Question 1

Figure 11-10  
-Refer to Figure 11-10.Identify the minimum efficient scale of production.

Accepted Answer

A) Qa 
B) Qb 
C) Qc 
D) Qd 
A) Qa 
B) Qb 
C) Qc 
D) Qd

Question 2

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Accepted Answer

A) $1,000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information. 
A) $1,000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information.

Question 3

The change in a firm's total cost from producing one more unit of a good or service is

Accepted Answer

A) the result of economies of scale. 
B) the definition of marginal product 
C) the definition of marginal cost. 
D) impossible to observe in large firms with many manufacturing plants. 
A) the result of economies of scale. 
B) the definition of marginal product 
C) the definition of marginal cost. 
D) impossible to observe in large firms with many manufacturing plants.

Question 4

Figure 11-13  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

Accepted Answer

A) the price of capital increases while the price of labor remains unchanged. 
B) the price of labor decreases while the price of capital remains unchanged. 
C) the price of capital increases while the price of labor decreases. 
D) the price of capital decreases while the price of labor increases. 
A) the price of capital increases while the price of labor remains unchanged. 
B) the price of labor decreases while the price of capital remains unchanged. 
C) the price of capital increases while the price of labor decreases. 
D) the price of capital decreases while the price of labor increases.

Question 5

The slope of an isoquant measures

Accepted Answer

A) the price ratio of the two inputs. 
B) the average product of labor. 
C) the ratio of the marginal utility of the two inputs. 
D) the rate at which inputs can be substituted for each other keeping total output constant. 
A) the price ratio of the two inputs. 
B) the average product of labor. 
C) the ratio of the marginal utility of the two inputs. 
D) the rate at which inputs can be substituted for each other keeping total output constant.

Question 6

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an implicit cost of production?

Accepted Answer

A) interest paid on a loan to a bank 
B) wages paid to labor plus the cost of carrying benefits for workers 
C) the utility bill paid to water,electricity,and natural gas companies 
D) rent that could have been earned on a building owned and used by the firm 
A) interest paid on a loan to a bank 
B) wages paid to labor plus the cost of carrying benefits for workers 
C) the utility bill paid to water,electricity,and natural gas companies 
D) rent that could have been earned on a building owned and used by the firm

Question 8

If we have information about workers' marginal products,then total and average product can be found by

Accepted Answer

A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average. 
A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average.

Question 9

If marginal product is equal to average product,then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 10

Joan Jillson owns a coffee shop.Assume that the marginal product of the labor Joan employs (MPL)equals 500 cups per week and the marginal product of her shop's capital (MPK)equals 1,000.Assume also that the wage (w)Joan pays her workers equals $250 per week and the rental price (r)of her capital - her coffee machines - equals $500 per week.Which of the following correctly analyzes whether Joan is minimizing her costs?

Accepted Answer

A) No,Joan is not minimizing her costs because MPK is greater than MPL and r is greater than w. 
B) Yes,Joan is minimizing her costs because MPK/r equals MPL/w. 
C) No,Joan is not minimizing her costs because MPL × w is less than MPK × r. 
D) Yes,Joan is minimizing her costs because she is a price-taker in the markets for labor and capital. 
A) No,Joan is not minimizing her costs because MPK is greater than MPL and r is greater than w. 
B) Yes,Joan is minimizing her costs because MPK/r equals MPL/w. 
C) No,Joan is not minimizing her costs because MPL × w is less than MPK × r. 
D) Yes,Joan is minimizing her costs because she is a price-taker in the markets for labor and capital.

Question 11

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

Accepted Answer

A) True 
 B)False

Question 12

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc.
-Refer to Figure 11-11.In the short run,if the firm sells fewer than 5,000 picture frames per month

Accepted Answer

A) it should produce with the scale of operation associated with ATCa. 
B) it should produce with the scale of operation associated with ATCb. 
C) it should produce with the scale of operation associated with ATCc. 
D) it will experience constant returns to scale. 
A) it should produce with the scale of operation associated with ATCa. 
B) it should produce with the scale of operation associated with ATCb. 
C) it should produce with the scale of operation associated with ATCc. 
D) it will experience constant returns to scale.

Question 13

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

Accepted Answer

Assume the two companies are o

Question 14

Average total cost is

Accepted Answer

A) total cost divided by the quantity of output produced. 
B) total explicit costs divided by the quantity of output produced. 
C) variable cost divided by the quantity of output produced. 
D) the change in fixed plus variable cost divided by the quantity of output produced. 
A) total cost divided by the quantity of output produced. 
B) total explicit costs divided by the quantity of output produced. 
C) variable cost divided by the quantity of output produced. 
D) the change in fixed plus variable cost divided by the quantity of output produced.

Question 15

Figure 11-1  
-Refer to Figure 11-1.The marginal product of the 3rd worker is

Accepted Answer

A) 57. 
B) 19. 
C) 15. 
D) 11. 
A) 57. 
B) 19. 
C) 15. 
D) 11.

Question 16

Figure 11-5  
-Refer to Figure 11-5.The vertical difference between curves F and G measures

Accepted Answer

A) average fixed costs. 
B) marginal costs. 
C) fixed costs. 
D) sunk costs. 
A) average fixed costs. 
B) marginal costs. 
C) fixed costs. 
D) sunk costs.

Question 17

Figure 11-16  
-Refer to Figure 11-16.The figure above illustrates a series of isoquants.Which of the following statements is true?

Accepted Answer

A) Points x,z,and y all represent the same output. 
B) Points z and y represent the same output;this output is produced with more capital at z than at y. 
C) Point x and y represent the same output but the cost of production at y is greater than the cost of production at x. 
D) Point z represents a greater output than point x or point y. 
A) Points x,z,and y all represent the same output. 
B) Points z and y represent the same output;this output is produced with more capital at z than at y. 
C) Point x and y represent the same output but the cost of production at y is greater than the cost of production at x. 
D) Point z represents a greater output than point x or point y.

Question 18

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Accepted Answer

A) 4 pounds 
B) 10.8 bushels 
C) 38.2 pounds 
D) 54 pounds 
A) 4 pounds 
B) 10.8 bushels 
C) 38.2 pounds 
D) 54 pounds

Question 19

Table 11-3
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Boxes }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Product of } \
\text { Labor }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Product of } \
\text { Labor }
\end{array} \
\hline 0 & 0 & - - - - & - - - - \
\hline 1 & 50 & & \
\hline 2 & 200 & & \
\hline 3 & 240 & & \
\hline 4 & 264 & & \
\hline 5 & 284 & & \
\hline
\end{array}$$
-Refer to Table 11-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.Diminishing returns to labor are first observed in this example after Manny hires the ________ worker.

Accepted Answer

A) second 
B) third 
C) fourth 
D) fifth 
A) second 
B) third 
C) fourth 
D) fifth

Question 20

The law of diminishing marginal returns states

Accepted Answer

A) that at some point,adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) that at some point,adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) that in the presence of a fixed factor,at some point average product of labor starts to fall as more and more variable inputs are added. 
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. 
A) that at some point,adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. 
B) that at some point,adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. 
C) that in the presence of a fixed factor,at some point average product of labor starts to fall as more and more variable inputs are added. 
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

Exam 11: Technology,production,and Costs

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

The change in a firm's total cost from producing one more unit of a good or service is

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

The slope of an isoquant measures

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Which of the following is an implicit cost of production?

If we have information about workers' marginal products,then total and average product can be found by

If marginal product is equal to average product,then total product is at a maximum.

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc. -Refer to Figure 11-11.In the short run,if the firm sells fewer than 5,000 picture frames per month

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

Average total cost is

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

Figure 11-5 -Refer to Figure 11-5.The vertical difference between curves F and G measures

Figure 11-16 -Refer to Figure 11-16.The figure above illustrates a series of isoquants.Which of the following statements is true?

1eaaa28_a9cb_7b34_9b29_2f66e61cebfd_TB3018_00_TB3018_00_TB3018_00 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

The law of diminishing marginal returns states

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

Filters