Question 1

After constructing a new factory, the cost of building the factory is a

Accepted Answer

A)  past cost. 
B)  sunk cost. 
C)  variable cost. 
D)  None of the above answers are correct. 
A)  past cost. 
B)  sunk cost. 
C)  variable cost. 
D)  None of the above answers are correct.

Question 2

Pizza Hut  
-Using the data in the above table, what is the average product of three employees?

Accepted Answer

A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  12 pizzas per hour 
A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  12 pizzas per hour

Question 3

If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

Accepted Answer

A)  short-run average total cost curve shifts upward because all inputs have increased. 
B)  firm moves along its short-run average total cost curve. 
C)  firm experiences economies of scale. 
D)  long-run average cost curve shifts downward. 
A)  short-run average total cost curve shifts upward because all inputs have increased. 
B)  firm moves along its short-run average total cost curve. 
C)  firm experiences economies of scale. 
D)  long-run average cost curve shifts downward.

Question 4

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is

Accepted Answer

A)  $50. 
B)  $200. 
C)  $250. 
D)  More information is needed to answer the question. 
A)  $50. 
B)  $200. 
C)  $250. 
D)  More information is needed to answer the question.

Question 5

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so, carefully explain these reasons. If not, explain why each curve is U-shaped.

Accepted Answer

The curves are U-shaped for quite differ

Question 6

Cost schedule  
-In the above table, the total cost of producing 9 units of output is

Accepted Answer

A)  $20. 
B)  $30. 
C)  $50. 
D)  $70. 
A)  $20. 
B)  $30. 
C)  $50. 
D)  $70.

Question 7

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect. When output

Question 8

When a firm is experiencing economies of scale,

Accepted Answer

A)  the MP curve slopes upward. 
B)  the LRAC curve slopes downward. 
C)  diminishing returns to labor have been suspended. 
D)  the MC curve slopes downward. 
A)  the MP curve slopes upward. 
B)  the LRAC curve slopes downward. 
C)  diminishing returns to labor have been suspended. 
D)  the MC curve slopes downward.

Question 9

-In the above figure, which of the following statements is FALSE?

Accepted Answer

A)  The total fixed cost curve is curve C. 
B)  Total variable cost and total cost both increase as output increases. 
C)  Marginal cost is equal to the slope of curve A. 
D)  The vertical gap between curves A and B is equal to average fixed cost. 
A)  The total fixed cost curve is curve C. 
B)  Total variable cost and total cost both increase as output increases. 
C)  Marginal cost is equal to the slope of curve A. 
D)  The vertical gap between curves A and B is equal to average fixed cost.

Question 10

Marginal cost eventually increases because

Accepted Answer

A)  of the law of diminishing returns. 
B)  eventually each additional worker produces a successively smaller addition to output. 
C)  the marginal product of the variable input eventually falls. 
D)  All of the above answers are correct. 
A)  of the law of diminishing returns. 
B)  eventually each additional worker produces a successively smaller addition to output. 
C)  the marginal product of the variable input eventually falls. 
D)  All of the above answers are correct.

Question 11

When long-run average costs increase as output increases, there are

Accepted Answer

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

Question 12

The average product of labor exceeds the marginal product of labor

Accepted Answer

A)  when the average product of labor is falling. 
B)  when the average product of labor is rising. 
C)  when the marginal product of labor is at its maximum. 
D)  when the average product of labor is at its maximum. 
A)  when the average product of labor is falling. 
B)  when the average product of labor is rising. 
C)  when the marginal product of labor is at its maximum. 
D)  when the average product of labor is at its maximum.

Question 13

-The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC,

Accepted Answer

A)  decreases as output increases. 
B)  is equal to its marginal cost, MC. 
C)  is equal to its total fixed cost, TFC. 
D)  is equal to its average product. 
A)  decreases as output increases. 
B)  is equal to its marginal cost, MC. 
C)  is equal to its total fixed cost, TFC. 
D)  is equal to its average product.

Question 14

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Accepted Answer

The long-run average cost curve shows th

Question 15

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

Accepted Answer

A)  decreasing marginal returns. 
B)  diseconomies of scale. 
C)  increasing marginal returns. 
D)  economies of scale. 
A)  decreasing marginal returns. 
B)  diseconomies of scale. 
C)  increasing marginal returns. 
D)  economies of scale.

Question 16

If total fixed cost increases, then the average total cost curve ________ and the marginal cost curve ________.

Accepted Answer

A)  does not shift; shifts upward 
B)  shifts upward; shifts upward 
C)  does not shift; does not shift 
D)  shifts upward; does not shift 
A)  does not shift; shifts upward 
B)  shifts upward; shifts upward 
C)  does not shift; does not shift 
D)  shifts upward; does not shift

Question 17

When the marginal product curve is downward sloping, the average product curve

Accepted Answer

A)  must also be downward sloping. 
B)  might be either upward or downward sloping. 
C)  must be upward sloping. 
D)  must be horizontal. 
A)  must also be downward sloping. 
B)  might be either upward or downward sloping. 
C)  must be upward sloping. 
D)  must be horizontal.

Question 18

A firm's total cost (TC) equals the sum of its fixed cost plus its

Accepted Answer

A)  marginal cost. 
B)  variable cost. 
C)  variable cost plus its marginal cost. 
D)  sunk cost plus its variable cost plus its marginal cost. 
A)  marginal cost. 
B)  variable cost. 
C)  variable cost plus its marginal cost. 
D)  sunk cost plus its variable cost plus its marginal cost.

Question 19

Cost schedule  
-Using the data in the above table, when output increases from 4 to 9 units, the marginal cost of one of those 5 units is

Accepted Answer

A)  $4.00. 
B)  $4.25. 
C)  $5.00. 
D)  $6.25. 
A)  $4.00. 
B)  $4.25. 
C)  $5.00. 
D)  $6.25.

Question 20

When marginal cost is greater than average total cost, the

Accepted Answer

A)  marginal cost decreases as output increases. 
B)  marginal cost does not change as output increases. 
C)  average total cost increases as output increases. 
D)  average total cost decreases as output increases. 
A)  marginal cost decreases as output increases. 
B)  marginal cost does not change as output increases. 
C)  average total cost increases as output increases. 
D)  average total cost decreases as output increases.

Exam 11: Output and Costs

After constructing a new factory, the cost of building the factory is a

Pizza Hut -Using the data in the above table, what is the average product of three employees?

If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so, carefully explain these reasons. If not, explain why each curve is U-shaped.

Cost schedule -In the above table, the total cost of producing 9 units of output is

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

When a firm is experiencing economies of scale,

-In the above figure, which of the following statements is FALSE?

Marginal cost eventually increases because

When long-run average costs increase as output increases, there are

The average product of labor exceeds the marginal product of labor

-The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC,

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

If total fixed cost increases, then the average total cost curve ________ and the marginal cost curve ________.

When the marginal product curve is downward sloping, the average product curve

A firm's total cost (TC) equals the sum of its fixed cost plus its

Cost schedule -Using the data in the above table, when output increases from 4 to 9 units, the marginal cost of one of those 5 units is

When marginal cost is greater than average total cost, the

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

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

If total fixed cost increases, then the average total cost curve and the marginal cost curve .