Question 1

If marginal cost is above the average variable cost,then average variable cost is decreasing.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Figure 8-2  
-Refer to Figure 8-2.Diminishing returns to labor set in

Accepted Answer

A) after L1. 
B) after L2. 
C) after L3. 
D) immediately. 
A) after L1. 
B) after L2. 
C) after L3. 
D) immediately.

Question 4

The formula for total fixed cost is

Accepted Answer

A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC. 
A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC.

Question 5

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Accepted Answer

A) impossible to determine with the information given. 
B) 12,800. 
C) 784. 
D) 50. 
A) impossible to determine with the information given. 
B) 12,800. 
C) 784. 
D) 50.

Question 6

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

Accepted Answer

A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity,it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design. 
A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity,it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design.

Question 7

A downward sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Accepted Answer

A) True 
 B)False

Question 8

Figure 8-3  
-Refer to Figure 8-3.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

Accepted Answer

A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost. 
A) It remains constant. 
B) It rises. 
C) It falls. 
D) It could rise or fall depending on what happens to total cost.

Question 9

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 10

Is it possible for technological change to be negative? If so,give an example.

Accepted Answer

Technological change could be negative,f

Question 11

If the marginal cost curve is below the average variable cost curve,then

Accepted Answer

A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing. 
A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing.

Question 12

Which of the following is an example of positive technological change?

Accepted Answer

A) A firm offers workers a higher wage to work on weekends and at night.As a result,the firm is able to increase its weekly production of surf boards. 
B) A firm buys an additional machine that it uses to make surf boards.As a result,the firm is able to increase its weekly production of surf boards. 
C) A firm conducts a new advertising campaign.As a result,the demand for the firm's surf boards increases. 
D) A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. 
A) A firm offers workers a higher wage to work on weekends and at night.As a result,the firm is able to increase its weekly production of surf boards. 
B) A firm buys an additional machine that it uses to make surf boards.As a result,the firm is able to increase its weekly production of surf boards. 
C) A firm conducts a new advertising campaign.As a result,the demand for the firm's surf boards increases. 
D) A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Question 13

In the short run,if marginal product is below average product,then average variable cost is increasing.

Accepted Answer

A) True 
 B)False

Question 14

In the short run,if marginal product is at its maximum,then

Accepted Answer

A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum. 
A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum.

Question 15

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 16

Describe the relationship between marginal cost and average total cost.

Accepted Answer

If marginal cost for a given output is b

Question 17

Which of the following is a fixed cost?

Accepted Answer

A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials 
A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials

Question 18

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 19

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

Accepted Answer

A) Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
B) Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
C) Diminishing marginal returns,which applies only in the short run when at least one factor is fixed,explains why marginal cost increases,while diseconomies of scale,which applies in the long run when all factors are variable,explains why average cost increases. 
D) Diminishing marginal returns ,which applies only in the long run when all factors are variable,explains why average variable cost increases,while diseconomies of scale,which applies in the short run when at least one factor is fixed,explains why average total cost increases. 
A) Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
B) Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
C) Diminishing marginal returns,which applies only in the short run when at least one factor is fixed,explains why marginal cost increases,while diseconomies of scale,which applies in the long run when all factors are variable,explains why average cost increases. 
D) Diminishing marginal returns ,which applies only in the long run when all factors are variable,explains why average variable cost increases,while diseconomies of scale,which applies in the short run when at least one factor is fixed,explains why average total cost increases.

Question 20

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material.Based on this information,what is the amount of her implicit costs?

Accepted Answer

A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500 
A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500

If marginal cost is above the average variable cost,then average variable cost is decreasing.

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

Figure 8-2 -Refer to Figure 8-2.Diminishing returns to labor set in

The formula for total fixed cost is

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

A downward sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Figure 8-3 -Refer to Figure 8-3.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

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

Is it possible for technological change to be negative? If so,give an example.

If the marginal cost curve is below the average variable cost curve,then

Which of the following is an example of positive technological change?

In the short run,if marginal product is below average product,then average variable cost is increasing.

In the short run,if marginal product is at its maximum,then

If average product is decreasing,then marginal product must be negative.

Describe the relationship between marginal cost and average total cost.

Which of the following is a fixed cost?

Which of the following is an implicit cost of production?

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

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

If marginal cost is above the average variable cost,then average variable cost is decreasing.

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

Figure 8-2 -Refer to Figure 8-2.Diminishing returns to labor set in

The formula for total fixed cost is

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

A downward sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Figure 8-3 -Refer to Figure 8-3.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

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

Is it possible for technological change to be negative? If so,give an example.

If the marginal cost curve is below the average variable cost curve,then

Which of the following is an example of positive technological change?

In the short run,if marginal product is below average product,then average variable cost is increasing.

In the short run,if marginal product is at its maximum,then

If average product is decreasing,then marginal product must be negative.

Describe the relationship between marginal cost and average total cost.

Which of the following is a fixed cost?

Which of the following is an implicit cost of production?

What is the difference between "diminishing marginal returns" and "diseconomies of scale"?

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