Question 1

What are the two components of a firm's total cost in the short run, and what are their definitions?

Accepted Answer

The two parts are the total fixed cost (

Question 2

-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 1?

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 3

In the short run,

Accepted Answer

A)  all factors of production are fixed. 
B)  labor usage must remain fixed. 
C)  a firm's plant is fixed. 
D)  no factors of production are fixed. 
A)  all factors of production are fixed. 
B)  labor usage must remain fixed. 
C)  a firm's plant is fixed. 
D)  no factors of production are fixed.

Question 4

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes?

Accepted Answer

A)  $100 
B)  $200 
C)  $300 
D)  $400 
A)  $100 
B)  $200 
C)  $300 
D)  $400

Question 5

A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?

Accepted Answer

There are several errors. The

Question 6

A firm's marginal cost is $82, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

Accepted Answer

A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080. 
A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080.

Question 7

-The above (incomplete) table provides information about the relationships between labor and various product measures. The amount of labor that maximizes the marginal product of labor is

Accepted Answer

A)  2 units of labor. 
B)  3 units of labor. 
C)  4 units of labor. 
D)  5 units of labor. 
A)  2 units of labor. 
B)  3 units of labor. 
C)  4 units of labor. 
D)  5 units of labor.

Question 8

Downsizing is the practice of laying off workers in an attempt to decrease average total cost. Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

Accepted Answer

Yes, downsizing by laying off workers ca

Question 9

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the total fixed cost of producing 4,500 frijoles?

Accepted Answer

A)  $1000 
B)  $8000 
C)  $9000 
D)  More information is needed to determine the answer. 
A)  $1000 
B)  $8000 
C)  $9000 
D)  More information is needed to determine the answer.

Question 10

Decent Donuts  
-Use the data in the table above and suppose that labor is the only variable factor of production. When 122 dozen donuts are produced at Decent Donuts, the MC curve

Accepted Answer

A)  has a positive slope. 
B)  shows the effect of increasing marginal returns. 
C)  Both answers A and B are correct. 
D)  Neither answer A nor B is correct. 
A)  has a positive slope. 
B)  shows the effect of increasing marginal returns. 
C)  Both answers A and B are correct. 
D)  Neither answer A nor B is correct.

Question 11

Jefferson's Cleaners  
-Based on the data in the above table, at what level of output does the marginal cost start to rise at Jefferson's Cleaners?

Accepted Answer

A)  45 suits per day 
B)  47 suits per day 
C)  74 suits per day 
D)  85 suits per day 
A)  45 suits per day 
B)  47 suits per day 
C)  74 suits per day 
D)  85 suits per day

Question 12

Based on the above figure, up to which level of output will Ike's Ice Cream Kitchen have increasing marginal returns?

Accepted Answer

A)  only at 0 gallons 
B)  up to 10 gallons 
C)  up to 40 gallons 
D)  up to 60 gallons 
A)  only at 0 gallons 
B)  up to 10 gallons 
C)  up to 40 gallons 
D)  up to 60 gallons

Question 13

-The above table gives some of the costs of the Delicious Pie Company. What is the average variable cost of producing 300 pies?

Accepted Answer

A)  $1,800 
B)  $6 
C)  $5 
D)  More information is needed to calculate the average variable cost. 
A)  $1,800 
B)  $6 
C)  $5 
D)  More information is needed to calculate the average variable cost.

Question 14

In the above figure, the marginal product of labor is zero at point

Accepted Answer

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

Question 15

The marginal product of labor is equal to the

Accepted Answer

A)  total product divided by the total number of workers hired. 
B)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
C)  slope of the marginal product of labor curve. 
D)  None of the above answers are correct. 
A)  total product divided by the total number of workers hired. 
B)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
C)  slope of the marginal product of labor curve. 
D)  None of the above answers are correct.

Question 16

In the short run,

Accepted Answer

A)  all factors of production are fixed. 
B)  at least one factor of production is fixed. 
C)  all factors of production are variable. 
D)  there are no variable costs. 
A)  all factors of production are fixed. 
B)  at least one factor of production is fixed. 
C)  all factors of production are variable. 
D)  there are no variable costs.

Question 17

-The table shows some data that describes Tom's T-Shirts' total product when Tom's has 1 sewing machine. When 4 workers are employed, ________.

Accepted Answer

A)  average product of labor is a maximum 
B)  marginal product of labor is less than average product of labor 
C)  marginal product of labor exceeds average product of labor 
D)  marginal product of labor equals average product of labor 
A)  average product of labor is a maximum 
B)  marginal product of labor is less than average product of labor 
C)  marginal product of labor exceeds average product of labor 
D)  marginal product of labor equals average product of labor

Question 18

Total product is

Accepted Answer

A)  the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. 
B)  maximum output that a given quantity of labor can produce. 
C)  maximum amount of output produced by a given quantity of labor divided by the given quantity of labor employed. 
D)  maximum amount of amount of output produced by a given quantity of labor divided by price of the output. 
A)  the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. 
B)  maximum output that a given quantity of labor can produce. 
C)  maximum amount of output produced by a given quantity of labor divided by the given quantity of labor employed. 
D)  maximum amount of amount of output produced by a given quantity of labor divided by price of the output.

Question 19

A firm's marginal cost is $30, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

Accepted Answer

A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080. 
A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080.

Question 20

-Fernando charges the restaurant Flaming Fernando's $1,000 annually for use of his name. If Fernando increases the fee for use of his name,

Accepted Answer

A)  the restaurant's average fixed cost, average variable cost, average total cost, and marginal cost curves all shift upward. 
B)  the restaurant's average fixed cost, average total cost, and marginal cost curves shift upward. 
C)  the restaurant's average variable cost, average total cost, and marginal cost curves shift upward. 
D)  the restaurant's average fixed cost and average total cost curves shift upward. 
A)  the restaurant's average fixed cost, average variable cost, average total cost, and marginal cost curves all shift upward. 
B)  the restaurant's average fixed cost, average total cost, and marginal cost curves shift upward. 
C)  the restaurant's average variable cost, average total cost, and marginal cost curves shift upward. 
D)  the restaurant's average fixed cost and average total cost curves shift upward.

Exam 11: Output and Costs

What are the two components of a firm's total cost in the short run, and what are their definitions?

-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 1?

In the short run,

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes?

A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?

A firm's marginal cost is $82, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

-The above (incomplete) table provides information about the relationships between labor and various product measures. The amount of labor that maximizes the marginal product of labor is

Downsizing is the practice of laying off workers in an attempt to decrease average total cost. Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the total fixed cost of producing 4,500 frijoles?

Decent Donuts -Use the data in the table above and suppose that labor is the only variable factor of production. When 122 dozen donuts are produced at Decent Donuts, the MC curve

Jefferson's Cleaners -Based on the data in the above table, at what level of output does the marginal cost start to rise at Jefferson's Cleaners?

Based on the above figure, up to which level of output will Ike's Ice Cream Kitchen have increasing marginal returns?

-The above table gives some of the costs of the Delicious Pie Company. What is the average variable cost of producing 300 pies?

In the above figure, the marginal product of labor is zero at point

The marginal product of labor is equal to the

In the short run,

-The table shows some data that describes Tom's T-Shirts' total product when Tom's has 1 sewing machine. When 4 workers are employed, ________.

Total product is

A firm's marginal cost is $30, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

-Fernando charges the restaurant Flaming Fernando's $1,000 annually for use of his name. If Fernando increases the fee for use of his name,

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 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 1?