Question 1

A firm's total fixed cost is $100.If total cost is $200 for one unit of output and $310 for two units,what is the marginal cost of the second unit?

Accepted Answer

A) $100 
B) $110 
C) $200 
D) $210 
E) $310 
A) $100 
B) $110 
C) $200 
D) $210 
E) $310

Question 2

Which of the following quotes best illustrates the idea of fixed cost?

Accepted Answer

A) "As we increase output,per-unit costs rise." 
B) "My primary source of overhead cost is the cost of running the head office." 
C) "If I need to,I can negotiate more overtime with my work force to meet unexpected orders." 
D) "If I double the number of workers and trucks,I get only 80 percent more packages delivered." 
E) "Labour costs are always rising." 
A) "As we increase output,per-unit costs rise." 
B) "My primary source of overhead cost is the cost of running the head office." 
C) "If I need to,I can negotiate more overtime with my work force to meet unexpected orders." 
D) "If I double the number of workers and trucks,I get only 80 percent more packages delivered." 
E) "Labour costs are always rising."

Question 3

The average variable cost curve will shift upward if

Accepted Answer

A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases. 
A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases.

Question 4

The marginal product of capital is the

Accepted Answer

A) change in total product resulting from a 1-unit increase in the quantity of labour employed,holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed,holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed,holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed,holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product,holding constant the quantity of labour. 
A) change in total product resulting from a 1-unit increase in the quantity of labour employed,holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed,holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed,holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed,holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product,holding constant the quantity of labour.

Question 5

A firm's opportunity cost includes

Accepted Answer

A) the cost of using resources bought in the market and owned by the firm only. 
B) the cost of using resources bought in the market,owned by the firm,and supplied by the firm's owner. 
C) only costs that are paid in cash or by cheque. 
D) the cost of using resources supplied by the firm's owner only. 
E) economic profit. 
A) the cost of using resources bought in the market and owned by the firm only. 
B) the cost of using resources bought in the market,owned by the firm,and supplied by the firm's owner. 
C) only costs that are paid in cash or by cheque. 
D) the cost of using resources supplied by the firm's owner only. 
E) economic profit.

Question 6

Which of the following is part of a firm's opportunity cost of production? I.wages
II.utility costs
III.interest on a bank loan
IV.interest forgone on funds used to buy capital equipment

Accepted Answer

A) I only 
B) II only 
C) III only 
D) IV only 
E) I,II,III,and IV 
A) I only 
B) II only 
C) III only 
D) IV only 
E) I,II,III,and IV

Question 7

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 average 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 8

Use the table below to answer the following questions.
Table 10.2.2  
-Refer to Table 10.2.2 which gives Rob's Repair Shop's total product schedule.The average product when Rob's hires three workers is

Accepted Answer

A) 1 repair per worker. 
B) 2 repairs per worker. 
C) 3 repairs per worker. 
D) 4 repairs per worker. 
E) 12 repairs per worker. 
A) 1 repair per worker. 
B) 2 repairs per worker. 
C) 3 repairs per worker. 
D) 4 repairs per worker. 
E) 12 repairs per worker.

Question 9

A technological advance will shift (1)TP,AP,and MP curves up.
(2)TP,AP,and MP down.
(3)TC,ATC,and MC curves up.
(4)TC,ATC,and MC curves down.

Accepted Answer

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

Question 10

Which of the following quotes best illustrates the idea of total product?

Accepted Answer

A) "If I have 10 workers on my assembly line,I can produce 13 tables a day." 
B) "If I add an 11th worker,I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night,table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line,I can make 120 percent more tables." 
A) "If I have 10 workers on my assembly line,I can produce 13 tables a day." 
B) "If I add an 11th worker,I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night,table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line,I can make 120 percent more tables."

Question 11

Use the figure below to answer the following questions.   Figure 10.2.1
-Refer to Figure 10.2.1 which illustrates Tania's Teapots' total product curve.Average product of labour reaches its maximum for the ________ worker.

Accepted Answer

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

Question 12

The steeper the slope of the total product curve,

Accepted Answer

A) the smaller the average product. 
B) the smaller the marginal product. 
C) the greater the total cost. 
D) the more efficient the technology employed. 
E) the greater the marginal product. 
A) the smaller the average product. 
B) the smaller the marginal product. 
C) the greater the total cost. 
D) the more efficient the technology employed. 
E) the greater the marginal product.

Question 13

Use the figure below to answer the following questions.   Figure 10.4.2
-Refer to Figure 10.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

Accepted Answer

A) ATCS1U1B1AS1U1B0 
B) ATCS1U1B1BS1U1B0 
C) ATCS1U1C1AS1U1B0 
D) ATCS1U1B1DS1U1B0 
E) All plants are of equal size. 
A) ATCS1U1B1AS1U1B0 
B) ATCS1U1B1BS1U1B0 
C) ATCS1U1C1AS1U1B0 
D) ATCS1U1B1DS1U1B0 
E) All plants are of equal size.

Question 14

Consider a graph that shows the total cost curve and the total variable cost curve.As output increases,the vertical distance between these two curves

Accepted Answer

A) increases. 
B) decreases. 
C) becomes smaller and then larger. 
D) becomes larger and then smaller. 
E) is constant. 
A) increases. 
B) decreases. 
C) becomes smaller and then larger. 
D) becomes larger and then smaller. 
E) is constant.

Question 15

The range over which average variable cost is decreasing is the same as the range over which

Accepted Answer

A) marginal cost is increasing. 
B) average fixed cost is decreasing. 
C) marginal product is decreasing. 
D) average product is decreasing. 
E) average product is increasing. 
A) marginal cost is increasing. 
B) average fixed cost is decreasing. 
C) marginal product is decreasing. 
D) average product is decreasing. 
E) average product is increasing.

Question 16

Which one of the following statements is false?

Accepted Answer

A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost. 
A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost.

Question 17

The implicit rental rate to a firm of owning a building is

Accepted Answer

A) the sum of economic depreciation and forgone interest. 
B) economic depreciation only. 
C) forgone interest only. 
D) the cost of using an alternative building. 
E) the rent paid on the building. 
A) the sum of economic depreciation and forgone interest. 
B) economic depreciation only. 
C) forgone interest only. 
D) the cost of using an alternative building. 
E) the rent paid on the building.

Question 18

Which of the following quotes best illustrates the idea of marginal product?

Accepted Answer

A) "If I have 10 workers on my assembly line,I can produce 13 tables a day." 
B) "If I add an 11th worker,I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night,table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line,I can make 120 percent more tables." 
A) "If I have 10 workers on my assembly line,I can produce 13 tables a day." 
B) "If I add an 11th worker,I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night,table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line,I can make 120 percent more tables."

Question 19

Diminishing marginal returns refers to a situation where the ________ of an additional worker is less than the ________ of the previous worker.

Accepted Answer

A) marginal cost;marginal cost 
B) average cost;average cost 
C) marginal product;marginal product 
D) average product;average product 
E) marginal product;average product 
A) marginal cost;marginal cost 
B) average cost;average cost 
C) marginal product;marginal product 
D) average product;average product 
E) marginal product;average product

Question 20

The AFC 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

A firm's total fixed cost is $100.If total cost is $200 for one unit of output and $310 for two units,what is the marginal cost of the second unit?

Which of the following quotes best illustrates the idea of fixed cost?

The average variable cost curve will shift upward if

The marginal product of capital is the

A firm's opportunity cost includes

Which of the following is part of a firm's opportunity cost of production? I.wages II.utility costs III.interest on a bank loan IV.interest forgone on funds used to buy capital equipment

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 average variable cost?

Use the table below to answer the following questions. Table 10.2.2 -Refer to Table 10.2.2 which gives Rob's Repair Shop's total product schedule.The average product when Rob's hires three workers is

A technological advance will shift (1)TP,AP,and MP curves up. (2)TP,AP,and MP down. (3)TC,ATC,and MC curves up. (4)TC,ATC,and MC curves down.

Which of the following quotes best illustrates the idea of total product?

Use the figure below to answer the following questions. Figure 10.2.1 -Refer to Figure 10.2.1 which illustrates Tania's Teapots' total product curve.Average product of labour reaches its maximum for the ________ worker.

The steeper the slope of the total product curve,

Use the figure below to answer the following questions. Figure 10.4.2 -Refer to Figure 10.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

Consider a graph that shows the total cost curve and the total variable cost curve.As output increases,the vertical distance between these two curves

The range over which average variable cost is decreasing is the same as the range over which

Which one of the following statements is false?

The implicit rental rate to a firm of owning a building is

Which of the following quotes best illustrates the idea of marginal product?

Diminishing marginal returns refers to a situation where the of an additional worker is less than the of the previous worker.

The AFC curve shifts upward if

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Exam 10: Output and Costs

A firm's total fixed cost is $100.If total cost is $200 for one unit of output and $310 for two units,what is the marginal cost of the second unit?

Which of the following quotes best illustrates the idea of fixed cost?

The average variable cost curve will shift upward if

The marginal product of capital is the

A firm's opportunity cost includes

Which of the following is part of a firm's opportunity cost of production? I.wages II.utility costs III.interest on a bank loan IV.interest forgone on funds used to buy capital equipment

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 average variable cost?

Use the table below to answer the following questions. Table 10.2.2 -Refer to Table 10.2.2 which gives Rob's Repair Shop's total product schedule.The average product when Rob's hires three workers is

A technological advance will shift (1)TP,AP,and MP curves up. (2)TP,AP,and MP down. (3)TC,ATC,and MC curves up. (4)TC,ATC,and MC curves down.

Which of the following quotes best illustrates the idea of total product?

Use the figure below to answer the following questions. Figure 10.2.1 -Refer to Figure 10.2.1 which illustrates Tania's Teapots' total product curve.Average product of labour reaches its maximum for the ________ worker.

The steeper the slope of the total product curve,

Use the figure below to answer the following questions. Figure 10.4.2 -Refer to Figure 10.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

Consider a graph that shows the total cost curve and the total variable cost curve.As output increases,the vertical distance between these two curves

The range over which average variable cost is decreasing is the same as the range over which

Which one of the following statements is false?

The implicit rental rate to a firm of owning a building is

Which of the following quotes best illustrates the idea of marginal product?

Diminishing marginal returns refers to a situation where the ________ of an additional worker is less than the ________ of the previous worker.

The AFC curve shifts upward if

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

Diminishing marginal returns refers to a situation where the of an additional worker is less than the of the previous worker.