Question 1

If the total cost of producing 2 pounds of cheese is $6 and the total cost of producing 4 pounds of cheese is $8, then:

Accepted Answer

A) total cost is declining. 
B) average total cost is declining. 
C) average total cost is increasing. 
D) average total cost is constant. 
E) total cost is constant. 
A) total cost is declining. 
B) average total cost is declining. 
C) average total cost is increasing. 
D) average total cost is constant. 
E) total cost is constant.

Question 2

The figure given below shows cost curves of a firm. Figure: 21.2   In the figure,
|: Marginal cost curve
||: Average total cost curve
|||: Average variable cost curve
Refer to Figure 21.2.At an output level of G:

Accepted Answer

A) both average total cost and average variable cost are falling. 
B) average fixed cost is equal to the distance JK. 
C) average variable cost exceeds marginal cost by the amount LJ. 
D) average total cost exceeds marginal cost by the amount KJ. 
E) total cost is equal to the area 0AJG. 
A) both average total cost and average variable cost are falling. 
B) average fixed cost is equal to the distance JK. 
C) average variable cost exceeds marginal cost by the amount LJ. 
D) average total cost exceeds marginal cost by the amount KJ. 
E) total cost is equal to the area 0AJG.

Question 3

If marginal physical product of labor is declining, then average physical product must also be declining.

Accepted Answer

A) True 
 B)False

Question 4

If a firm has constant returns to scale, then doubling all of its inputs will just double its output.

Accepted Answer

A) True 
 B)False

Question 5

The planning horizon refers to the short run, when the firm must plan how much of a variable input to apply to a fixed input.

Accepted Answer

A) True 
 B)False

Question 6

Short run refers to a period of time during which:

Accepted Answer

A) all the factors are constant. 
B) all the factors are variable. 
C) the producer can shift from one plant size to another. 
D) some factors are fixed while some others are variable. 
E) the producer cannot change the level of output. 
A) all the factors are constant. 
B) all the factors are variable. 
C) the producer can shift from one plant size to another. 
D) some factors are fixed while some others are variable. 
E) the producer cannot change the level of output.

Exam 41: Supply: the Costs of Doing Business

If the total cost of producing 2 pounds of cheese is $6 and the total cost of producing 4 pounds of cheese is $8, then:

The figure given below shows cost curves of a firm. Figure: 21.2 In the figure, |: Marginal cost curve ||: Average total cost curve |||: Average variable cost curve Refer to Figure 21.2.At an output level of G:

If marginal physical product of labor is declining, then average physical product must also be declining.

If a firm has constant returns to scale, then doubling all of its inputs will just double its output.

The planning horizon refers to the short run, when the firm must plan how much of a variable input to apply to a fixed input.

Short run refers to a period of time during which:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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