B)  $1,120 
C)  $592 
D)  $560 
A)  $3,600 
B)  $1,120 
C)  $592 
D)  $560

Question 6

Over the past twenty years,the number of small family farms has fallen significantly and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

Accepted Answer

A)  diseconomies of scale in farming 
B)  economies of scale in farming 
C)  diminishing returns to labor in farming 
D)  declining productivity 
A)  diseconomies of scale in farming 
B)  economies of scale in farming 
C)  diminishing returns to labor in farming 
D)  declining productivity

Question 7

If production displays economies of scale,the long-run average cost curve is

Accepted Answer

A)  above the short-run average total cost curve. 
B)  downward-sloping. 
C)  upward sloping. 
D)  below the long-run marginal cost curve. 
A)  above the short-run average total cost curve. 
B)  downward-sloping. 
C)  upward sloping. 
D)  below the long-run marginal cost curve.

Question 8

Sam Lewis owns a firm in New York City's garment district.If Sam keeps adding workers to use the same number of sewing machines,eventually the workplace will become so crowded that workers will get in each other's way.At this point

Accepted Answer

A)  the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B)  Sam should encourage his workers to share their sewing machines. 
C)  Sam's business will be in violation of safety rules that have been established by the New York City government. 
D)  Sam should begin using a division of labor in his business. 
A)  the marginal product of labor in Sam's business would be negative and his total output would decrease. 
B)  Sam should encourage his workers to share their sewing machines. 
C)  Sam's business will be in violation of safety rules that have been established by the New York City government. 
D)  Sam should begin using a division of labor in his business.

Question 9

Figure 11-2  
-Refer to Figure 11-2.Diminishing returns to labor set in

Accepted Answer

A)  after L1. 
B)  after L2. 
C)  after L3. 
D)  immediately. 
A)  after L1. 
B)  after L2. 
C)  after L3. 
D)  immediately.

Question 10

Figure 11-5  
-Refer to Figure 11-5.Curve G approaches curve F because

Accepted Answer

A)  marginal cost is above average variable costs. 
B)  average fixed cost falls as output rises. 
C)  fixed cost falls as capacity rises. 
D)  total cost falls as more and more is produced. 
A)  marginal cost is above average variable costs. 
B)  average fixed cost falls as output rises. 
C)  fixed cost falls as capacity rises. 
D)  total cost falls as more and more is produced.

Question 11

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 12

Figure 11-15  
-Refer to Figure 11-15.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

Accepted Answer

A)  1 unit of capital 
B)  10 units of capital 
C)  14 units of capital 
D)  24 units of capital 
A)  1 unit of capital 
B)  10 units of capital 
C)  14 units of capital 
D)  24 units of capital

Question 13

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is

Accepted Answer

A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units. 
A)  60 units. 
B)  54 units. 
C)  48 units. 
D)  5 units.

Question 14

What is an isocost line? What is the slope of an isocost line?

Accepted Answer

The isocost line shows all the combinati

Question 15

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 16

What is the marginal product of labor and what is the average product of labor.

Accepted Answer

The marginal product of labor is the add

Question 17

Figure 11-7   Figure 11-7 shows the cost structure for a firm.
-Refer to Figure 11-7.If output is 100 units what is the fixed cost of production?

Accepted Answer

A)  $8 
B)  $800 
C)  $1,000 
D)  This cannot be determined from the diagram. 
A)  $8 
B)  $800 
C)  $1,000 
D)  This cannot be determined from the diagram.

Question 18

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor. 
a.The payment he makes to buy tattoo ink.
b.The wages he pays his employees.
c.The $500-per-month payment he makes to advertise his shop on highway billboards.
d.The lease payment he makes to the landlord who owns the building where his shop is located.
e.The payment he makes on his liability insurance policy.

Accepted Answer

c,d,and e are fixed costs because they d

Question 19

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 average fixed cost per day when she produces 50 gyros using two workers?

Accepted Answer

A)  $2.00 
B)  $2.40 
C)  $4.40 
D)  $6.80 
A)  $2.00 
B)  $2.40 
C)  $4.40 
D)  $6.80

Question 20

Implicit costs can be defined as

Accepted Answer

A)  accounting profit minus explicit cost. 
B)  the non-monetary opportunity cost of using the firm's own resources. 
C)  the deferred cost of production. 
D)  total cost minus fixed costs. 
A)  accounting profit minus explicit cost. 
B)  the non-monetary opportunity cost of using the firm's own resources. 
C)  the deferred cost of production. 
D)  total cost minus fixed costs.

Which of the following equations is incorrect?

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

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Over the past twenty years,the number of small family farms has fallen significantly and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

If production displays economies of scale,the long-run average cost curve is

Sam Lewis owns a firm in New York City's garment district.If Sam keeps adding workers to use the same number of sewing machines,eventually the workplace will become so crowded that workers will get in each other's way.At this point

Figure 11-2 -Refer to Figure 11-2.Diminishing returns to labor set in

Figure 11-5 -Refer to Figure 11-5.Curve G approaches curve F because

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is

What is an isocost line? What is the slope of an isocost line?

If average product is decreasing,then marginal product must be negative.

What is the marginal product of labor and what is the average product of labor.

Figure 11-7 Figure 11-7 shows the cost structure for a firm. -Refer to Figure 11-7.If output is 100 units what is the fixed cost of production?

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 average fixed cost per day when she produces 50 gyros using two workers?

Implicit costs can be defined as

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

Which of the following equations is incorrect?

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

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit.What is the minimum cost of producing 200 gooseberry pies?

Over the past twenty years,the number of small family farms has fallen significantly and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

If production displays economies of scale,the long-run average cost curve is

Sam Lewis owns a firm in New York City's garment district.If Sam keeps adding workers to use the same number of sewing machines,eventually the workplace will become so crowded that workers will get in each other's way.At this point

Figure 11-2 -Refer to Figure 11-2.Diminishing returns to labor set in

Figure 11-5 -Refer to Figure 11-5.Curve G approaches curve F because

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

Figure 11-15 -Refer to Figure 11-15.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labor for capital when labor is increased from 10 to 20 hours?

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is

What is an isocost line? What is the slope of an isocost line?

If average product is decreasing,then marginal product must be negative.

What is the marginal product of labor and what is the average product of labor.

Figure 11-7 Figure 11-7 shows the cost structure for a firm. -Refer to Figure 11-7.If output is 100 units what is the fixed cost of production?

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 average fixed cost per day when she produces 50 gyros using two workers?

Implicit costs can be defined as

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