Question 1

The short run is the time period during which a firm has at least one input constraint.

Accepted Answer

A) True 
 B)False

Question 2

The law of diminishing marginal returns

Accepted Answer

A) explains why the average total cost and marginal cost curves are U-shaped in the short run. 
B) explains why the average total cost,average fixed cost and the marginal cost curves are U-shaped in the short run. 
C) causes average total costs to rise at a decreasing rate as output increases. 
D) causes the difference between average total cost and average variable cost to get smaller as output increases. 
A) explains why the average total cost and marginal cost curves are U-shaped in the short run. 
B) explains why the average total cost,average fixed cost and the marginal cost curves are U-shaped in the short run. 
C) causes average total costs to rise at a decreasing rate as output increases. 
D) causes the difference between average total cost and average variable cost to get smaller as output increases.

Question 3

Figure 8-1  
-Refer to Figure 8-1.The average product of the 4th worker

Accepted Answer

A) is 68. 
B) is 17. 
C) is 11. 
D) cannot be determined. 
A) is 68. 
B) is 17. 
C) is 11. 
D) cannot be determined.

Question 4

In 1955,the chairman of the Sony corporation offered to sell transistor radios through department stores in the United States.Sony based its selling price on its average total cost of production.If a store bought 5,000 radios,Sony would sell them at $29.95 each.For 10,000 there would be a discount,and for more than 10,000 the price would begin to climb.Based on this information,Sony reached minimum efficient scale

Accepted Answer

A) at a quantity below 5,000 radios. 
B) at a quantity of 5,000 radios. 
C) at a quantity of 10,000 radios. 
D) at a quantity above 10,000 radios. 
A) at a quantity below 5,000 radios. 
B) at a quantity of 5,000 radios. 
C) at a quantity of 10,000 radios. 
D) at a quantity above 10,000 radios.

Question 5

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Accepted Answer

A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero. 
A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero.

Question 6

Table 8-1
   Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011.
-Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

Accepted Answer

A) 2nd 
B) 3rd 
C) 4th 
D) None of the above;the production function displays increasing marginal returns. 
A) 2nd 
B) 3rd 
C) 4th 
D) None of the above;the production function displays increasing marginal returns.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

An important reason why diseconomies of scale arise is because firms may have to hire lower skilled workers as firms expand.

Accepted Answer

A) True 
 B)False

Question 11

Figure 8-1  
-Refer to Figure 8-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

Accepted Answer

A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker. 
A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker.

Question 12

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 13

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 14

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

Accepted Answer

A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information. 
A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information.

Question 15

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 16

Implicit costs can be defined as

Accepted Answer

A) accounting profit minus explicit cost. 
B) the non-monetary opportunity cost of using the firm's own resources. 
C) the deferred cost of production. 
D) total cost minus fixed costs. 
A) accounting profit minus explicit cost. 
B) the non-monetary opportunity cost of using the firm's own resources. 
C) the deferred cost of production. 
D) total cost minus fixed costs.

Question 17

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 th

Question 18

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).

Question 19

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 20

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.

The short run is the time period during which a firm has at least one input constraint.

The law of diminishing marginal returns

Figure 8-1 -Refer to Figure 8-1.The average product of the 4th worker

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Table 8-1 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011. -Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

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

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

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

An important reason why diseconomies of scale arise is because firms may have to hire lower skilled workers as firms expand.

Figure 8-1 -Refer to Figure 8-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

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

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

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?

Implicit costs can be defined as

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

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

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 8: Technology,production,and Costs

The short run is the time period during which a firm has at least one input constraint.

The law of diminishing marginal returns

Figure 8-1 -Refer to Figure 8-1.The average product of the 4th worker

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Table 8-1 Table 8-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011. -Refer to Table 8-1.Diminishing marginal returns sets in when the ________ worker is hired.

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

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

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

An important reason why diseconomies of scale arise is because firms may have to hire lower skilled workers as firms expand.

Figure 8-1 -Refer to Figure 8-1.In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis,the marginal product curve

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

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

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?

Implicit costs can be defined as

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

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

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters