Question 1

Economies of scale refer to the range of output over which

Accepted Answer

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

Question 2

Which type of cost does not change as the quantity of output produced changes?

Accepted Answer

A) average total cost 
B) marginal cost 
C) average fixed cost 
D) total fixed cost 
E) Both C and D are correct. 
A) average total cost 
B) marginal cost 
C) average fixed cost 
D) total fixed cost 
E) Both C and D are correct.

Question 3

Average variable cost is at a minimum at the same output at which

Accepted Answer

A) average product is at a maximum. 
B) average product is at a minimum. 
C) marginal product is at a maximum. 
D) marginal product is at a minimum. 
E) marginal cost is at a minimum. 
A) average product is at a maximum. 
B) average product is at a minimum. 
C) marginal product is at a maximum. 
D) marginal product is at a minimum. 
E) marginal cost is at a minimum.

Question 4

The total product curve is a graph that shows the

Accepted Answer

A) minimum cost of producing a given amount of output using a given technology. 
B) maximum profit from each unit of output sold. 
C) maximum output that a given quantity of labour can produce. 
D) maximum output that can be produced as technology advances. 
E) change in total product for a given change in marginal product. 
A) minimum cost of producing a given amount of output using a given technology. 
B) maximum profit from each unit of output sold. 
C) maximum output that a given quantity of labour can produce. 
D) maximum output that can be produced as technology advances. 
E) change in total product for a given change in marginal product.

Question 5

The production function is the relationship between the maximum output attainable and the

Accepted Answer

A) price of output. 
B) change in technology. 
C) demand for output. 
D) quantities of inputs used. 
E) amount of labour used. 
A) price of output. 
B) change in technology. 
C) demand for output. 
D) quantities of inputs used. 
E) amount of labour used.

Question 6

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.Which one of the following statements is true?

Accepted Answer

A) The points above the curve are attainable and inefficient. 
B) The points below the curve are attainable and inefficient. 
C) The points below the curve are inefficient and unattainable. 
D) The points on the curve are efficient and unattainable. 
E) Marginal product is equal at every point on the total product curve. 
A) The points above the curve are attainable and inefficient. 
B) The points below the curve are attainable and inefficient. 
C) The points below the curve are inefficient and unattainable. 
D) The points on the curve are efficient and unattainable. 
E) Marginal product is equal at every point on the total product curve.

Question 7

Choose the statement that is incorrect.

Accepted Answer

A) Expenditure on a plant that has no resale value is a sunk cost. 
B) A sunk cost is irrelevant to a firm's current decisions. 
C) A cost that influences a firm's current decisions is the short-run cost of changing its labour inputs. 
D) A cost that influences a firm's current decisions is the long-run cost of changing its plant. 
E) The short run is a time frame in which a firm can change its plant. 
A) Expenditure on a plant that has no resale value is a sunk cost. 
B) A sunk cost is irrelevant to a firm's current decisions. 
C) A cost that influences a firm's current decisions is the short-run cost of changing its labour inputs. 
D) A cost that influences a firm's current decisions is the long-run cost of changing its plant. 
E) The short run is a time frame in which a firm can change its plant.

Question 8

The law of diminishing marginal returns states:

Accepted Answer

A) As the size of a plant increases,marginal product eventually decreases. 
B) As the size of a firm's plant increases,average cost eventually decreases. 
C) As a firm uses more of a variable factor of production,with a given quantity of the fixed factor of production,the marginal product of the variable factor eventually diminishes. 
D) As a firm uses more of a variable factor of production,its average cost eventually decreases. 
E) As a firm uses more of a variable factor or production,total product eventually decreases. 
A) As the size of a plant increases,marginal product eventually decreases. 
B) As the size of a firm's plant increases,average cost eventually decreases. 
C) As a firm uses more of a variable factor of production,with a given quantity of the fixed factor of production,the marginal product of the variable factor eventually diminishes. 
D) As a firm uses more of a variable factor of production,its average cost eventually decreases. 
E) As a firm uses more of a variable factor or production,total product eventually decreases.

Question 9

Which one of the following statements about the implicit rental rate of capital is true?

Accepted Answer

A) It is the market value of capital. 
B) It is the opportunity cost to a firm of using its own capital. 
C) It includes normal profit. 
D) It is the amount paid for the use of land or buildings. 
E) It is the depreciated value of capital. 
A) It is the market value of capital. 
B) It is the opportunity cost to a firm of using its own capital. 
C) It includes normal profit. 
D) It is the amount paid for the use of land or buildings. 
E) It is the depreciated value of capital.

Question 10

Refer to the table below to answer the following questions.
Table 10.2.1
  
-Refer to Table 10.2.1 which gives Tania's Teapots' total product schedule.The marginal product when the number of workers increases from 1 to 2 is

Accepted Answer

A) 3 teapots. 
B) 12 teapots. 
C) 7 teapots. 
D) 9 teapots. 
E) 6 teapots. 
A) 3 teapots. 
B) 12 teapots. 
C) 7 teapots. 
D) 9 teapots. 
E) 6 teapots.

Question 11

The long run is a time frame in which

Accepted Answer

A) the firm can hire all the workers it wants to employ,but it does not have sufficient time to buy more equipment. 
B) the firm is able to maximize revenue. 
C) the firm may want to build a bigger plant,but cannot do so. 
D) economic efficiency is achieved. 
E) the quantities of all factors of production can be varied. 
A) the firm can hire all the workers it wants to employ,but it does not have sufficient time to buy more equipment. 
B) the firm is able to maximize revenue. 
C) the firm may want to build a bigger plant,but cannot do so. 
D) economic efficiency is achieved. 
E) the quantities of all factors of production can be varied.

Question 12

The average product of labour is

Accepted Answer

A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the marginal product of labour. 
E) calculated as total product divided by the total quantity of labour employed. 
A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the marginal product of labour. 
E) calculated as total product divided by the total quantity of labour employed.

Question 13

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 marginal product when the number of workers increases from 2 to 3 is

Accepted Answer

A) 1 repair. 
B) 2 repairs. 
C) 3 repairs. 
D) 4 repairs. 
E) 3.75 repairs. 
A) 1 repair. 
B) 2 repairs. 
C) 3 repairs. 
D) 4 repairs. 
E) 3.75 repairs.

Question 14

Total cost is $20 at 4 units of output and $36 at 6 units of output.Between 4 and 6 units of output,marginal cost

Accepted Answer

A) is less than average total cost. 
B) is equal to average total cost. 
C) is equal to average variable cost. 
D) is greater than average total cost. 
E) equals average fixed cost. 
A) is less than average total cost. 
B) is equal to average total cost. 
C) is equal to average variable cost. 
D) is greater than average total cost. 
E) equals average fixed cost.

Question 15

Flora's Flowers bought a new van last year for $10,000.It can now sell the van for $8,500.To buy this year's model it would have to pay $11,000.Flora's also had to take out a $9,000 loan to buy the van which had to be paid back in yearly installments of $3,300 per year over three years.What is the implicit rental rate of the first year's use of the van?

Accepted Answer

A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800 
A) $2,800 
B) $1,300 
C) $1,800 
D) $13,300 
E) $4,800

Question 16

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Accepted Answer

A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant. 
A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant.

Question 17

Economies of scale are present when

Accepted Answer

A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases. 
A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases.

Question 18

Marginal cost is the amount that

Accepted Answer

A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced. 
A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced.

Question 19

Choose the correct statement.

Accepted Answer

A) When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing. 
B) When total product is increasing average product of labour and marginal product of labour are both increasing. 
C) When marginal product of labour is greater than or equal to average product of labour,average product of labour is increasing. 
D) When marginal product of labour is increasing,average product of labour is greater than marginal product of labour. 
E) When total product is increasing,average product of labour is decreasing and marginal product of labour is increasing. 
A) When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing. 
B) When total product is increasing average product of labour and marginal product of labour are both increasing. 
C) When marginal product of labour is greater than or equal to average product of labour,average product of labour is increasing. 
D) When marginal product of labour is increasing,average product of labour is greater than marginal product of labour. 
E) When total product is increasing,average product of labour is decreasing and marginal product of labour is increasing.

Question 20

A firm's total product curve describes

Accepted Answer

A) the minimum cost of producing a given amount of output. 
B) the maximum output that a given quantity of labour can produce. 
C) how the maximum attainable output varies as the size of the firm's plant varies,given the quantity of labour employed. 
D) how the management of the firm makes decisions over the short run. 
E) how the amount of labour varies as the amount of output varies. 
A) the minimum cost of producing a given amount of output. 
B) the maximum output that a given quantity of labour can produce. 
C) how the maximum attainable output varies as the size of the firm's plant varies,given the quantity of labour employed. 
D) how the management of the firm makes decisions over the short run. 
E) how the amount of labour varies as the amount of output varies.

Economies of scale refer to the range of output over which

Which type of cost does not change as the quantity of output produced changes?

Average variable cost is at a minimum at the same output at which

The total product curve is a graph that shows the

The production function is the relationship between the maximum output attainable and the

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.Which one of the following statements is true?

Choose the statement that is incorrect.

The law of diminishing marginal returns states:

Which one of the following statements about the implicit rental rate of capital is true?

Refer to the table below to answer the following questions. Table 10.2.1 -Refer to Table 10.2.1 which gives Tania's Teapots' total product schedule.The marginal product when the number of workers increases from 1 to 2 is

The long run is a time frame in which

The average product of labour is

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 marginal product when the number of workers increases from 2 to 3 is

Total cost is $20 at 4 units of output and $36 at 6 units of output.Between 4 and 6 units of output,marginal cost

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Economies of scale are present when

Marginal cost is the amount that

Choose the correct statement.

A firm's total product curve describes

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

Economies of scale refer to the range of output over which

Which type of cost does not change as the quantity of output produced changes?

Average variable cost is at a minimum at the same output at which

The total product curve is a graph that shows the

The production function is the relationship between the maximum output attainable and the

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.Which one of the following statements is true?

Choose the statement that is incorrect.

The law of diminishing marginal returns states:

Which one of the following statements about the implicit rental rate of capital is true?

Refer to the table below to answer the following questions. Table 10.2.1 -Refer to Table 10.2.1 which gives Tania's Teapots' total product schedule.The marginal product when the number of workers increases from 1 to 2 is

The long run is a time frame in which

The average product of labour is

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 marginal product when the number of workers increases from 2 to 3 is

Total cost is $20 at 4 units of output and $36 at 6 units of output.Between 4 and 6 units of output,marginal cost

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Economies of scale are present when

Marginal cost is the amount that

Choose the correct statement.

A firm's total product curve describes

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