Question 1

Which of the following observations is true?

Accepted Answer

A) Sunk costs are irrelevant for any future action. 
B) Sunk costs should not be ignored when making decisions. 
C) Sunk costs are often hidden. 
D) Sunk costs can be recovered using corrective measures. 
A) Sunk costs are irrelevant for any future action. 
B) Sunk costs should not be ignored when making decisions. 
C) Sunk costs are often hidden. 
D) Sunk costs can be recovered using corrective measures.

Question 2

A firm's average fixed cost curve is:

Accepted Answer

A) U-shaped. 
B) a curve that increases as output expands. 
C) a vertical line. 
D) a curve that declines as output expands and approaches the X-axis when output is large. 
E) a horizontal line. 
A) U-shaped. 
B) a curve that increases as output expands. 
C) a vertical line. 
D) a curve that declines as output expands and approaches the X-axis when output is large. 
E) a horizontal line.

Question 3

Figure 6-C  
-Refer to Figure 6-C.The average variable 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 4

Figure 6-F  
-How short is the short-run production period?

Accepted Answer

In the short run, some factors cannot be

Question 5

Table 6-A
 $$\begin{array} { | c | c | } 
\hline \text { \# of Pickers } & \text { Total \# of Oranges Picked } \
\hline 1 & 1,000 \
\hline 2 & 2,000 \
\hline 3 & 3,000 \
\hline 4 & 3,900 \
\hline 5 & 4,700 \
\hline 6 & 5,400 \
\hline 7 & 6,000 \
\hline 8 & 6,200 \
\hline 9 & 6,000 \
\hline
\end{array}$$
-Refer to Table 6-A.The marginal product of labor begins to diminish with the addition of the ____ picker.

Accepted Answer

A) fourth 
B) fifth 
C) seventh 
D) eighth 
E) ninth 
A) fourth 
B) fifth 
C) seventh 
D) eighth 
E) ninth

Question 6

The marginal product of labor can be defined as:

Accepted Answer

A) the change in profit divided by the change in labor, other factors of production held constant. 
B) the change in total output divided by the change in labor, other factors of production held constant. 
C) the total output divided by the total labor utilized. 
D) the change in labor utilized divided by the change in total output, other factors of production held constant. 
E) the change in labor divided by the change in the total cost, other factors of production held constant. 
A) the change in profit divided by the change in labor, other factors of production held constant. 
B) the change in total output divided by the change in labor, other factors of production held constant. 
C) the total output divided by the total labor utilized. 
D) the change in labor utilized divided by the change in total output, other factors of production held constant. 
E) the change in labor divided by the change in the total cost, other factors of production held constant.

Question 7

When a firm makes zero economic profit, it means that:

Accepted Answer

A) the firm is covering implicit costs alone. 
B) the firm is covering the total opportunity costs of its resources. 
C) the firm is covering explicit costs alone. 
D) the firm is running at a loss. 
E) the firm is also making a zero accounting profit. 
A) the firm is covering implicit costs alone. 
B) the firm is covering the total opportunity costs of its resources. 
C) the firm is covering explicit costs alone. 
D) the firm is running at a loss. 
E) the firm is also making a zero accounting profit.

Question 8

In the long-run the firm gets to choose which short-run curve it wants to use.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-E  
-Refer to Figure 6-E.Which of the following curves represent the LRATC?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 10

Figure 7-H  
-An economic profit of zero indicates a satisfactory situation for the firm.

Accepted Answer

A) True 
 B)False

Question 11

In the short run, an expansion of output always causes in an increase in:

Accepted Answer

A) TC. 
B) AFC. 
C) AVC. 
D) MC. 
E) all of the above. 
A) TC. 
B) AFC. 
C) AVC. 
D) MC. 
E) all of the above.

Question 12

Whenever the marginal product of a firm's only variable input was positive, but falling:

Accepted Answer

A) its total product is growing at a decreasing rate. 
B) it will use more of the variable input until its marginal product is negative. 
C) it would reduce its use of the variable input. 
D) its total product is beyond its maximum. 
E) all of the above would be true. 
A) its total product is growing at a decreasing rate. 
B) it will use more of the variable input until its marginal product is negative. 
C) it would reduce its use of the variable input. 
D) its total product is beyond its maximum. 
E) all of the above would be true.

Question 13

Figure 6-F  
-A firm's total product of labor curve is represented by the following data: 1 worker can produce 4 units of output; 2 workers, 10 units; 3 workers, 17 units; 4 workers, 25 units; 5 workers, 30 units; 6 workers, 35 units; 7 workers, 38 units; 8 workers, 39 units; and 9 workers, 38 units.What is the marginal product of the seventh worker? When does the law of diminishing marginal product set in? Under these circumstances would you ever choose to employ nine workers?

Accepted Answer

The marginal product of the seventh work

Question 14

Figure 6-F  
-Refer to Figure 6-F.Point A refers to:

Accepted Answer

A) break-even point. 
B) efficient equilibrium. 
C) minimum efficient scale. 
D) zero economic profit. 
A) break-even point. 
B) efficient equilibrium. 
C) minimum efficient scale. 
D) zero economic profit.

Question 15

You operate a factory that produces beach towels.Your current level of output equals 2,000 towels per week.Your weekly variable cost equals $8,000.If your total cost each week equals $9,000, it follows that:

Accepted Answer

A) the average variable cost of production equals $2 per towel. 
B) the average total cost of production equals $4 per towel. 
C) the average total cost of production equals $4.50 per towel. 
D) the average total cost of production equals $8 per towel. 
E) the average fixed cost of production equals $1 per towel. 
A) the average variable cost of production equals $2 per towel. 
B) the average total cost of production equals $4 per towel. 
C) the average total cost of production equals $4.50 per towel. 
D) the average total cost of production equals $8 per towel. 
E) the average fixed cost of production equals $1 per towel.

Question 16

Which of the following would be considered a variable input in the short run?

Accepted Answer

A) The size of a firm's plant. 
B) The acreage of an apple farmer's orchard. 
C) The production capacity of a machine. 
D) All of the above. 
E) None of the above. 
A) The size of a firm's plant. 
B) The acreage of an apple farmer's orchard. 
C) The production capacity of a machine. 
D) All of the above. 
E) None of the above.

Question 17

When economies of scale exist:

Accepted Answer

A) per unit production costs increase as output expands. 
B) per unit production costs decline as output expands. 
C) marginal cost must decrease as output expands. 
D) per unit production costs remain constant as output expands. 
A) per unit production costs increase as output expands. 
B) per unit production costs decline as output expands. 
C) marginal cost must decrease as output expands. 
D) per unit production costs remain constant as output expands.

Which of the following observations is true?

A firm's average fixed cost curve is:

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

Figure 6-F -How short is the short-run production period?

Table 6-A \# of Pickers Total \# of Oranges Picked 1 1,000 2 2,000 3 3,000 4 3,900 5 4,700 6 5,400 7 6,000 8 6,200 9 6,000 -Refer to Table 6-A.The marginal product of labor begins to diminish with the addition of the ____ picker.

The marginal product of labor can be defined as:

When a firm makes zero economic profit, it means that:

In the long-run the firm gets to choose which short-run curve it wants to use.

Figure 6-E -Refer to Figure 6-E.Which of the following curves represent the LRATC?

Figure 7-H -An economic profit of zero indicates a satisfactory situation for the firm.

In the short run, an expansion of output always causes in an increase in:

Whenever the marginal product of a firm's only variable input was positive, but falling:

Figure 6-F -Refer to Figure 6-F.Point A refers to:

You operate a factory that produces beach towels.Your current level of output equals 2,000 towels per week.Your weekly variable cost equals $8,000.If your total cost each week equals $9,000, it follows that:

Which of the following would be considered a variable input in the short run?

When economies of scale exist:

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

Which of the following observations is true?

A firm's average fixed cost curve is:

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

Figure 6-F -How short is the short-run production period?

Table 6-A \# of Pickers Total \# of Oranges Picked 1 1,000 2 2,000 3 3,000 4 3,900 5 4,700 6 5,400 7 6,000 8 6,200 9 6,000 -Refer to Table 6-A.The marginal product of labor begins to diminish with the addition of the ____ picker.

The marginal product of labor can be defined as:

When a firm makes zero economic profit, it means that:

In the long-run the firm gets to choose which short-run curve it wants to use.

Figure 6-E -Refer to Figure 6-E.Which of the following curves represent the LRATC?

Figure 7-H -An economic profit of zero indicates a satisfactory situation for the firm.

In the short run, an expansion of output always causes in an increase in:

Whenever the marginal product of a firm's only variable input was positive, but falling:

Figure 6-F -Refer to Figure 6-F.Point A refers to:

You operate a factory that produces beach towels.Your current level of output equals 2,000 towels per week.Your weekly variable cost equals $8,000.If your total cost each week equals $9,000, it follows that:

Which of the following would be considered a variable input in the short run?

When economies of scale exist:

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