Question 1

-In the above table, the marginal cost of the ninth unit is

Accepted Answer

A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00. 
A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00.

Question 2

Which of the following statements is NOT true about the short run and the long run?

Accepted Answer

A)  The short run for a firm is today while the long run is next week. 
B)  These terms apply to the planning decisions of firms. 
C)  The firm is always operating in the short run. 
D)  In the short run, the firm can change the amount of variable inputs. 
A)  The short run for a firm is today while the long run is next week. 
B)  These terms apply to the planning decisions of firms. 
C)  The firm is always operating in the short run. 
D)  In the short run, the firm can change the amount of variable inputs.

Question 3

-Refer to the above table. At what quantity of labor does the law of diminishing marginal product set in?

Accepted Answer

A)  after 1 unit 
B)  after 2 units 
C)  after 3 units 
D)  after 6 units 
A)  after 1 unit 
B)  after 2 units 
C)  after 3 units 
D)  after 6 units

Question 4

-In the above table, total fixed costs are

Accepted Answer

A)  $10.00. 
B)  $5.00. 
C)  $8.00. 
D)  $18.00. 
A)  $10.00. 
B)  $5.00. 
C)  $8.00. 
D)  $18.00.

Question 5

When the marginal physical product is falling

Accepted Answer

A)  marginal cost is rising. 
B)  average fixed costs are rising. 
C)  total costs are falling. 
D)  average variable costs are falling. 
A)  marginal cost is rising. 
B)  average fixed costs are rising. 
C)  total costs are falling. 
D)  average variable costs are falling.

Question 6

Marginal costs are defined as

Accepted Answer

A)  the change in total costs due to a one-unit change in production. 
B)  costs that are viewed as marginal; of little or small importance. 
C)  costs that represent a change, but one that cannot be measured correctly. 
D)  the change in the decisions that are made by households and firms. 
A)  the change in total costs due to a one-unit change in production. 
B)  costs that are viewed as marginal; of little or small importance. 
C)  costs that represent a change, but one that cannot be measured correctly. 
D)  the change in the decisions that are made by households and firms.

Question 7

-Refer to the above table. What are total costs at an output of 2 units?

Accepted Answer

A)  $50 
B)  $100 
C)  $150 
D)  $200 
A)  $50 
B)  $100 
C)  $150 
D)  $200

Question 8

Which of the following is correct?

Accepted Answer

A)  AFC = TC/Q - TVC/Q 
B)  AVC = TVC - AFC 
C)  TC = AVC∗Q 
D)  MC = TC - TVC 
A)  AFC = TC/Q - TVC/Q 
B)  AVC = TVC - AFC 
C)  TC = AVC∗Q 
D)  MC = TC - TVC

Question 9

Which of the following activities is NOT included in the production process?

Accepted Answer

A)  determining the value of the goods 
B)  making the goods 
C)  packaging the goods 
D)  transporting the goods 
A)  determining the value of the goods 
B)  making the goods 
C)  packaging the goods 
D)  transporting the goods

Question 10

A firm's long-run average cost curve is

Accepted Answer

A)  the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted. 
B)  the locus of points made up of the minimum point on each short-run average total cost curve when only one input may be adjusted. 
C)  the envelope of the firm's variable cost curves. 
D)  identical to the lowest short-run average cost curve the firm has. 
A)  the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted. 
B)  the locus of points made up of the minimum point on each short-run average total cost curve when only one input may be adjusted. 
C)  the envelope of the firm's variable cost curves. 
D)  identical to the lowest short-run average cost curve the firm has.

Question 11

-In the above table, the marginal cost of the fourth unit is

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $6.00. 
D)  $24.00. 
A)  $1.00. 
B)  $2.00. 
C)  $6.00. 
D)  $24.00.

Question 12

Which of the following would be an example of a fixed cost to a firm?

Accepted Answer

A)  rent for the building it occupies 
B)  wages for the laborers 
C)  the cost of raw materials 
D)  electricity and other fuel costs 
A)  rent for the building it occupies 
B)  wages for the laborers 
C)  the cost of raw materials 
D)  electricity and other fuel costs

Question 13

Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

Accepted Answer

Given the information on total physical

Question 14

-Refer to the above table. When output rises from 2 units to 5 units, marginal costs are

Accepted Answer

A)  $26.50. 
B)  $31. 
C)  $21. 
D)  $63. 
A)  $26.50. 
B)  $31. 
C)  $21. 
D)  $63.

Question 15

Suppose there are fixed costs and marginal costs that are constant. Then we know that

Accepted Answer

A)  average total costs are also constant. 
B)  average variable costs decrease continuously as output increases, and lie above the marginal cost curve. 
C)  average total costs decrease continuously as output increases, and lie above the average variable cost curve, which also is decreasing continuously. 
D)  average total costs decrease continuously as output increases, and lie above the average variable cost curve, which is constant. 
A)  average total costs are also constant. 
B)  average variable costs decrease continuously as output increases, and lie above the marginal cost curve. 
C)  average total costs decrease continuously as output increases, and lie above the average variable cost curve, which also is decreasing continuously. 
D)  average total costs decrease continuously as output increases, and lie above the average variable cost curve, which is constant.

Question 16

What factors generate economies of scale?

Accepted Answer

Economies of scale can be generated by s

Question 17

-Use the above figure. At an output equal to "Q" the total variable cost for the firm will be the area

Accepted Answer

A)  OQAB. 
B)  OQEB. 
C)  OQFA. 
D)  OQDC. 
A)  OQAB. 
B)  OQEB. 
C)  OQFA. 
D)  OQDC.

Question 18

An increase in output would result in no change in long-run average costs when there are

Accepted Answer

A)  economies of scale. 
B)  diseconomies to scale. 
C)  constant returns to scale. 
D)  diminishing marginal product. 
A)  economies of scale. 
B)  diseconomies to scale. 
C)  constant returns to scale. 
D)  diminishing marginal product.

Question 19

-Refer to the above table. What are total costs at an output of 3 units?

Accepted Answer

A)  $90 
B)  $120 
C)  $150 
D)  $270 
A)  $90 
B)  $120 
C)  $150 
D)  $270

Question 20

-Use the above figure. The AFC at output level 20 is

Accepted Answer

A)  $10.00. 
B)  $0.50. 
C)  $3.00. 
D)  $1.00. 
A)  $10.00. 
B)  $0.50. 
C)  $3.00. 
D)  $1.00.

Exam 22: The Firm: Cost and Output Determination

-In the above table, the marginal cost of the ninth unit is

Which of the following statements is NOT true about the short run and the long run?

-Refer to the above table. At what quantity of labor does the law of diminishing marginal product set in?

-In the above table, total fixed costs are

When the marginal physical product is falling

Marginal costs are defined as

-Refer to the above table. What are total costs at an output of 2 units?

Which of the following is correct?

Which of the following activities is NOT included in the production process?

A firm's long-run average cost curve is

-In the above table, the marginal cost of the fourth unit is

Which of the following would be an example of a fixed cost to a firm?

Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

-Refer to the above table. When output rises from 2 units to 5 units, marginal costs are

Suppose there are fixed costs and marginal costs that are constant. Then we know that

What factors generate economies of scale?

-Use the above figure. At an output equal to "Q" the total variable cost for the firm will be the area

An increase in output would result in no change in long-run average costs when there are

-Refer to the above table. What are total costs at an output of 3 units?

-Use the above figure. The AFC at output level 20 is

The Nature of Economics

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