Question 1

Which of the following statements is false?

Accepted Answer

A) An implicit cost is a nonmonetary opportunity cost. 
B) Economic costs include both accounting costs and implicit costs. 
C) An explicit cost is a cost that involves spending money. 
D) Economists consider all costs to be implicit costs. 
A) An implicit cost is a nonmonetary opportunity cost. 
B) Economic costs include both accounting costs and implicit costs. 
C) An explicit cost is a cost that involves spending money. 
D) Economists consider all costs to be implicit costs.

Question 2

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor.
a.The payment he makes to buy tattoo ink.
b.The wages he pays his employees.
c.The $500-per-month payment he makes to advertise his shop on highway billboards.
d.The lease payment he makes to the landlord who owns the building where his shop is located.
e.The payment he makes on his liability insurance policy.

Accepted Answer

c,d,and e are fixed costs because they d

Question 3

Which of the following statements is true?

Accepted Answer

A) The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. 
B) The average product of labor is at its minimum when the average product of labor equals the marginal product of labor. 
C) The average product of labor tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing. 
A) The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. 
B) The average product of labor is at its minimum when the average product of labor equals the marginal product of labor. 
C) The average product of labor tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing.

Question 4

-Refer to Figure 11-12.Which of the following statements about the input combinations shown in the diagram is false?

Accepted Answer

A) The firm produces a higher output level when it uses input combination b compared to input combination a. 
B) The firm produces a lower output level when it uses input combination d compared to input combination a. 
C) The firm produces the same output level when it uses input combination a or c. 
D) The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output. 
A) The firm produces a higher output level when it uses input combination b compared to input combination a. 
B) The firm produces a lower output level when it uses input combination d compared to input combination a. 
C) The firm produces the same output level when it uses input combination a or c. 
D) The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output.

Question 5

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 6

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Accepted Answer

A) the marginal product of labor. 
B) the division of labor. 
C) the average product of labor. 
D) the average cost of production. 
A) the marginal product of labor. 
B) the division of labor. 
C) the average product of labor. 
D) the average cost of production.

Question 7

Average total cost is equal to average variable cost minus average fixed cost.

Accepted Answer

A) True 
 B)False

Question 8

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is

Accepted Answer

A) 60 units. 
B) 54 units. 
C) 48 units. 
D) 5 units. 
A) 60 units. 
B) 54 units. 
C) 48 units. 
D) 5 units.

Question 9

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labor is 8 for the first artist,12 for the second artist,and 7 for the third artist.What is Damian's average product of labor for these three tattoo artists?

Accepted Answer

The average product of labor i

Question 10

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Accepted Answer

Explicit costs are costs that involve sp

Question 11

Figure 11-13  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labor while the price of capital remains unchanged?

Accepted Answer

A) the movement from AF to BD 
B) the movement from AF to CE 
C) the movement from BF to BD 
D) the movement from BF to CE 
A) the movement from AF to BD 
B) the movement from AF to CE 
C) the movement from BF to BD 
D) the movement from BF to CE

Question 12

Higher isocost lines correspond to higher

Accepted Answer

A) profits. 
B) total costs of production. 
C) input prices. 
D) sales revenue. 
A) profits. 
B) total costs of production. 
C) input prices. 
D) sales revenue.

Question 13

Which of the following is a factor of production that generally is fixed in the short run?

Accepted Answer

A) raw materials 
B) labor 
C) a factory building 
D) water 
A) raw materials 
B) labor 
C) a factory building 
D) water

Question 14

A firm's expansion path

Accepted Answer

A) is the same thing as its long-run average cost curve. 
B) is a curve that shows a firm's cost-minimizing combination of inputs for every level of output,holding input prices constant. 
C) shows the targeted growth rate in sales over the long run. 
D) is a curve that shows expected profits at various price levels. 
A) is the same thing as its long-run average cost curve. 
B) is a curve that shows a firm's cost-minimizing combination of inputs for every level of output,holding input prices constant. 
C) shows the targeted growth rate in sales over the long run. 
D) is a curve that shows expected profits at various price levels.

Question 15

Figure 11-6 contains information about the short run cost structure of a firm.
-Refer to Figure 11-6.In the figure above which letter represents the average total cost curve?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

The slope of a typical isoquant is negative because to produce a given output,a producer

Accepted Answer

A) will use more of one input only if it uses more of another. 
B) can use less of one input only if the productivity of that input increases 
C) can use less of one input only if it uses more of another. 
D) will use more of one input only if the price of that input falls. 
A) will use more of one input only if it uses more of another. 
B) can use less of one input only if the productivity of that input increases 
C) can use less of one input only if it uses more of another. 
D) will use more of one input only if the price of that input falls.

Question 17

Marginal cost is equal to the

Accepted Answer

A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output. 
A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output.

Question 18

If average total cost is falling marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 19

If fixed costs do not change,then marginal cost

Accepted Answer

A) also remains constant. 
B) equals the change in variable cost divided by the change in output. 
C) equals the change in average variable cost divided by the change in output. 
D) equals the change in average fixed cost divided by the change in output. 
A) also remains constant. 
B) equals the change in variable cost divided by the change in output. 
C) equals the change in average variable cost divided by the change in output. 
D) equals the change in average fixed cost divided by the change in output.

Question 20

The slope of an isocost line ________ and equals the negative of ________.

Accepted Answer

A) increases as we move down the line;the ratio of input prices 
B) decreases as we move down the line;the ratio of the marginal products 
C) is constant;the ratio of input prices 
D) is constant;the ratio of the marginal products 
A) increases as we move down the line;the ratio of input prices 
B) decreases as we move down the line;the ratio of the marginal products 
C) is constant;the ratio of input prices 
D) is constant;the ratio of the marginal products

Exam 11: Technology,production,and Costs

Which of the following statements is false?

Which of the following statements is true?

-Refer to Figure 11-12.Which of the following statements about the input combinations shown in the diagram is false?

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Average total cost is equal to average variable cost minus average fixed cost.

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is

Damian owns a tattoo parlor and has hired three tattoo artists to work for him.The marginal product of labor is 8 for the first artist,12 for the second artist,and 7 for the third artist.What is Damian's average product of labor for these three tattoo artists?

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labor while the price of capital remains unchanged?

Higher isocost lines correspond to higher

Which of the following is a factor of production that generally is fixed in the short run?

A firm's expansion path

Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average total cost curve?

The slope of a typical isoquant is negative because to produce a given output,a producer

Marginal cost is equal to the

If average total cost is falling marginal cost must also be falling.

If fixed costs do not change,then marginal cost

The slope of an isocost line ________ and equals the negative of ________.

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

The slope of an isocost line and equals the negative of .