Question 1

​Farmers rotate their crops between corn and soybean to increase crop yields.This behavior exhibits

Accepted Answer

A) ​Economies of scale 
B) Economies of scope 
C) Diseconomies of scale 
D) ​Diseconomies of scope

Question 2

​What are economies of scale?

Accepted Answer

A) ​decreasing average costs as production increases 
B) increasing average costs as production increases 
C) increasing fixed costs as production increases 
D) ​none of the above

Question 3

Learning curves mean​

Accepted Answer

A) ​you learn from experience 
B) current production decreases future unit costs 
C) production today leads to lower costs in the future 
D) ​All of the above

Question 4

​It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1500.The firm has experienced

Accepted Answer

A) ​Economies of Scale 
B) Economies of Scope 
C) Diseconomies of Scale 
D) ​Diseconomies of Scope

Question 5

​A firewood supplier has a very seasonal demand for its product.Its transport trucks lay idle during the warmer parts of the year.It can exploit economies of scope if

Accepted Answer

A) ​It merges with a manufacturer of wooden Christmas ornaments 
B) It turns into a rental trucking company during the warmer months for other seasonal producers such as ice-cream makers 
C) It starts producing other seasonal products that would sell mostly during the warmer months such as rustic lawn chairs 
D) ​B and C

Question 6

​Eddys' Electronics found that instead of producing a dvd player and a gaming system separately,it is cheaper to incorporate dvd playing capabilities in their new version of the gaming system.Eddy's is taking advantage of

Accepted Answer

A) ​Economies of Scale 
B) Learning curve 
C) Economies of Scope 
D) ​Decreasing marginal costs

Question 7

​You would expect that your firm is experiencing increasing returns to scale if

Accepted Answer

A) ​Long run average costs increase with output 
B) Long run average costs decrease with output 
C) Long run average costs are constant with respect to output 
D) ​None of the above

Question 8

As a table manufacturing company produces more tables,the average total cost of each table produced increases.This could be because:​

Accepted Answer

A) ​Total fixed costs are decreasing as more tables are produced 
B) There are economies of scale 
C) There are diseconomies of scale 
D) ​Total variable cost is decreasing as more tables are produced.

Question 9

A rising average cost implies that​

Accepted Answer

A) ​marginal cost is equal to average cost 
B) marginal cost is above average cost 
C) marginal cost is below average cost 
D) ​none of the above

Question 10

​Ray's Radios believed the synergies between radio production and battery production could be realized if he expanded.However,due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing.Ray's Radios is experiencing

Accepted Answer

A) ​Economies of scale 
B) Economies of scope 
C) Diseconomies of scale 
D) ​Diseconomies of scope

Question 11

​Average costs _______initially due to the presence of fixed costs and then rise due to _________

Accepted Answer

A) ​fall;decreasing marginal costs 
B) fall ;increasing marginal costs 
C) rise;decreasing fixed costs 
D) ​rise;increasing fixed costs

Question 12

​The term "bottleneck" refers to

Accepted Answer

A) ​when increasing amounts of variable inputs must share a fixed input. 
B) "fixity" of some factor of production 
C) None of the above 
D) ​Both a and b

Question 13

Diminishing marginal productivity implies​

Accepted Answer

A) ​decreasing marginal costs 
B) increasing marginal costs 
C) decreasing average costs 
D) ​decreasing total costs

Question 14

Once marginal costs rise above the average cost,​

Accepted Answer

A) ​Average cost increases 
B) Average cost decreases 
C) Average costs will stay the same 
D) ​None of the above

Question 15

​What are economies of scope?

Accepted Answer

A) ​lower average costs when multiple different products are produced 
B) higher average costs when multiple different products are produced 
C) Constant average costs when multiple different products are produced 
D) ​none of the above

Question 16

​Marginal productivity is

Accepted Answer

A) ​The total output associated with total inputs 
B) The total output associated with extra inputs 
C) The extra output associated with total inputs 
D) ​The extra output associated with extra inputs

Question 17

Average costs curves initially fall​

Accepted Answer

A) ​Due to declining average fixed costs 
B) Due to rising average fixed costs 
C) Due to rising fixed costs 
D) ​Due to rising marginal costs

Question 18

​You would expect that your firm is experiencing a constant returns to scale if

Accepted Answer

A) ​Long run average costs increase with output 
B) Long run average costs decrease with output 
C) Long run average costs are constant with respect to output 
D) ​None of the above

Question 19

Which of the following statements describes the presence of diminishing returns? All else equal,​

Accepted Answer

A) ​Marginal product is constant as output increases 
B) Marginal product is falling as output increases 
C) Marginal product is rising as output increases 
D) ​Marginal product is zero

Question 20

​Economies of scale are also known as

Accepted Answer

A) ​Increasing returns to scale 
B) Decreasing returns to scale 
C) Constant returns to scale 
D) ​None of the above

Exam 6: Economies of Scale and Scope

Farmers rotate their crops between corn and soybean to increase crop yields.This behavior exhibits

What are economies of scale?

Learning curves mean

It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1500.The firm has experienced

A firewood supplier has a very seasonal demand for its product.Its transport trucks lay idle during the warmer parts of the year.It can exploit economies of scope if

Eddys' Electronics found that instead of producing a dvd player and a gaming system separately,it is cheaper to incorporate dvd playing capabilities in their new version of the gaming system.Eddy's is taking advantage of

You would expect that your firm is experiencing increasing returns to scale if

As a table manufacturing company produces more tables,the average total cost of each table produced increases.This could be because:

A rising average cost implies that

Ray's Radios believed the synergies between radio production and battery production could be realized if he expanded.However,due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing.Ray's Radios is experiencing

Average costs _initially due to the presence of fixed costs and then rise due to ___

The term "bottleneck" refers to

Diminishing marginal productivity implies

Once marginal costs rise above the average cost,

What are economies of scope?

Marginal productivity is

Average costs curves initially fall

You would expect that your firm is experiencing a constant returns to scale if

Which of the following statements describes the presence of diminishing returns? All else equal,

Economies of scale are also known as