Question 1

-In the above table, what is marginal product of labor for the 2nd worker?

Accepted Answer

A)  20 
B)  8 
C)  10 
D)  12 
A)  20 
B)  8 
C)  10 
D)  12

Question 2

The marginal product of labor is defined as the increase in output attributable to the last worker hired divided by the total number of workers employed.

Accepted Answer

A) True 
 B)False

Question 3

A firm's long-run average cost curve

Accepted Answer

A)  shows the lowest attainable average total cost of producing any level of output when the plant and labor are fixed. 
B)  is the sum of all of its short-run average cost curves. 
C)  tells the firm which plant size to use and which quantity of labor to use to minimize the cost of producing any level of output. 
D)  all of the above 
A)  shows the lowest attainable average total cost of producing any level of output when the plant and labor are fixed. 
B)  is the sum of all of its short-run average cost curves. 
C)  tells the firm which plant size to use and which quantity of labor to use to minimize the cost of producing any level of output. 
D)  all of the above

Question 4

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

Accepted Answer

A)  is less than $40. 
B)  is between $40 and $60. 
C)  is more than $60. 
D)  cannot be determined without more information. 
A)  is less than $40. 
B)  is between $40 and $60. 
C)  is more than $60. 
D)  cannot be determined without more information.

Question 5

In August 2008, Toyota halted production of the Tundra, its full-size, gas-guzzling pick-up. Sales of the vehicle are down 15 percent and the production suspension could last for months. When production of the truck resumes, it'll be at a slower pace. If Toyota, like many car makers, experiences increasing returns to scale, what would happen to long run average cost if production resumed, but at a slower pace?

Accepted Answer

A)  Long run average cost would increase. 
B)  Long run average cost would decrease. 
C)  Long run average cost would stay constant. 
D)  Long run average cost would increase and then decrease. 
A)  Long run average cost would increase. 
B)  Long run average cost would decrease. 
C)  Long run average cost would stay constant. 
D)  Long run average cost would increase and then decrease.

Question 6

If marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost ________ and average variable cost ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; decreases 
C)  increases; increases 
D)  decreases; increases 
A)  increases; decreases 
B)  decreases; decreases 
C)  increases; increases 
D)  decreases; increases

Question 7

In the short run,

Accepted Answer

A)  the size of the plant is fixed. 
B)  all factors of production are variable. 
C)  all factors of production are fixed. 
D)  some firms experience increasing returns to scale. 
A)  the size of the plant is fixed. 
B)  all factors of production are variable. 
C)  all factors of production are fixed. 
D)  some firms experience increasing returns to scale.

Question 8

What is the difference between average total cost and marginal cost and are they ever equal to each other?

Accepted Answer

Average total cost is total cost divided

Question 9

-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 fixed cost of producing 10 baseball hats per hour is

Accepted Answer

A)  $400. 
B)  $200. 
C)  $22. 
D)  More information is needed to answer the question. 
A)  $400. 
B)  $200. 
C)  $22. 
D)  More information is needed to answer the question.

Question 10

-In the above figure, the total fixed cost curve is curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  none of the curves in the figure 
A)  A. 
B)  B. 
C)  C. 
D)  none of the curves in the figure

Question 11

In the short run, average fixed cost is constant as output increases.

Accepted Answer

A) True 
 B)False

Question 12

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

Accepted Answer

A)  the marginal benefit of producing the 101st unit. 
B)  the marginal cost of producing the 101st unit. 
C)  both the marginal benefit and the marginal cost of producing the 101st unit. 
D)  neither the marginal benefit nor the marginal cost of producing the 101st unit. 
A)  the marginal benefit of producing the 101st unit. 
B)  the marginal cost of producing the 101st unit. 
C)  both the marginal benefit and the marginal cost of producing the 101st unit. 
D)  neither the marginal benefit nor the marginal cost of producing the 101st unit.

Question 13

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?

Accepted Answer

A)  $105 
B)  $35 
C)  $9.55 
D)  $5 
A)  $105 
B)  $35 
C)  $9.55 
D)  $5

Question 14

As output increases, average fixed cost

Accepted Answer

A)  always decreases. 
B)  increases, then decreases. 
C)  decreases, then increases. 
D)  remains constant. 
A)  always decreases. 
B)  increases, then decreases. 
C)  decreases, then increases. 
D)  remains constant.

Question 15

When long-run average cost decreases as output increases there are definitely

Accepted Answer

A)  increasing marginal returns. 
B)  economies of scale. 
C)  Both answers A and B are correct. 
D)  Neither answer A nor B is correct. 
A)  increasing marginal returns. 
B)  economies of scale. 
C)  Both answers A and B are correct. 
D)  Neither answer A nor B is correct.

Question 16

-Based on the production data for Pat's Pizza Parlor in the above table, the average product of labor when 4 workers are hired is ________ pizzas.

Accepted Answer

A)  8 
B)  10 
C)  11.25 
D)  45 
A)  8 
B)  10 
C)  11.25 
D)  45

Question 17

-The above table gives some of the costs of the Delicious Pie Company. What is the total fixed cost of producing 100 pies?

Accepted Answer

A)  $300 
B)  $400 
C)  $700 
D)  More information is needed to calculate the total fixed cost. 
A)  $300 
B)  $400 
C)  $700 
D)  More information is needed to calculate the total fixed cost.

Question 18

Diminishing marginal returns occur when ________.

Accepted Answer

A)  the average product of the variable input eventually diminishes 
B)  the marginal product of an additional worker is less than the marginal product of the previous worker hired 
C)  the firm hires cheap, less-skilled workers in place of expensive, high-skilled workers 
D)  total product diminishes 
A)  the average product of the variable input eventually diminishes 
B)  the marginal product of an additional worker is less than the marginal product of the previous worker hired 
C)  the firm hires cheap, less-skilled workers in place of expensive, high-skilled workers 
D)  total product diminishes

Question 19

When long-run average costs decrease 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 20

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

Accepted Answer

A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output. 
A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output.

Exam 11: Output and Costs

-In the above table, what is marginal product of labor for the 2nd worker?

The marginal product of labor is defined as the increase in output attributable to the last worker hired divided by the total number of workers employed.

A firm's long-run average cost curve

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

If marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost ________ and average variable cost ________.

In the short run,

What is the difference between average total cost and marginal cost and are they ever equal to each other?

-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 fixed cost of producing 10 baseball hats per hour is

-In the above figure, the total fixed cost curve is curve

In the short run, average fixed cost is constant as output increases.

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?

As output increases, average fixed cost

When long-run average cost decreases as output increases there are definitely

-Based on the production data for Pat's Pizza Parlor in the above table, the average product of labor when 4 workers are hired is ________ pizzas.

-The above table gives some of the costs of the Delicious Pie Company. What is the total fixed cost of producing 100 pies?

Diminishing marginal returns occur when ________.

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

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

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 marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost and average variable cost .