Question 1

-In the figure above, when 20 units are produced the marginal cost is

Accepted Answer

A)  less than $8. 
B)  $8. 
C)  more than $8 and less than $16. 
D)  None of the above answers is correct. 
A)  less than $8. 
B)  $8. 
C)  more than $8 and less than $16. 
D)  None of the above answers is correct.

Question 2

The vertical distance between the total variable cost curve and the total cost curve ________ as output increases; the vertical distance between the average variable cost curve and the average total cost curve ________ as output increases.

Accepted Answer

A)  decreases; remains the same 
B)  is constant; becomes smaller 
C)  increases; becomes smaller at first but then increases 
D)  increases; remains the same 
A)  decreases; remains the same 
B)  is constant; becomes smaller 
C)  increases; becomes smaller at first but then increases 
D)  increases; remains the same

Question 3

When the marginal product of labor exceeds the average product of labor,

Accepted Answer

A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale. 
A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale.

Question 4

The short run is a time frame in which

Accepted Answer

A)  at least one factor of production is fixed. 
B)  all factors of production can be varied. 
C)  all factors of production are fixed. 
D)  at least one factor of production can be varied. 
A)  at least one factor of production is fixed. 
B)  all factors of production can be varied. 
C)  all factors of production are fixed. 
D)  at least one factor of production can be varied.

Question 5

-This month, the local widget factory produced 100 widgets. The total variable cost of production was $500 and the average total cost of production was $8.
a) What is the total cost?
b) What is the total fixed cost?
c) What is the average fixed cost?
d) What is the average variable cost?

Accepted Answer

a) Total cost can be calculated as avera

Question 6

"The law of diminishing returns is the same as the decreasing returns to scale." Do you agree? Explain.

Accepted Answer

The statement is incorrect. The law of d

Question 7

-Using the data in the above table, the average fixed cost of producing 16 units is

Accepted Answer

A)  $1.11 a unit. 
B)  $1.25 a unit. 
C)  $1.54 a unit. 
D)  $2.22 a unit. 
A)  $1.11 a unit. 
B)  $1.25 a unit. 
C)  $1.54 a unit. 
D)  $2.22 a unit.

Question 8

-The table above shows the short-run product schedule for Virginia's Tee-Shirts. What is the marginal product associated with the hiring the fifth worker?

Accepted Answer

A)  30 shirts 
B)  50 shirts 
C)  235 shirts 
D)  250 shirts 
A)  30 shirts 
B)  50 shirts 
C)  235 shirts 
D)  250 shirts

Question 9

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

Accepted Answer

A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25 
A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25

Question 10

A firm's minimum efficient scale is the largest quantity of output at which long-run average cost reaches its highest level.

Accepted Answer

A) True 
 B)False

Question 11

If marginal cost exceeds average variable cost, then ________ cost is ________ as output increases.

Accepted Answer

A)  average total; at a maximum 
B)  average total; falling 
C)  average variable; rising 
D)  average fixed; at a maximum 
A)  average total; at a maximum 
B)  average total; falling 
C)  average variable; rising 
D)  average fixed; at a maximum

Question 12

-The above table shows the total product of producing baseball hats. The average product of 3 workers is equal to

Accepted Answer

A)  1.67 baseball hats. 
B)  6.00 baseball hats. 
C)  12.78 baseball hats. 
D)  18.00 baseball hats. 
A)  1.67 baseball hats. 
B)  6.00 baseball hats. 
C)  12.78 baseball hats. 
D)  18.00 baseball hats.

Question 13

The law of diminishing returns implies that, with the quantity of capital fixed, as the use of labor rises,

Accepted Answer

A)  total product will fall eventually. 
B)  the marginal product of labor will fall eventually. 
C)  the total product of labor will fall below the marginal product of labor. 
D)  the production process will become technologically inefficient eventually. 
A)  total product will fall eventually. 
B)  the marginal product of labor will fall eventually. 
C)  the total product of labor will fall below the marginal product of labor. 
D)  the production process will become technologically inefficient eventually.

Question 14

Points below a firm's total product curve are

Accepted Answer

A)  both attainable and technologically efficient. 
B)  neither attainable nor technologically efficient. 
C)  attainable but not technologically efficient. 
D)  technologically efficient but not attainable. 
A)  both attainable and technologically efficient. 
B)  neither attainable nor technologically efficient. 
C)  attainable but not technologically efficient. 
D)  technologically efficient but not attainable.

Question 15

-The table above gives the cost of producing T-shirts. The total fixed cost is ________ and the marginal cost of increasing production from 5 to 6 T shirts is ________.

Accepted Answer

A)  $20; $6 
B)  $20; $10 
C)  $10.40; $8 
D)  unable to be determined; $8 
A)  $20; $6 
B)  $20; $10 
C)  $10.40; $8 
D)  unable to be determined; $8

Question 16

In the above figure, a technologically inefficient point is

Accepted Answer

A)  a. 
B)  e. 
C)  g. 
D)  f. 
A)  a. 
B)  e. 
C)  g. 
D)  f.

Question 17

Cost schedule  
-The above table shows a firm's

Accepted Answer

A)  long-run costs. 
B)  short-run costs. 
C)  short-run and long-run costs. 
D)  More information is needed to determine if the costs are long-run costs or short-run costs. 
A)  long-run costs. 
B)  short-run costs. 
C)  short-run and long-run costs. 
D)  More information is needed to determine if the costs are long-run costs or short-run costs.

Question 18

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 total cost?

Accepted Answer

A)  $12 
B)  $10 
C)  $8 
D)  $2 
A)  $12 
B)  $10 
C)  $8 
D)  $2

Question 19

-In the above figure, between 5 and 10 units per hour, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing total fixed costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing total fixed costs.

Question 20

What does the average product of labor equal?

Accepted Answer

The average product of labor e

Exam 11: Output and Costs

-In the figure above, when 20 units are produced the marginal cost is

The vertical distance between the total variable cost curve and the total cost curve ________ as output increases; the vertical distance between the average variable cost curve and the average total cost curve ________ as output increases.

When the marginal product of labor exceeds the average product of labor,

The short run is a time frame in which

-This month, the local widget factory produced 100 widgets. The total variable cost of production was $500 and the average total cost of production was $8. a) What is the total cost? b) What is the total fixed cost? c) What is the average fixed cost? d) What is the average variable cost?

"The law of diminishing returns is the same as the decreasing returns to scale." Do you agree? Explain.

-Using the data in the above table, the average fixed cost of producing 16 units is

-The table above shows the short-run product schedule for Virginia's Tee-Shirts. What is the marginal product associated with the hiring the fifth worker?

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

A firm's minimum efficient scale is the largest quantity of output at which long-run average cost reaches its highest level.

If marginal cost exceeds average variable cost, then ________ cost is ________ as output increases.

-The above table shows the total product of producing baseball hats. The average product of 3 workers is equal to

The law of diminishing returns implies that, with the quantity of capital fixed, as the use of labor rises,

Points below a firm's total product curve are

-The table above gives the cost of producing T-shirts. The total fixed cost is ________ and the marginal cost of increasing production from 5 to 6 T shirts is ________.

In the above figure, a technologically inefficient point is

Cost schedule -The above table shows a firm's

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 total cost?

-In the above figure, between 5 and 10 units per hour, the firm experiences

What does the average product of labor equal?

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

The vertical distance between the total variable cost curve and the total cost curve as output increases; the vertical distance between the average variable cost curve and the average total cost curve as output increases.

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

If marginal cost exceeds average variable cost, then cost is as output increases.

-The table above gives the cost of producing T-shirts. The total fixed cost is and the marginal cost of increasing production from 5 to 6 T shirts is .