Question 1

Use the following to answer questions:
Figure: Short-Run Costs 
-(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the _____ cost curve.

Accepted Answer

A)  average total 
B)  average variable 
C)  marginal 
D)  total

Question 2

The slope of the total product curve is equal to the average product of labor.

Accepted Answer

A) True 
 B)False

Question 3

If marginal cost is greater than average total cost, then average total cost is:

Accepted Answer

A)  at its maximum. 
B)  at its minimum. 
C)  increasing. 
D)  decreasing.

Question 4

If a firm has to increase output suddenly to meet an increase in demand, its average total cost will increase in the short run until it has time to add physical capital.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions:
Figure: The Total Product 
-(Figure: The Total Product) Look at the figure The Total Product. After hiring L2 labor and producing at point B on the total product curve, hiring more labor beyond L2 would cause the:

Accepted Answer

A)  marginal product of labor to rise. 
B)  marginal product of labor to be negative. 
C)  total product to be negative. 
D)  total product to be zero.

Question 6

Use the following to answer questions: 
-(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 2 purses is:

Accepted Answer

A)  $60. 
B)  $120. 
C)  $190. 
D)  $220.

Question 7

In the short run, the average total cost curve always lies above the average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 8

The curve that illustrates the relationship between output and average total cost when the fixed cost has been chosen to minimize average total cost for each level of output is the _____ curve.

Accepted Answer

A)  short-run average total cost 
B)  long-run average total cost 
C)  marginal cost 
D)  total product

Question 9

It is time to pay the bills. You pay the rent, the basic cable bill, the electricity bill, and your grocery bill. Which of these are good examples of fixed costs and which are variable costs? Explain your reasoning.

Accepted Answer

The answer of It is time to pay the bills....

Question 10

Decreasing and increasing returns to scale account for the shape of the:

Accepted Answer

A)  short-run average total cost curve. 
B)  short-run average variable cost curve. 
C)  long-run average total cost curve. 
D)  marginal cost curve in both the short run and the long run.

Question 11

When diseconomies of scale occur:

Accepted Answer

A)  long-run average cost rises. 
B)  marginal cost declines. 
C)  average total cost declines. 
D)  average variable cost declines.

Question 12

The _____ curve shows the additional cost of producing each additional unit of output.

Accepted Answer

A)  average cost 
B)  total cost 
C)  marginal product 
D)  marginal cost

Question 13

The long-run average total cost curve shows the relationship between output and the average total cost when variable cost has been chosen to minimize average total cost for each level of output.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions: 
-(Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 45 bushels of soybeans is:

Accepted Answer

A)  $100. 
B)  $200. 
C)  $350. 
D)  $4,500.

Question 15

Use the following to answer questions: 
-(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 4 purses is:

Accepted Answer

A)  $12.50. 
B)  $47.50. 
C)  $50.00. 
D)  $82.50.

Question 16

Marginal cost is the:

Accepted Answer

A)  increase in total cost when one more unit of output is produced. 
B)  reduction in cost from economies of scale. 
C)  ratio of average total cost to total cost. 
D)  increase in output from the addition of one unit of labor.

Question 17

In the short run, if marginal cost is higher than average total cost, producing an extra unit of output must raise average total cost.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions:
Figure: Short-Run Costs II 
-(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. Curve 1 crosses the average total cost curve at:

Accepted Answer

A)  the minimum value of curve 2. 
B)  approximately 4.3 units of output. 
C)  approximately 2.8 units of output. 
D)  point A.

Question 19

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  diminishing returns.

Question 20

Average total cost is the ratio of _____ cost to _____.

Accepted Answer

A)  total; marginal cost 
B)  total; quantity of output 
C)  total; amount of variable input 
D)  marginal; amount of variable input

Exam 11: Behind the Supply Curve: Inputs and Costs

Use the following to answer questions: Figure: Short-Run Costs -(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the _____ cost curve.

The slope of the total product curve is equal to the average product of labor.

If marginal cost is greater than average total cost, then average total cost is:

If a firm has to increase output suddenly to meet an increase in demand, its average total cost will increase in the short run until it has time to add physical capital.

Use the following to answer questions: Figure: The Total Product -(Figure: The Total Product) Look at the figure The Total Product. After hiring L₂ labor and producing at point B on the total product curve, hiring more labor beyond L₂ would cause the:

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 2 purses is:

In the short run, the average total cost curve always lies above the average variable cost curve.

The curve that illustrates the relationship between output and average total cost when the fixed cost has been chosen to minimize average total cost for each level of output is the _____ curve.

It is time to pay the bills. You pay the rent, the basic cable bill, the electricity bill, and your grocery bill. Which of these are good examples of fixed costs and which are variable costs? Explain your reasoning.

Decreasing and increasing returns to scale account for the shape of the:

When diseconomies of scale occur:

The _____ curve shows the additional cost of producing each additional unit of output.

The long-run average total cost curve shows the relationship between output and the average total cost when variable cost has been chosen to minimize average total cost for each level of output.

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 4 purses is:

Marginal cost is the:

In the short run, if marginal cost is higher than average total cost, producing an extra unit of output must raise average total cost.

Use the following to answer questions: Figure: Short-Run Costs II -(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. Curve 1 crosses the average total cost curve at:

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has:

Average total cost is the ratio of _ cost to _.

Exam 11: Behind the Supply Curve: Inputs and Costs

Use the following to answer questions: Figure: Short-Run Costs -(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the _____ cost curve.

The slope of the total product curve is equal to the average product of labor.

If marginal cost is greater than average total cost, then average total cost is:

If a firm has to increase output suddenly to meet an increase in demand, its average total cost will increase in the short run until it has time to add physical capital.

Use the following to answer questions: Figure: The Total Product -(Figure: The Total Product) Look at the figure The Total Product. After hiring L2 labor and producing at point B on the total product curve, hiring more labor beyond L2 would cause the:

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 2 purses is:

In the short run, the average total cost curve always lies above the average variable cost curve.

The curve that illustrates the relationship between output and average total cost when the fixed cost has been chosen to minimize average total cost for each level of output is the _____ curve.

It is time to pay the bills. You pay the rent, the basic cable bill, the electricity bill, and your grocery bill. Which of these are good examples of fixed costs and which are variable costs? Explain your reasoning.

Decreasing and increasing returns to scale account for the shape of the:

When diseconomies of scale occur:

The _____ curve shows the additional cost of producing each additional unit of output.

The long-run average total cost curve shows the relationship between output and the average total cost when variable cost has been chosen to minimize average total cost for each level of output.

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 4 purses is:

Marginal cost is the:

In the short run, if marginal cost is higher than average total cost, producing an extra unit of output must raise average total cost.

Use the following to answer questions: Figure: Short-Run Costs II -(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. Curve 1 crosses the average total cost curve at:

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has:

Average total cost is the ratio of _____ cost to _____.

Use the following to answer questions: Figure: The Total Product -(Figure: The Total Product) Look at the figure The Total Product. After hiring L₂ labor and producing at point B on the total product curve, hiring more labor beyond L₂ would cause the:

Average total cost is the ratio of _ cost to _.