Question 1

-In the above table, when the firm employs 4 workers, the marginal product will be

Accepted Answer

A)  140 tablets. 
B)  30 tablets. 
C)  35 tablets. 
D)  208 tablets. 
A)  140 tablets. 
B)  30 tablets. 
C)  35 tablets. 
D)  208 tablets.

Question 2

Minimum efficient scale is defined as

Accepted Answer

A)  the lowest output level at which long-run average costs are at their minimum. 
B)  the amount of labor that maximizes the marginal product of labor. 
C)  the point at which marginal cost, average variable cost, and average fixed cost are all equal. 
D)  the point at which economies of scale are at their maximum. 
A)  the lowest output level at which long-run average costs are at their minimum. 
B)  the amount of labor that maximizes the marginal product of labor. 
C)  the point at which marginal cost, average variable cost, and average fixed cost are all equal. 
D)  the point at which economies of scale are at their maximum.

Question 3

When a firm is at its minimum efficient scale of operation, it produces the

Accepted Answer

A)  maximum rate of output at which long-run average cost is minimized. 
B)  minimum rate of output at which long-run average cost is minimized. 
C)  maximum rate of output consistent with lowest long-run marginal cost. 
D)  minimum rate of output consistent with lowest long-run marginal cost. 
A)  maximum rate of output at which long-run average cost is minimized. 
B)  minimum rate of output at which long-run average cost is minimized. 
C)  maximum rate of output consistent with lowest long-run marginal cost. 
D)  minimum rate of output consistent with lowest long-run marginal cost.

Question 4

-In the above table, what is the marginal cost to produce the 4th unit of output?

Accepted Answer

A)  $30 
B)  $60 
C)  $55 
D)  $20 
A)  $30 
B)  $60 
C)  $55 
D)  $20

Question 5

The planning curve is the

Accepted Answer

A)  long-run average cost curve. 
B)  production function. 
C)  short-run marginal cost curve. 
D)  short-run average cost curve. 
A)  long-run average cost curve. 
B)  production function. 
C)  short-run marginal cost curve. 
D)  short-run average cost curve.

Question 6

Which of the following is TRUE?

Accepted Answer

A)  The MC curve intersects AFC at its minimum point. 
B)  If MC is below AVC, AVC must be increasing. 
C)  If MC is above ATC, ATC must be increasing. 
D)  none of the above 
A)  The MC curve intersects AFC at its minimum point. 
B)  If MC is below AVC, AVC must be increasing. 
C)  If MC is above ATC, ATC must be increasing. 
D)  none of the above

Question 7

Which of the following statements is NOT true about the production function?

Accepted Answer

A)  It gives the maximum output that can be obtained for a given level of inputs. 
B)  A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C)  The production function depends upon the level of technology available to the firm. 
D)  It specifies the cost of inputs necessary to produce a certain level of outputs. 
A)  It gives the maximum output that can be obtained for a given level of inputs. 
B)  A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C)  The production function depends upon the level of technology available to the firm. 
D)  It specifies the cost of inputs necessary to produce a certain level of outputs.

Question 8

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?

Accepted Answer

A)  335; 341 
B)  335; 0 
C)  5; 0 
D)  0; 5 
A)  335; 341 
B)  335; 0 
C)  5; 0 
D)  0; 5

Question 9

Which of the following physical relationships might generate economies of scale?

Accepted Answer

A)  Proportionally larger pipes can transport more than a proportional increase in oil. 
B)  Larger equipment tends to weigh more and use more fuel on a per-unit-of-output basis. 
C)  Each lift truck requires one lift truck driver. 
D)  A doubling of all inputs leads to a doubling of output. 
A)  Proportionally larger pipes can transport more than a proportional increase in oil. 
B)  Larger equipment tends to weigh more and use more fuel on a per-unit-of-output basis. 
C)  Each lift truck requires one lift truck driver. 
D)  A doubling of all inputs leads to a doubling of output.

Question 10

The marginal product of labor is calculated assuming other factor inputs

Accepted Answer

A)  increase more than proportionately. 
B)  increase less than proportionately. 
C)  remain constant. 
D)  decrease. 
A)  increase more than proportionately. 
B)  increase less than proportionately. 
C)  remain constant. 
D)  decrease.

Question 11

Every point on the long-run average cost curve is

Accepted Answer

A)  also a minimum point on a short-run average cost curve. 
B)  on a short-run average total cost curve. 
C)  on a short-run average variable cost curve. 
D)  on a short-run marginal cost curve. 
A)  also a minimum point on a short-run average cost curve. 
B)  on a short-run average total cost curve. 
C)  on a short-run average variable cost curve. 
D)  on a short-run marginal cost curve.

Question 12

If the price of labor is constant and a firm experiences diminishing marginal product, then its

Accepted Answer

A)  marginal costs decrease. 
B)  fixed costs increase. 
C)  average variable cost increases. 
D)  total costs decrease. 
A)  marginal costs decrease. 
B)  fixed costs increase. 
C)  average variable cost increases. 
D)  total costs decrease.

Question 13

Summing all of the costs that do NOT change as output varies yields

Accepted Answer

A)  variable costs. 
B)  fixed costs. 
C)  implicit costs. 
D)  explicit costs. 
A)  variable costs. 
B)  fixed costs. 
C)  implicit costs. 
D)  explicit costs.

Question 14

What are the relationships between the marginal cost curve and the average cost curves? Explain in words.

Accepted Answer

When the marginal cost curve is below ea

Question 15

What is the most important determinant of the firm's short-run cost curves?

Accepted Answer

The short-run cost curves owe their shap

Question 16

The law of diminishing marginal product

Accepted Answer

A)  holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B)  does not hold in the short run because of fixed costs. 
C)  does not hold in the long run because there are no fixed inputs in the long run. 
D)  holds in the short and long run because of economies to scale. 
A)  holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B)  does not hold in the short run because of fixed costs. 
C)  does not hold in the long run because there are no fixed inputs in the long run. 
D)  holds in the short and long run because of economies to scale.

Question 17

A decrease in the long-run average costs resulting from increasing output is referred to as

Accepted Answer

A)  diseconomies of scale. 
B)  constant return to scale. 
C)  a scale invariant process. 
D)  economies of scale. 
A)  diseconomies of scale. 
B)  constant return to scale. 
C)  a scale invariant process. 
D)  economies of scale.

Question 18

When total product is decreasing, marginal product is

Accepted Answer

A)  positive and increasing. 
B)  positive and decreasing. 
C)  constant. 
D)  negative. 
A)  positive and increasing. 
B)  positive and decreasing. 
C)  constant. 
D)  negative.

Question 19

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines

Accepted Answer

A)  maximum efficient scale. 
B)  minimum efficient scale. 
C)  allowable efficient scale. 
D)  short-run efficient scale. 
A)  maximum efficient scale. 
B)  minimum efficient scale. 
C)  allowable efficient scale. 
D)  short-run efficient scale.

Question 20

How is the long-run average cost curve found? What is its importance to the firm?

Accepted Answer

The long-run average cost curve is the l

Exam 22: The Firm: Cost and Output Determination

-In the above table, when the firm employs 4 workers, the marginal product will be

Minimum efficient scale is defined as

When a firm is at its minimum efficient scale of operation, it produces the

-In the above table, what is the marginal cost to produce the 4th unit of output?

The planning curve is the

Which of the following is TRUE?

Which of the following statements is NOT true about the production function?

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?

Which of the following physical relationships might generate economies of scale?

The marginal product of labor is calculated assuming other factor inputs

Every point on the long-run average cost curve is

If the price of labor is constant and a firm experiences diminishing marginal product, then its

Summing all of the costs that do NOT change as output varies yields

What are the relationships between the marginal cost curve and the average cost curves? Explain in words.

What is the most important determinant of the firm's short-run cost curves?

The law of diminishing marginal product

A decrease in the long-run average costs resulting from increasing output is referred to as

When total product is decreasing, marginal product is

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines

How is the long-run average cost curve found? What is its importance to the firm?

The Nature of Economics

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