Question 1

A change in the slope of an isocost line is due to a change in

Accepted Answer

A) the output price. 
B) the price of one or both inputs. 
C) total cost. 
D) quantity of output. 
A) the output price. 
B) the price of one or both inputs. 
C) total cost. 
D) quantity of output.

Question 2

If,when a firm doubles all its inputs,its average cost of production increases,then production displays

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs.

Question 3

Diminishing marginal product of labor occurs when adding another unit of labor

Accepted Answer

A) decreases output. 
B) changes output by an amount smaller than the output added by the previous unit of labor. 
C) increases output by an amount larger than the output added by the previous unit of labor. 
D) decreases output by an amount smaller than the output added by the previous unit of labor. 
A) decreases output. 
B) changes output by an amount smaller than the output added by the previous unit of labor. 
C) increases output by an amount larger than the output added by the previous unit of labor. 
D) decreases output by an amount smaller than the output added by the previous unit of labor.

Question 4

A U-shaped long-run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Accepted Answer

A) True 
 B)False

Question 5

Article Summary
Due to changing shopping habits and increased online sales,Macy's announced it would be closing 35 to 40 underperforming stores in early 2016.The stores represent about 5 percent of its total locations,and the company expects to lose about $300 million in sales,or 1 percent of total sales,from the closures.Over the past five years,Macy's has closed 52 stores and opened 12 new locations,leaving the company 770 stores in 45 states.
-Refer to the Article Summary.Use a graph to illustrate average total cost curves for Macy's before and after closing the 35 to 40 stores.Assume that after closing the stores,Macy's will be producing at minimum average total cost.

Accepted Answer

@#IMG-DLM& Before closing the stores,Macy's would

Question 6

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production 
A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production

Question 7

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Accepted Answer

A) its labor is more productive in a smaller plant. 
B) its diseconomies of scale are less. 
C) the firm should reduce its plant size even more. 
D) the firm is now profitable. 
A) its labor is more productive in a smaller plant. 
B) its diseconomies of scale are less. 
C) the firm should reduce its plant size even more. 
D) the firm is now profitable.

Question 8

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays

Accepted Answer

A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs. 
A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs.

Question 9

As a firm hires more labor in the short run,the

Accepted Answer

A) level of total product stays constant. 
B) output per worker rises. 
C) extra output of another worker may rise at first,but eventually must fall. 
D) costs of production are increasing at a fixed rate per unit of output. 
A) level of total product stays constant. 
B) output per worker rises. 
C) extra output of another worker may rise at first,but eventually must fall. 
D) costs of production are increasing at a fixed rate per unit of output.

Question 10

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc. )to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

Accepted Answer

A) $0 
B) $2 
C) $60 
D) $120 
A) $0 
B) $2 
C) $60 
D) $120

Question 11

If another worker adds 9 units of output to a group of workers who had an average product of 7 units,then the average product of labor

Accepted Answer

A) will remain the same. 
B) will increase. 
C) will decrease. 
D) and what will happen to it cannot be determined. 
A) will remain the same. 
B) will increase. 
C) will decrease. 
D) and what will happen to it cannot be determined.

Question 12

A curve that shows all the combinations of two inputs,such as labor and capital,that will produce the same level of output is called

Accepted Answer

A) an isoquant. 
B) an isocost line 
C) a budget line. 
D) an optimal input combination curve. 
A) an isoquant. 
B) an isocost line 
C) a budget line. 
D) an optimal input combination curve.

Question 13

What are economies of scale? What are diseconomies of scale?

Accepted Answer

Economies of scale occur when

Question 14

If marginal product is greater than average product,then

Accepted Answer

A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing. 
A) average product must be decreasing. 
B) marginal product must be decreasing. 
C) marginal product must be increasing. 
D) marginal product could either be increasing or decreasing.

Question 15

Figure 11-5  
-Refer to Figure 11-5.Identify the curves in the diagram.

Accepted Answer

A) E = average fixed cost curve;F = variable cost curve;G = total cost curve,H = marginal cost curve 
B) E = marginal cost curve;F = total cost curve;G = variable cost curve,H = average fixed cost curve 
C) E = average fixed cost curve;F = average total cost curve;G = average variable cost curve,H = marginal cost curve 
D) E = marginal cost curve;F = average total cost curve;G = average variable cost curve;H = average fixed cost curve. 
A) E = average fixed cost curve;F = variable cost curve;G = total cost curve,H = marginal cost curve 
B) E = marginal cost curve;F = total cost curve;G = variable cost curve,H = average fixed cost curve 
C) E = average fixed cost curve;F = average total cost curve;G = average variable cost curve,H = marginal cost curve 
D) E = marginal cost curve;F = average total cost curve;G = average variable cost curve;H = average fixed cost curve.

Question 16

If the marginal cost curve is below the average variable cost curve,then

Accepted Answer

A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing. 
A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing.

Question 17

Academic book publishers hire editors,designers,and production and marketing managers who help prepare books for publication.Because these employees work on several books simultaneously,the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year.The salaries and benefits of people in these job categories will be included in

Accepted Answer

A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost. 
A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost.

Question 18

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s.Bill took out a loan from his bank to pay for his store and its initial inventory.Bill pays the bank $900 per week for his loan.The $900 bank payment

Accepted Answer

A) is a long-run implicit cost. 
B) is a fixed cost. 
C) is a short-run implicit cost. 
D) is a variable cost. 
A) is a long-run implicit cost. 
B) is a fixed cost. 
C) is a short-run implicit cost. 
D) is a variable cost.

Question 19

In the long run which of the following is true?

Accepted Answer

A) Total cost = fixed cost + variable cost. 
B) The size of a firm's physical plant can be changed but the firm cannot adopt new technology. 
C) There are no fixed costs. 
D) The firm can vary its explicit costs but not its implicit costs. 
A) Total cost = fixed cost + variable cost. 
B) The size of a firm's physical plant can be changed but the firm cannot adopt new technology. 
C) There are no fixed costs. 
D) The firm can vary its explicit costs but not its implicit costs.

Question 20

Figure 11-4  
-Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost. 
A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost.

Exam 11: Technology,production,and Costs

A change in the slope of an isocost line is due to a change in

If,when a firm doubles all its inputs,its average cost of production increases,then production displays

Diminishing marginal product of labor occurs when adding another unit of labor

A U-shaped long-run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Which of the following is not a source of technological advancement for a producer?

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays

As a firm hires more labor in the short run,the

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc. )to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

If another worker adds 9 units of output to a group of workers who had an average product of 7 units,then the average product of labor

A curve that shows all the combinations of two inputs,such as labor and capital,that will produce the same level of output is called

What are economies of scale? What are diseconomies of scale?

If marginal product is greater than average product,then

Figure 11-5 -Refer to Figure 11-5.Identify the curves in the diagram.

If the marginal cost curve is below the average variable cost curve,then

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s.Bill took out a loan from his bank to pay for his store and its initial inventory.Bill pays the bank $900 per week for his loan.The $900 bank payment

In the long run which of the following is true?

Figure 11-4 -Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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