Question 1

Figure 6-E  
-Refer to Figure 6-E.In the long run the firm moves from

Accepted Answer

A) A to B 
B) A to C 
C) B to A 
D) all of the above 
A) A to B 
B) A to C 
C) B to A 
D) all of the above

Question 2

An example of an implicit cost of production is:

Accepted Answer

A) the cost of leather used in manufacturing furniture. 
B) the opportunity cost of space in your home that is used for a home office. 
C) the wages paid to high school students that work in a fast-food restaurant. 
D) none of the above. 
A) the cost of leather used in manufacturing furniture. 
B) the opportunity cost of space in your home that is used for a home office. 
C) the wages paid to high school students that work in a fast-food restaurant. 
D) none of the above.

Question 3

Figure 6-F  
-The R&J Ice Cream Company makes gallons of ice cream using the technology described below.Fill in the Marginal Product columns of these tables.When six ice cream makers are utilized each hour, at what point does diminishing marginal product set in? When eight ice cream makers are utilized? Why is the point of diminishing marginal product different in each case?
 \(\begin{array}{|c|c|c|c|c|c|}
\hline
\begin{array}{c}
\text { With 6 ice } \
\text { cream } \
\text { makers }
\end{array} & & \begin{array}{c}
\text { With 8 ice } \
\text { cream } \
\text { makers }
\end{array} & & \
\hline \text { Labor } & \begin{array}{c}
\text { Total } \
\text { Product } \
\text { (gallons) }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Product } \
\text { (gallons) }
\end{array} & \text { Labor } & \begin{array}{c}
\text { Total } \
\text { Product } \
\text { (gallons) }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Product } \
\text { (gallons) }
\end{array} \
\hline 1 \text { worker } & 16 & & 1 \text { worker } & 18 & \
\hline 2 \text { workers } & 36 & & 2 \text { workers } & 40 & \
\hline 3 \text { workers } & 60 & & 3 \text { workers } & 70 & \
\hline 4 \text { workers } & 90 & & 4 \text { workers } & 110 & \
\hline 5 \text { workers } & 114 & & 5 \text { workers } & 152 & \
\hline 6 \text { workers } & 134 & & 6 \text { workers } & 176 & \
\hline 7 \text { workers } & 144 & & 7 \text { workers } & 190 & \
\hline
\end{array}\)

Accepted Answer

Diminishing marginal product sets in wit

Question 4

Diseconomies of scale are present when the long run average total cost of production declines as output expands.

Accepted Answer

A) True 
 B)False

Question 5

Average fixed cost:

Accepted Answer

A) remains unchanged as output expands. 
B) is defined as the change in total cost divided by the change in output. 
C) always increases as output increases. 
D) always decreases as output expands. 
A) remains unchanged as output expands. 
B) is defined as the change in total cost divided by the change in output. 
C) always increases as output increases. 
D) always decreases as output expands.

Question 6

The long-run production period:

Accepted Answer

A) is a time when all inputs are variable. 
B) varies in length according to how capital goods are specialized. 
C) is likely longer for a steel manufacturer than for a retailer who sells watches off a cart at the local mall. 
D) is characterized by all of the above. 
A) is a time when all inputs are variable. 
B) varies in length according to how capital goods are specialized. 
C) is likely longer for a steel manufacturer than for a retailer who sells watches off a cart at the local mall. 
D) is characterized by all of the above.

Question 7

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11th unit is $30, what is the average total cost of 11 units?

Accepted Answer

A) $23.00 
B) $20.09 
C) $30.00 
D) $39.09 
A) $23.00 
B) $20.09 
C) $30.00 
D) $39.09

Question 8

If opportunity costs are ignored:

Accepted Answer

A) all firms will show accounting profits. 
B) all firms will appear to incur economic losses. 
C) firms will still make profit-maximizing production decisions. 
D) firms experiencing economic losses may appear to be profitable. 
A) all firms will show accounting profits. 
B) all firms will appear to incur economic losses. 
C) firms will still make profit-maximizing production decisions. 
D) firms experiencing economic losses may appear to be profitable.

Question 9

Economies of scale:

Accepted Answer

A) are the result of a diminishing marginal product. 
B) pertain to the long run only. 
C) refer to the increase in output that results from the increased utilization of a single input. 
D) imply that the average total cost curve will fall continuously as output increases in the short run. 
A) are the result of a diminishing marginal product. 
B) pertain to the long run only. 
C) refer to the increase in output that results from the increased utilization of a single input. 
D) imply that the average total cost curve will fall continuously as output increases in the short run.

Question 10

Figure 6-F  
-Explain the cost advantage of a firm operating at constant returns to scale.

Accepted Answer

In this constant returns to scale range,

Question 11

An example of an explicit cost of production is:

Accepted Answer

A) the cost of foregone labor earnings for an entrepreneur. 
B) the cost of flour for a baker. 
C) the foregone rent that could have been earned if land owned by a firm was not used as its parking lot. 
D) provided by none of the above. 
A) the cost of foregone labor earnings for an entrepreneur. 
B) the cost of flour for a baker. 
C) the foregone rent that could have been earned if land owned by a firm was not used as its parking lot. 
D) provided by none of the above.

Question 12

Figure 6-F  
-Explain why some costs are considered to be variable and some fixed.How does time enter into the definition?

Accepted Answer

Some factors cannot be adjusted quickly

Question 13

Characteristics of the short run include:

Accepted Answer

A) at least one fixed input. 
B) insufficient time for firms to enter or leave the industry in question. 
C) the applicability of the law of diminishing returns. 
D) all of the above. 
A) at least one fixed input. 
B) insufficient time for firms to enter or leave the industry in question. 
C) the applicability of the law of diminishing returns. 
D) all of the above.

Question 14

Figure 6-F  
-Refer to Figure 6-F.The region 'x' refers to:

Accepted Answer

A) diseconomies of scale. 
B) constant returns to scale. 
C) minimum efficient scale. 
D) economies of scale. 
A) diseconomies of scale. 
B) constant returns to scale. 
C) minimum efficient scale. 
D) economies of scale.

Question 15

Luke realizes that his space taxi service is operating in the region of diminishing marginal product.As he provides more taxi service in the short run, what will happen to the marginal cost of providing the additional service?

Accepted Answer

A) It is impossible to say anything about marginal cost with the information provided. 
B) Marginal cost will decrease. 
C) Marginal cost will increase. 
D) Marginal cost will stay the same. 
A) It is impossible to say anything about marginal cost with the information provided. 
B) Marginal cost will decrease. 
C) Marginal cost will increase. 
D) Marginal cost will stay the same.

Question 16

Figure 6-C  
-Refer to Figure 6-C.The average fixed cost curve is the curve labeled:

Accepted Answer

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

Question 17

The short run is that period in which firms:

Accepted Answer

A) are free to vary all inputs. 
B) are able to vary some, but not all, inputs. 
C) can vary inputs, but only by varying all inputs in equal proportion. 
D) cannot increase production at all. 
A) are free to vary all inputs. 
B) are able to vary some, but not all, inputs. 
C) can vary inputs, but only by varying all inputs in equal proportion. 
D) cannot increase production at all.

Question 18

Total variable costs:

Accepted Answer

A) are costs associated with short-run fixed capital. 
B) are so named because they vary from firm to firm within an industry. 
C) increase as production increases. 
D) decrease as production increases. 
A) are costs associated with short-run fixed capital. 
B) are so named because they vary from firm to firm within an industry. 
C) increase as production increases. 
D) decrease as production increases.

Question 19

Which of the following is a reason that marginal product will eventually begin to fall?

Accepted Answer

A) economies of scale 
B) effective use of fixed inputs 
C) decrease in demand 
D) specialization 
E) limited amounts of fixed inputs 
A) economies of scale 
B) effective use of fixed inputs 
C) decrease in demand 
D) specialization 
E) limited amounts of fixed inputs

Question 20

If average variable cost exceeds marginal cost, then:

Accepted Answer

A) average variable cost is increasing and the average total cost is decreasing. 
B) the average variable cost is decreasing and the average total cost is increasing. 
C) both the average variable and average total cost are decreasing. 
D) the average variable cost is decreasing and the average total cost may be increasing or decreasing. 
E) the average variable cost may be rising or falling, but the average total cost is declining. 
A) average variable cost is increasing and the average total cost is decreasing. 
B) the average variable cost is decreasing and the average total cost is increasing. 
C) both the average variable and average total cost are decreasing. 
D) the average variable cost is decreasing and the average total cost may be increasing or decreasing. 
E) the average variable cost may be rising or falling, but the average total cost is declining.

Figure 6-E -Refer to Figure 6-E.In the long run the firm moves from

An example of an implicit cost of production is:

Diseconomies of scale are present when the long run average total cost of production declines as output expands.

Average fixed cost:

The long-run production period:

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11^th unit is $30, what is the average total cost of 11 units?

If opportunity costs are ignored:

Economies of scale:

Figure 6-F -Explain the cost advantage of a firm operating at constant returns to scale.

An example of an explicit cost of production is:

Figure 6-F -Explain why some costs are considered to be variable and some fixed.How does time enter into the definition?

Characteristics of the short run include:

Figure 6-F -Refer to Figure 6-F.The region 'x' refers to:

Luke realizes that his space taxi service is operating in the region of diminishing marginal product.As he provides more taxi service in the short run, what will happen to the marginal cost of providing the additional service?

Figure 6-C -Refer to Figure 6-C.The average fixed cost curve is the curve labeled:

The short run is that period in which firms:

Total variable costs:

Which of the following is a reason that marginal product will eventually begin to fall?

If average variable cost exceeds marginal cost, then:

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.In the long run the firm moves from

An example of an implicit cost of production is:

Diseconomies of scale are present when the long run average total cost of production declines as output expands.

Average fixed cost:

The long-run production period:

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11th unit is $30, what is the average total cost of 11 units?

If opportunity costs are ignored:

Economies of scale:

Figure 6-F -Explain the cost advantage of a firm operating at constant returns to scale.

An example of an explicit cost of production is:

Figure 6-F -Explain why some costs are considered to be variable and some fixed.How does time enter into the definition?

Characteristics of the short run include:

Figure 6-F -Refer to Figure 6-F.The region 'x' refers to:

Luke realizes that his space taxi service is operating in the region of diminishing marginal product.As he provides more taxi service in the short run, what will happen to the marginal cost of providing the additional service?

Figure 6-C -Refer to Figure 6-C.The average fixed cost curve is the curve labeled:

The short run is that period in which firms:

Total variable costs:

Which of the following is a reason that marginal product will eventually begin to fall?

If average variable cost exceeds marginal cost, then:

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

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11^th unit is $30, what is the average total cost of 11 units?