Question 1

If the marginal product of labor is decreasing,then marginal cost of production must be rising.

Accepted Answer

A) True 
 B)False

Question 2

When a firm experiences a positive technological change

Accepted Answer

A) the price of a share of the firm's stock rises. 
B) the firm is able to produce more output using the same inputs,or the same output using fewer inputs. 
C) the value of the firm's assets rises. 
D) the firm will hire additional workers in order to increase production. 
A) the price of a share of the firm's stock rises. 
B) the firm is able to produce more output using the same inputs,or the same output using fewer inputs. 
C) the value of the firm's assets rises. 
D) the firm will hire additional workers in order to increase production.

Question 3

When a firm experiences negative technological change it can produce the same output with fewer inputs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is the best example of a short-run adjustment?

Accepted Answer

A) A local bakery purchases another commercial oven as part of its capacity expansion. 
B) Your local Wal-Mart hires two more associates. 
C) Smith University completed negotiations to acquire a large piece of land to build its new library. 
D) Toyota builds a new assembly plant in Texas. 
A) A local bakery purchases another commercial oven as part of its capacity expansion. 
B) Your local Wal-Mart hires two more associates. 
C) Smith University completed negotiations to acquire a large piece of land to build its new library. 
D) Toyota builds a new assembly plant in Texas.

Question 5

If production displays increasing marginal returns,then

Accepted Answer

A) total product rises by a constant amount throughout. 
B) each new worker hired adds more to output than previous hires. 
C) the firm must be adding new capital to keep boosting productivity. 
D) total product reaches a maximum sooner than if production displayed decreasing returns. 
A) total product rises by a constant amount throughout. 
B) each new worker hired adds more to output than previous hires. 
C) the firm must be adding new capital to keep boosting productivity. 
D) total product reaches a maximum sooner than if production displayed decreasing returns.

Question 6

Accounting costs exclude implicit costs.

Accepted Answer

A) True 
 B)False

Question 7

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

Accepted Answer

A) True 
 B)False

Question 8

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accepted Answer

A) $41.43. 
B) $134.29. 
C) $135. 
D) $145. 
A) $41.43. 
B) $134.29. 
C) $135. 
D) $145.

Question 9

Which of the following is a reason why a firm would experience diseconomies of scale?

Accepted Answer

A) To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. 
B) As the size of the firm increases,it becomes more difficult to find markets where it doesn't already have operations. 
C) As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. 
D) As the size of the firm increases,it must operate in other countries where differences in language,customs,and laws increase its average costs. 
A) To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. 
B) As the size of the firm increases,it becomes more difficult to find markets where it doesn't already have operations. 
C) As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. 
D) As the size of the firm increases,it must operate in other countries where differences in language,customs,and laws increase its average costs.

Question 10

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 11

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced. 
A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced.

Question 12

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 13

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.The highest value of the average product is labor is ________ when Manny hires ________ workers.

Accepted Answer

A) 80;3 
B) 100;3 
C) 100;2 
D) 80;4 
A) 80;3 
B) 100;3 
C) 100;2 
D) 80;4

Question 14

The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers.An increase in the demand for its product led Santa Fe to hire 150 new workers.Santa Fe also plans to expand the capacity of its plant but this project will take 2 years to complete.Which of the following statements is true?

Accepted Answer

A) The wages and benefits paid to the new workers are implicit costs. 
B) The long run for Santa Fe is longer than 1 year. 
C) The short run for Santa Fe is 1 year. 
D) In the short run Santa Fe's variable costs increase but its fixed costs decrease. 
A) The wages and benefits paid to the new workers are implicit costs. 
B) The long run for Santa Fe is longer than 1 year. 
C) The short run for Santa Fe is 1 year. 
D) In the short run Santa Fe's variable costs increase but its fixed costs decrease.

Question 15

Economies of scale occur when

Accepted Answer

A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases. 
A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases.

Question 16

Which of the following is true at the output level where average total cost is at its minimum?

Accepted Answer

A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost. 
A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost.

Question 17

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

Accepted Answer

Yes.As long as the marginal co

Question 18

If production displays diseconomies of scale,the long-run average cost curve is

Accepted Answer

A) above the short-run average total cost curve. 
B) above the long-run marginal cost curve. 
C) upward sloping. 
D) downward sloping. 
A) above the short-run average total cost curve. 
B) above the long-run marginal cost curve. 
C) upward sloping. 
D) downward sloping.

Question 19

Stan owns a software design business.He does not have time to expand his office space or redesign the layout of his office.He can increase the amount of work he does by working more hours,asking his current employees to work more hours,or hiring more employees.The relationship between Stan's inputs and the maximum output his firm can produce is called his

Accepted Answer

A) long-run production function. 
B) production possibilities frontier. 
C) short-run production function. 
D) cost function. 
A) long-run production function. 
B) production possibilities frontier. 
C) short-run production function. 
D) cost function.

Question 20

Ford Motor Company started producing the Model A at plants scattered around the United States

Accepted Answer

A) to save on transport costs. 
B) because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C) to locate its production centers closer to its customers. 
D) because it was not able to attract skilled workers in Michigan (where its first plant was located). 
A) to save on transport costs. 
B) because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C) to locate its production centers closer to its customers. 
D) because it was not able to attract skilled workers in Michigan (where its first plant was located).

Exam 11: Technology,production,and Costs

If the marginal product of labor is decreasing,then marginal cost of production must be rising.

When a firm experiences a positive technological change

When a firm experiences negative technological change it can produce the same output with fewer inputs.

Which of the following is the best example of a short-run adjustment?

If production displays increasing marginal returns,then

Accounting costs exclude implicit costs.

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

When a firm produces 50,000 units of output,its total cost equals $6.5 million.When it increases its production to 70,000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Which of the following is a reason why a firm would experience diseconomies of scale?

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Minimum efficient scale is defined as the level of output at which

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Economies of scale occur when

Which of the following is true at the output level where average total cost is at its minimum?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

If production displays diseconomies of scale,the long-run average cost curve is

Ford Motor Company started producing the Model A at plants scattered around the United 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

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