Question 1

Figure 6-E  
-Refer to Figure 6-E.How long does it take a firm to get to the long run?

Accepted Answer

A) one week 
B) one month 
C) one year 
D) it depends on the firm--some firms may be less than a year, some more. 
A) one week 
B) one month 
C) one year 
D) it depends on the firm--some firms may be less than a year, some more.

Question 2

Figure 6-A  
-Refer to Figure 6-A.If the firm's goal is to maximize weekly output, how many workers should the firm employ each week?

Accepted Answer

A) one worker 
B) two workers 
C) three workers 
D) four workers 
E) five workers 
A) one worker 
B) two workers 
C) three workers 
D) four workers 
E) five workers

Question 3

A firm which owns its own equipment and is earning positive economic profits

Accepted Answer

A) is likely earning positive accounting profits. 
B) is likely earning zero accounting profits. 
C) is likely earning negative accounting profits. 
D) could be earning positive or negative accounting profits. 
A) is likely earning positive accounting profits. 
B) is likely earning zero accounting profits. 
C) is likely earning negative accounting profits. 
D) could be earning positive or negative accounting profits.

Question 4

The short-run average total cost curve eventually turns upward to form a U shape because:

Accepted Answer

A) of diminishing marginal cost. 
B) of increasing average fixed cost. 
C) all factors can be varied in the long run. 
D) of diminishing marginal productivity. 
A) of diminishing marginal cost. 
B) of increasing average fixed cost. 
C) all factors can be varied in the long run. 
D) of diminishing marginal productivity.

Question 5

Which of the following is a short run adjustment?

Accepted Answer

A) A bakery hiring two additional bakers. 
B) Two new firms enter the textile industry. 
C) Three firms leave the bicycle industry. 
D) A computer hardware company builds a new factory. 
E) None of the above. 
A) A bakery hiring two additional bakers. 
B) Two new firms enter the textile industry. 
C) Three firms leave the bicycle industry. 
D) A computer hardware company builds a new factory. 
E) None of the above.

Question 6

Which of the following is an implicit cost to Mondo Manufacturing, Inc.?

Accepted Answer

A) Payments of wages to its office workers. 
B) Property taxes. 
C) Depreciation charges on company owned automobiles and trucks. 
D) Rent paid for the use of equipment. 
E) None of the above. 
A) Payments of wages to its office workers. 
B) Property taxes. 
C) Depreciation charges on company owned automobiles and trucks. 
D) Rent paid for the use of equipment. 
E) None of the above.

Question 7

Figure 7-H  
-Economic profit always exceeds accounting profit.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-D  
-Refer to Figure 6-D.At output level 0Q, average total cost equals ____ and marginal cost equals ____.:

Accepted Answer

A) QD; QF 
B) QF; QD 
C) QE; DE 
D) DE; QE 
E) QD; QD 
A) QD; QF 
B) QF; QD 
C) QE; DE 
D) DE; QE 
E) QD; QD

Question 9

The long run:

Accepted Answer

A) is a period long enough for every input except plant size to be varied. 
B) is a period in which there are no fixed costs. 
C) is typically a period of two years. 
D) is all of the above. 
A) is a period long enough for every input except plant size to be varied. 
B) is a period in which there are no fixed costs. 
C) is typically a period of two years. 
D) is all of the above.

Question 10

Figure 7-H  
-A Texas oil woman would like to increase the oil produced from her oil fields.Since it takes over a year to drill new wells, she opts instead for increasing labor and other variable inputs to produce more oil from existing wells.She is making a short-run production decision.

Accepted Answer

A) True 
 B)False

Question 11

When marginal product is rising, marginal costs will:

Accepted Answer

A) rise. 
B) remain unchanged. 
C) fall. 
D) rise by an equal value. 
E) None of the above, since marginal product and marginal costs are not related. 
A) rise. 
B) remain unchanged. 
C) fall. 
D) rise by an equal value. 
E) None of the above, since marginal product and marginal costs are not related.

Question 12

Figure 6-D  
-Refer to Figure 6-D.At output level 0Q, total variable cost equals:

Accepted Answer

A) area ADQ0. 
B) area ADEB. 
C) area CFQ0. 
D) area BEQ0. 
A) area ADQ0. 
B) area ADEB. 
C) area CFQ0. 
D) area BEQ0.

Question 13

An understanding of opportunity costs is important to understanding:

Accepted Answer

A) how to calculate the total revenue generated by a firm. 
B) how to assess the economic profitability of a firm. 
C) the tax liability of a firm. 
D) how accountants calculate accounting profits. 
A) how to calculate the total revenue generated by a firm. 
B) how to assess the economic profitability of a firm. 
C) the tax liability of a firm. 
D) how accountants calculate accounting profits.

Question 14

Table 6-E
 $\begin{array}{lrrrrrrr}
\text { Quantity of Bicycles } & 0 & 1 & 2 & 3 & 4 & 5&6 \
\text { (in thousands) } \
\text { Total Cost of Production } & \$ 5 & \$ 8 & \$ 12 & \$ 16.5 & \$ 20 & \$ 27.5 & \$ 36\
\text { (in thousands) } 
\end{array}$ 
-Refer to Table 6-E.What is the level of the firm's total fixed cost (in thousands)?

Accepted Answer

A) $0 
B) $5 
C) $8 
D) $25 
E) This cannot be determined from the information provided. 
A) $0 
B) $5 
C) $8 
D) $25 
E) This cannot be determined from the information provided.

Question 15

A production function:

Accepted Answer

A) shows the relationship between a firm's costs and revenues. 
B) shows the relationship between production and profits. 
C) shows the relationship between inputs and the maximum output that can be produced from those inputs. 
D) shows the relationship between variable inputs and fixed inputs. 
E) shows the relationship between a worker's human capital and her average productivity. 
A) shows the relationship between a firm's costs and revenues. 
B) shows the relationship between production and profits. 
C) shows the relationship between inputs and the maximum output that can be produced from those inputs. 
D) shows the relationship between variable inputs and fixed inputs. 
E) shows the relationship between a worker's human capital and her average productivity.

Question 16

Which of the following factors of production is not variable in the long run?

Accepted Answer

A) the size of the firm's plant 
B) land 
C) highly skilled labor 
D) All factors are variable in the long run. 
A) the size of the firm's plant 
B) land 
C) highly skilled labor 
D) All factors are variable in the long run.

Question 17

During the short-run period of the production process, a firm is:

Accepted Answer

A) unable to vary any of its factors of production. 
B) able to vary only some of its factors of production. 
C) able to vary all of its factors of production. 
D) able to vary the size of its plant. 
E) unlikely to experience diminishing marginal productivity. 
A) unable to vary any of its factors of production. 
B) able to vary only some of its factors of production. 
C) able to vary all of its factors of production. 
D) able to vary the size of its plant. 
E) unlikely to experience diminishing marginal productivity.

Question 18

If average fixed cost and average variable cost are summed together, the result is:

Accepted Answer

A) total revenue. 
B) total profit. 
C) total cost. 
D) average total cost. 
E) average revenue. 
A) total revenue. 
B) total profit. 
C) total cost. 
D) average total cost. 
E) average revenue.

Question 19

Diminishing marginal product of labor occurs when:

Accepted Answer

A) adding another unit of labor increases output, but not by as large a margin as the last unit of labor employed. 
B) the average product of labor begins to rise. 
C) adding another unit of labor increases output by a larger margin than the last unit of labor employed. 
D) all inputs are varied simultaneously in the same proportion. 
A) adding another unit of labor increases output, but not by as large a margin as the last unit of labor employed. 
B) the average product of labor begins to rise. 
C) adding another unit of labor increases output by a larger margin than the last unit of labor employed. 
D) all inputs are varied simultaneously in the same proportion.

Question 20

Table 6-D
The table below shows how total cost varies with output in a factory producing watches:
 $$\begin{array} { c c } 
\begin{array} { c } 
\text { Output } \
\text { (Per Week) }
\end{array} & \begin{array} { c } 
\text { Tatal Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & \$ 50 \
1 & \$ 60 \
2 & \$ 65 \
3 & \$ 69 \
4 & \$ 72 \
5 & \$ 95 \
6 & \$ 120
\end{array}$$
-Refer to Table 6-D.If the output equals four watches per week, then the average total cost of producing a watch equals:

Accepted Answer

A) $72. 
B) $3. 
C) $18. 
D) $5.50. 
E) none of the above. 
A) $72. 
B) $3. 
C) $18. 
D) $5.50. 
E) none of the above.

Figure 6-E -Refer to Figure 6-E.How long does it take a firm to get to the long run?

Figure 6-A -Refer to Figure 6-A.If the firm's goal is to maximize weekly output, how many workers should the firm employ each week?

A firm which owns its own equipment and is earning positive economic profits

The short-run average total cost curve eventually turns upward to form a U shape because:

Which of the following is a short run adjustment?

Which of the following is an implicit cost to Mondo Manufacturing, Inc.?

Figure 7-H -Economic profit always exceeds accounting profit.

Figure 6-D -Refer to Figure 6-D.At output level 0Q, average total cost equals and marginal cost equals .:

The long run:

Figure 7-H -A Texas oil woman would like to increase the oil produced from her oil fields.Since it takes over a year to drill new wells, she opts instead for increasing labor and other variable inputs to produce more oil from existing wells.She is making a short-run production decision.

When marginal product is rising, marginal costs will:

Figure 6-D -Refer to Figure 6-D.At output level 0Q, total variable cost equals:

An understanding of opportunity costs is important to understanding:

Table 6-E Quantity of Bicycles 0 1 2 3 4 5 6 (in thousands) Total Cost of Production \ 5 \ 8 \ 12 \ 16.5 \ 20 \ 27.5 \ 36 (in thousands) -Refer to Table 6-E.What is the level of the firm's total fixed cost (in thousands)?

A production function:

Which of the following factors of production is not variable in the long run?

During the short-run period of the production process, a firm is:

If average fixed cost and average variable cost are summed together, the result is:

Diminishing marginal product of labor occurs when:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

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Exam 6: Production and Costs

Figure 6-E -Refer to Figure 6-E.How long does it take a firm to get to the long run?

Figure 6-A -Refer to Figure 6-A.If the firm's goal is to maximize weekly output, how many workers should the firm employ each week?

A firm which owns its own equipment and is earning positive economic profits

The short-run average total cost curve eventually turns upward to form a U shape because:

Which of the following is a short run adjustment?

Which of the following is an implicit cost to Mondo Manufacturing, Inc.?

Figure 7-H -Economic profit always exceeds accounting profit.

Figure 6-D -Refer to Figure 6-D.At output level 0Q, average total cost equals ____ and marginal cost equals ____.:

The long run:

Figure 7-H -A Texas oil woman would like to increase the oil produced from her oil fields.Since it takes over a year to drill new wells, she opts instead for increasing labor and other variable inputs to produce more oil from existing wells.She is making a short-run production decision.

When marginal product is rising, marginal costs will:

Figure 6-D -Refer to Figure 6-D.At output level 0Q, total variable cost equals:

An understanding of opportunity costs is important to understanding:

Table 6-E Quantity of Bicycles 0 1 2 3 4 5 6 (in thousands) Total Cost of Production \ 5 \ 8 \ 12 \ 16.5 \ 20 \ 27.5 \ 36 (in thousands) -Refer to Table 6-E.What is the level of the firm's total fixed cost (in thousands)?

A production function:

Which of the following factors of production is not variable in the long run?

During the short-run period of the production process, a firm is:

If average fixed cost and average variable cost are summed together, the result is:

Diminishing marginal product of labor occurs when:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Figure 6-D -Refer to Figure 6-D.At output level 0Q, average total cost equals and marginal cost equals .: