Question 1

The minimum efficient scale is the smallest quantity of output at which

Accepted Answer

A) the long-run average cost curve reaches its lowest level. 
B) the average total cost curve reaches its lowest level. 
C) the average fixed cost curve reaches its lowest level. 
D) economies of scale begin. 
E) diminishing returns begin. 
A) the long-run average cost curve reaches its lowest level. 
B) the average total cost curve reaches its lowest level. 
C) the average fixed cost curve reaches its lowest level. 
D) economies of scale begin. 
E) diminishing returns begin.

Question 2

In general, (1)opportunity cost is greater than accounting cost.
(2)opportunity cost is less than accounting cost.
(3)economic profit is greater than accounting profit.
(4)economic profit is less than accounting profit.

Accepted Answer

A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4 
A) 1 only 
B) 1 and 3 
C) 1 and 4 
D) 2 and 3 
E) 2 and 4

Question 3

Diseconomies of scale refer to the range of output over which

Accepted Answer

A) long-run average cost rises as output increases. 
B) average cost exceeds marginal cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour increases. 
E) marginal product equals average product. 
A) long-run average cost rises as output increases. 
B) average cost exceeds marginal cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour increases. 
E) marginal product equals average product.

Question 4

When the 7th worker is hired,output increases from 100 units per week to 110 units per week.When the 8th worker is hired,output increases from 110 units to 118 units.This is an example of

Accepted Answer

A) diminishing marginal returns. 
B) diminishing marginal cost. 
C) decreasing returns to scale. 
D) labour-intensive production. 
E) increasing returns to scale. 
A) diminishing marginal returns. 
B) diminishing marginal cost. 
C) decreasing returns to scale. 
D) labour-intensive production. 
E) increasing returns to scale.

Question 5

A rise in the price of a fixed input shifts a firm's

Accepted Answer

A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward. 
A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward.

Question 6

Which of the following would be classified as a fixed cost for the local supermarket?

Accepted Answer

A) the rent from the six-year lease on the building where the store is located 
B) the cost of the boxes of cereal sold in the supermarket 
C) the salary paid to the store's manager 
D) the overtime paid to the store's manager 
E) the Canada Pension payments that the supermarket makes to the government on the workers' income 
A) the rent from the six-year lease on the building where the store is located 
B) the cost of the boxes of cereal sold in the supermarket 
C) the salary paid to the store's manager 
D) the overtime paid to the store's manager 
E) the Canada Pension payments that the supermarket makes to the government on the workers' income

Question 7

A firm experiences ________ when its ________ as output increases.

Accepted Answer

A) economies of scale;long-run average cost curve slopes downward 
B) diseconomies of scale;average total cost curve slopes downward 
C) economies of scale;long-run average cost curve shifts upward 
D) diminishing marginal returns;average total cost curve shifts upward 
E) constant returns to scale;long-run average cost curve shifts upward 
A) economies of scale;long-run average cost curve slopes downward 
B) diseconomies of scale;average total cost curve slopes downward 
C) economies of scale;long-run average cost curve shifts upward 
D) diminishing marginal returns;average total cost curve shifts upward 
E) constant returns to scale;long-run average cost curve shifts upward

Question 8

Which of the following statements by a restaurant owner refers to the law of diminishing returns?

Accepted Answer

A) "The higher the quality of the ingredients we use,the higher the cost of producing each meal." 
B) "If we double the size of our premises and double everything else - kitchen staff,serving staff,equipment - we can increase the number of meals we serve,but not to double the current levels." 
C) "We can increase the number of meals we serve by just adding more kitchen staff,but each additional worker adds less meals than the previous worker because traffic in the kitchen will get worse." 
D) "We can serve the same number of meals with fewer kitchen staff,but we would have to buy more labour-saving kitchen equipment." 
E) "We can serve the same number of meals with less kitchen equipment,but we would have to hire more kitchen staff." 
A) "The higher the quality of the ingredients we use,the higher the cost of producing each meal." 
B) "If we double the size of our premises and double everything else - kitchen staff,serving staff,equipment - we can increase the number of meals we serve,but not to double the current levels." 
C) "We can increase the number of meals we serve by just adding more kitchen staff,but each additional worker adds less meals than the previous worker because traffic in the kitchen will get worse." 
D) "We can serve the same number of meals with fewer kitchen staff,but we would have to buy more labour-saving kitchen equipment." 
E) "We can serve the same number of meals with less kitchen equipment,but we would have to hire more kitchen staff."

Question 9

The ATC curve shifts upward if

Accepted Answer

A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above 
E) none of the above 
A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above 
E) none of the above

Question 10

The MC curve shifts upward if

Accepted Answer

A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above 
E) none of the above 
A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above 
E) none of the above

Question 11

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed.What is Ernie's total variable cost?

Accepted Answer

A) $400 
B) $8 
C) $2 
D) $2,400 
E) $1,600 
A) $400 
B) $8 
C) $2 
D) $2,400 
E) $1,600

Question 12

Use the figure below to answer the following question.   Figure 10.4.3
-Refer to Figure 10.4.3 which shows a firm's long-run average total cost curve.When production increases from Q1 to Q2 sweaters per day,the firm experiences

Accepted Answer

A) a decrease in fixed costs. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale. 
A) a decrease in fixed costs. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale.

Question 13

When the marginal product of labour is less than the average product of labour,

Accepted Answer

A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the average product of labour is at its maximum. 
A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the average product of labour is at its maximum.

Question 14

When the demand for electricity peaks during the hottest days of summer,Hydro One can generate more electricity by using more fuel and increasing the working hours of many of its employees.The company cannot,however,increase electric power production by building additional generating capacity.This means that the company is operating in the

Accepted Answer

A) market run. 
B) intermediate run. 
C) long run. 
D) immediate run. 
E) short run. 
A) market run. 
B) intermediate run. 
C) long run. 
D) immediate run. 
E) short run.

Question 15

The long run refers to a time period

Accepted Answer

A) of one year or less. 
B) in which all factors of production are variable. 
C) in which labour is variable,but plant is fixed. 
D) when there is at least one variable factor of production. 
E) of at least 5 years. 
A) of one year or less. 
B) in which all factors of production are variable. 
C) in which labour is variable,but plant is fixed. 
D) when there is at least one variable factor of production. 
E) of at least 5 years.

Question 16

Economic profit equals total revenue minus

Accepted Answer

A) the cost of resources bought in the market. 
B) the implicit rental rate. 
C) the opportunity cost of production. 
D) the cost of resources supplied by the owner. 
E) the cost of resources owned by the firm. 
A) the cost of resources bought in the market. 
B) the implicit rental rate. 
C) the opportunity cost of production. 
D) the cost of resources supplied by the owner. 
E) the cost of resources owned by the firm.

Question 17

Use the table below to answer the following questions.
Table 10.3.1  
-Refer to Table 10.3.1,which gives Tania's Teapots' total cost schedule.The average fixed cost of producing 9 teapots per day is

Accepted Answer

A) $2.22. 
B) $1.25. 
C) $10.00. 
D) $1.11. 
E) $1.54. 
A) $2.22. 
B) $1.25. 
C) $10.00. 
D) $1.11. 
E) $1.54.

Question 18

If the MC curve is rising then the ATC curve must be

Accepted Answer

A) rising. 
B) falling. 
C) above MC. 
D) below MC. 
E) horizontal. 
A) rising. 
B) falling. 
C) above MC. 
D) below MC. 
E) horizontal.

Question 19

In the long run,a firm can vary

Accepted Answer

A) all of its factors of production. 
B) labour but not capital. 
C) capital but not labour. 
D) labour and capital but not land. 
E) labour,capital and entrepreneurship but not land. 
A) all of its factors of production. 
B) labour but not capital. 
C) capital but not labour. 
D) labour and capital but not land. 
E) labour,capital and entrepreneurship but not land.

Question 20

Marginal cost is equal to

Accepted Answer

A) total cost divided by output. 
B) the increase in total cost divided by the increase in output. 
C) the increase in total cost divided by the increase in labour input,given the amount of capital. 
D) total variable cost minus total fixed cost. 
E) the increase in total cost divided by the increase in variable cost. 
A) total cost divided by output. 
B) the increase in total cost divided by the increase in output. 
C) the increase in total cost divided by the increase in labour input,given the amount of capital. 
D) total variable cost minus total fixed cost. 
E) the increase in total cost divided by the increase in variable cost.

The minimum efficient scale is the smallest quantity of output at which

In general, (1)opportunity cost is greater than accounting cost. (2)opportunity cost is less than accounting cost. (3)economic profit is greater than accounting profit. (4)economic profit is less than accounting profit.

Diseconomies of scale refer to the range of output over which

When the 7th worker is hired,output increases from 100 units per week to 110 units per week.When the 8th worker is hired,output increases from 110 units to 118 units.This is an example of

A rise in the price of a fixed input shifts a firm's

Which of the following would be classified as a fixed cost for the local supermarket?

A firm experiences when its as output increases.

Which of the following statements by a restaurant owner refers to the law of diminishing returns?

The ATC curve shifts upward if

The MC curve shifts upward if

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed.What is Ernie's total variable cost?

Use the figure below to answer the following question. Figure 10.4.3 -Refer to Figure 10.4.3 which shows a firm's long-run average total cost curve.When production increases from Q₁ to Q₂ sweaters per day,the firm experiences

When the marginal product of labour is less than the average product of labour,

The long run refers to a time period

Economic profit equals total revenue minus

Use the table below to answer the following questions. Table 10.3.1 -Refer to Table 10.3.1,which gives Tania's Teapots' total cost schedule.The average fixed cost of producing 9 teapots per day is

If the MC curve is rising then the ATC curve must be

In the long run,a firm can vary

Marginal cost is equal to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 10: Output and Costs

The minimum efficient scale is the smallest quantity of output at which

In general, (1)opportunity cost is greater than accounting cost. (2)opportunity cost is less than accounting cost. (3)economic profit is greater than accounting profit. (4)economic profit is less than accounting profit.

Diseconomies of scale refer to the range of output over which

When the 7th worker is hired,output increases from 100 units per week to 110 units per week.When the 8th worker is hired,output increases from 110 units to 118 units.This is an example of

A rise in the price of a fixed input shifts a firm's

Which of the following would be classified as a fixed cost for the local supermarket?

A firm experiences ________ when its ________ as output increases.

Which of the following statements by a restaurant owner refers to the law of diminishing returns?

The ATC curve shifts upward if

The MC curve shifts upward if

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed.What is Ernie's total variable cost?

Use the figure below to answer the following question. Figure 10.4.3 -Refer to Figure 10.4.3 which shows a firm's long-run average total cost curve.When production increases from Q1 to Q2 sweaters per day,the firm experiences

When the marginal product of labour is less than the average product of labour,

The long run refers to a time period

Economic profit equals total revenue minus

Use the table below to answer the following questions. Table 10.3.1 -Refer to Table 10.3.1,which gives Tania's Teapots' total cost schedule.The average fixed cost of producing 9 teapots per day is

If the MC curve is rising then the ATC curve must be

In the long run,a firm can vary

Marginal cost is equal to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

A firm experiences when its as output increases.

Use the figure below to answer the following question. Figure 10.4.3 -Refer to Figure 10.4.3 which shows a firm's long-run average total cost curve.When production increases from Q₁ to Q₂ sweaters per day,the firm experiences