Question 1

As a firm increases production in the short run,the marginal cost of output increases because the marginal product of the variable input decreases.

Accepted Answer

A) True 
 B)False

Question 2

When marginal cost is rising:

Accepted Answer

A) average variable cost must be rising. 
B) average total cost must be rising. 
C) average variable cost and average total cost must be falling. 
D) both average variable cost and average total cost may be rising or falling. 
A) average variable cost must be rising. 
B) average total cost must be rising. 
C) average variable cost and average total cost must be falling. 
D) both average variable cost and average total cost may be rising or falling.

Question 3

Diminishing returns are one explanation for diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 4

Total cost divided by the quantity of output produced is:

Accepted Answer

A) always increasing. 
B) always decreasing. 
C) average total cost. 
D) marginal cost. 
A) always increasing. 
B) always decreasing. 
C) average total cost. 
D) marginal cost.

Question 5

When a cherry orchard in Oregon adds a worker,the total cost of production increases by $24,000.Adding the worker increases total cherry output by 600 pounds.Therefore,the marginal cost of the last pound of cherries produced is:

Accepted Answer

A) $40. 
B) $19. 
C) $4,000. 
D) $24,000. 
A) $40. 
B) $19. 
C) $4,000. 
D) $24,000.

Question 6

Scott operates a business that takes people on boat tours in Crystal River,Florida.The amount of fuel Scott uses each day is a variable input.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer question:  
-(Figure: The Total Product)Use Figure: The Total Product.If the firm hires more than L2 labor,the total product will _____ because the marginal product of labor is _____.

Accepted Answer

A) decrease;positive 
B) increase;positive 
C) decrease;negative 
D) increase;negative 
A) decrease;positive 
B) increase;positive 
C) decrease;negative 
D) increase;negative

Question 8

Use the following to answer question:  
-(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average fixed cost of 2 cakes?

Accepted Answer

A) $5 
B) $10 
C) $25 
D) $30 
A) $5 
B) $10 
C) $25 
D) $30

Question 9

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The average total cost of producing 10 pairs of eyeglasses is:

Accepted Answer

A) $30. 
B) $35. 
C) $50. 
D) $300. 
A) $30. 
B) $35. 
C) $50. 
D) $300.

Question 10

Use the following to answer question:  
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 3 mixers and bakes 200 cakes per day,what is her average total cost?

Accepted Answer

A) $50.00 
B) $12.50 
C) $16.50 
D) $800.00 
A) $50.00 
B) $12.50 
C) $16.50 
D) $800.00

Question 11

It is common in large breweries for the long-run average total cost to decline as output increases.This indicates that many breweries operate with:

Accepted Answer

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

Question 12

Use the following to answer question:  
-(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The total cost of producing 6 bagels is:

Accepted Answer

A) $0.10. 
B) $0.20. 
C) $0.80. 
D) $0.90. 
A) $0.10. 
B) $0.20. 
C) $0.80. 
D) $0.90.

Question 13

Use the following to answer question:  
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers and bakes 100 cakes per day,what is her average total cost?

Accepted Answer

A) $8 
B) $10 
C) $15 
D) $22 
A) $8 
B) $10 
C) $15 
D) $22

Question 14

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns.

Accepted Answer

A) increases;decreases 
B) decreases;increases 
C) is constant;decreases 
D) increases;is constant 
A) increases;decreases 
B) decreases;increases 
C) is constant;decreases 
D) increases;is constant

Question 15

Use the following to answer question:  
-(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The average total cost of producing 2 bagels is:

Accepted Answer

A) $0.05. 
B) $0.10. 
C) $0.20. 
D) $0.40. 
A) $0.05. 
B) $0.10. 
C) $0.20. 
D) $0.40.

Question 16

(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Diminishing returns to labor begin to kick in after Bonnie hires the _____ worker.

Accepted Answer

A) second 
B) third 
C) fourth 
D) fifth 
A) second 
B) third 
C) fourth 
D) fifth

Question 17

The total cost curve gets steeper as output increases because of:

Accepted Answer

A) increasing returns to the variable input. 
B) decreasing returns to the variable input. 
C) increases in fixed cost. 
D) decreases in overhead costs. 
A) increasing returns to the variable input. 
B) decreasing returns to the variable input. 
C) increases in fixed cost. 
D) decreases in overhead costs.

Question 18

The curve that shows the additional cost of each additional unit of output is called the _____ curve.

Accepted Answer

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

Question 19

For most restaurants,the average total cost curve _____ at _____ levels of output,then _____ at _____ levels.

Accepted Answer

A) falls;low;rises;high 
B) rises;low;falls;high 
C) rises;high;rises;low 
D) falls;high;falls;low 
A) falls;low;rises;high 
B) rises;low;falls;high 
C) rises;high;rises;low 
D) falls;high;falls;low

Question 20

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 48,and when she hires four workers,total product is 45.The marginal product of the third and fourth workers is:

Accepted Answer

A) increasing and positive. 
B) increasing and negative. 
C) decreasing and positive. 
D) decreasing and negative. 
A) increasing and positive. 
B) increasing and negative. 
C) decreasing and positive. 
D) decreasing and negative.

As a firm increases production in the short run,the marginal cost of output increases because the marginal product of the variable input decreases.

When marginal cost is rising:

Diminishing returns are one explanation for diseconomies of scale.

Total cost divided by the quantity of output produced is:

When a cherry orchard in Oregon adds a worker,the total cost of production increases by $24,000.Adding the worker increases total cherry output by 600 pounds.Therefore,the marginal cost of the last pound of cherries produced is:

Scott operates a business that takes people on boat tours in Crystal River,Florida.The amount of fuel Scott uses each day is a variable input.

Use the following to answer question: -(Figure: The Total Product)Use Figure: The Total Product.If the firm hires more than L₂ labor,the total product will _ because the marginal product of labor is _.

Use the following to answer question: -(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average fixed cost of 2 cakes?

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The average total cost of producing 10 pairs of eyeglasses is:

It is common in large breweries for the long-run average total cost to decline as output increases.This indicates that many breweries operate with:

Use the following to answer question: -(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The total cost of producing 6 bagels is:

Marginal cost _ over the range of increasing marginal returns and _ over the range of diminishing marginal returns.

Use the following to answer question: -(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The average total cost of producing 2 bagels is:

(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Diminishing returns to labor begin to kick in after Bonnie hires the _____ worker.

The total cost curve gets steeper as output increases because of:

The curve that shows the additional cost of each additional unit of output is called the _____ curve.

For most restaurants,the average total cost curve ___ at _ levels of output,then _ at ___ levels.

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 48,and when she hires four workers,total product is 45.The marginal product of the third and fourth workers is:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 11: Behind the Supply Curve: Inputs and Costs

As a firm increases production in the short run,the marginal cost of output increases because the marginal product of the variable input decreases.

When marginal cost is rising:

Diminishing returns are one explanation for diseconomies of scale.

Total cost divided by the quantity of output produced is:

When a cherry orchard in Oregon adds a worker,the total cost of production increases by $24,000.Adding the worker increases total cherry output by 600 pounds.Therefore,the marginal cost of the last pound of cherries produced is:

Scott operates a business that takes people on boat tours in Crystal River,Florida.The amount of fuel Scott uses each day is a variable input.

Use the following to answer question: -(Figure: The Total Product)Use Figure: The Total Product.If the firm hires more than L2 labor,the total product will _____ because the marginal product of labor is _____.

Use the following to answer question: -(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average fixed cost of 2 cakes?

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The average total cost of producing 10 pairs of eyeglasses is:

It is common in large breweries for the long-run average total cost to decline as output increases.This indicates that many breweries operate with:

Use the following to answer question: -(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The total cost of producing 6 bagels is:

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns.

Use the following to answer question: -(Table: Costs of Producing Bagels)Use Table: Cost of Producing Bagels.The average total cost of producing 2 bagels is:

(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Diminishing returns to labor begin to kick in after Bonnie hires the _____ worker.

The total cost curve gets steeper as output increases because of:

The curve that shows the additional cost of each additional unit of output is called the _____ curve.

For most restaurants,the average total cost curve _____ at _____ levels of output,then _____ at _____ levels.

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 48,and when she hires four workers,total product is 45.The marginal product of the third and fourth workers is:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: -(Figure: The Total Product)Use Figure: The Total Product.If the firm hires more than L₂ labor,the total product will _ because the marginal product of labor is _.

Marginal cost _ over the range of increasing marginal returns and _ over the range of diminishing marginal returns.

For most restaurants,the average total cost curve ___ at _ levels of output,then _ at ___ levels.