Question 1

-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. Average variable cost (AVC) is lowest when output is equal to

Accepted Answer

A)  1 barrel of pickles. 
B)  2 barrels of pickles. 
C)  3 barrels of pickles. 
D)  4 barrels of pickles. 
A)  1 barrel of pickles. 
B)  2 barrels of pickles. 
C)  3 barrels of pickles. 
D)  4 barrels of pickles.

Question 2

When the marginal product of labor exceeds the average product of labor, the average product must increase when employment increases.

Accepted Answer

A) True 
 B)False

Question 3

Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

Accepted Answer

A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above 
A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above

Question 4

-Jones Production started business with a small scale plant. Fortunately for Smith, the owner of Jones Production, the business grew rapidly. It doubled its plant scale and its labor force every year for the next six years. The table above gives the total costs and the associated total products for each year.
a) Complete the table by finding the average cost for each scale.
b) Over what range of total product (output) did Jones Production experience economies of scale, constant returns to scale, and diseconomies of scale?

Accepted Answer

@#IMG-DLM& a) The completed table is above.
b) The

Question 5

A firm increases both its plant and its labor force by the same percentage and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

Accepted Answer

The firm is experien

Question 6

-Using the data in the above table, if the firm employs 5 workers, total product (measured in units per day) and average product and marginal product of the fifth worker (measured in units per worker) are

Accepted Answer

A)  23, 5.00, and 4 respectively. 
B)  23, 5.75, and 4 respectively. 
C)  25, 5.00, and 2 respectively. 
D)  25, 5.75, and 4 respectively. 
A)  23, 5.00, and 4 respectively. 
B)  23, 5.75, and 4 respectively. 
C)  25, 5.00, and 2 respectively. 
D)  25, 5.75, and 4 respectively.

Question 7

Marginal cost is calculated as

Accepted Answer

A)  total cost divided by output. 
B)  the increase in total cost divided by the increase in output. 
C)  the increase in total cost divided by the increase in labor, given the amount of capital. 
D)  total cost minus total fixed cost. 
A)  total cost divided by output. 
B)  the increase in total cost divided by the increase in output. 
C)  the increase in total cost divided by the increase in labor, given the amount of capital. 
D)  total cost minus total fixed cost.

Question 8

When a firm's long-run average cost is constant as output increases, the firm is experiencing constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 9

A period of time in which the quantity of at least one factor of production used by a firm is fixed is called the

Accepted Answer

A)  market period. 
B)  intermediate run. 
C)  short run. 
D)  long run. 
A)  market period. 
B)  intermediate run. 
C)  short run. 
D)  long run.

Question 10

Health care costs are expected to rise more than 10 percent into 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs is expected to solely come from increased costs to buy MRI and X-ray machines, then for the health care industry:

Accepted Answer

A)  Fixed costs are increasing. 
B)  Long run average total cost is decreasing. 
C)  Productivity is increasing. 
D)  Variable costs are increasing. 
A)  Fixed costs are increasing. 
B)  Long run average total cost is decreasing. 
C)  Productivity is increasing. 
D)  Variable costs are increasing.

Question 11

Constant returns to scale means that as all inputs are increased,

Accepted Answer

A)  total output remains constant. 
B)  average total cost rises. 
C)  average total cost rises at the same rate as do the inputs. 
D)  total output increases in the same proportion as do the inputs. 
A)  total output remains constant. 
B)  average total cost rises. 
C)  average total cost rises at the same rate as do the inputs. 
D)  total output increases in the same proportion as do the inputs.

Question 12

Total variable cost is the sum of all

Accepted Answer

A)  costs of the firm's fixed factors of production. 
B)  costs associated with the production of goods. 
C)  costs that rise as output increases. 
D)  implicit costs. 
A)  costs of the firm's fixed factors of production. 
B)  costs associated with the production of goods. 
C)  costs that rise as output increases. 
D)  implicit costs.

Question 13

The long run is a time frame in which

Accepted Answer

A)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
B)  the quantities of all factors of production can be varied. 
C)  the quantities of all factors of production are fixed. 
D)  all costs are sunk costs. 
A)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
B)  the quantities of all factors of production can be varied. 
C)  the quantities of all factors of production are fixed. 
D)  all costs are sunk costs.

Question 14

A decrease in the price of a fixed factor of production decreases total cost and

Accepted Answer

A)  increases marginal cost. 
B)  leaves marginal cost unchanged. 
C)  decreases marginal cost. 
D)  increases variable cost. 
A)  increases marginal cost. 
B)  leaves marginal cost unchanged. 
C)  decreases marginal cost. 
D)  increases variable cost.

Question 15

-Based on the production data for Pat's Pizza Parlor in the above table, the marginal product of the 4th worker is ________ pizzas.

Accepted Answer

A)  5 
B)  8 
C)  10 
D)  45 
A)  5 
B)  8 
C)  10 
D)  45

Question 16

In the long run, a firm has

Accepted Answer

A)  no factors of production that are fixed. 
B)  no factors of production that are variable. 
C)  no factors of production that are either fixed or variable. 
D)  fixed factors of production but no variable resources. 
A)  no factors of production that are fixed. 
B)  no factors of production that are variable. 
C)  no factors of production that are either fixed or variable. 
D)  fixed factors of production but no variable resources.

Question 17

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. What is Silvio's long-run average cost if the output is 100 pizzas per week?

Accepted Answer

A)  $8.40 
B)  $11.00 
C)  $19.40 
D)  $17.90 
A)  $8.40 
B)  $11.00 
C)  $19.40 
D)  $17.90

Question 18

Which of the following statements is true?

Accepted Answer

A)  In the long run, the average cost curve is always downward sloping. 
B)  In the long run, the quantities of all inputs are fixed. 
C)  In the long run, the firms' fixed costs are greater than its variable costs. 
D)  In the long run, all costs are variable costs. 
A)  In the long run, the average cost curve is always downward sloping. 
B)  In the long run, the quantities of all inputs are fixed. 
C)  In the long run, the firms' fixed costs are greater than its variable costs. 
D)  In the long run, all costs are variable costs.

Question 19

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 2 and hires 4 workers. What is the firm's average total cost?

Accepted Answer

A)  $6.00 
B)  $8.26 
C)  $10.55 
D)  $12.40 
A)  $6.00 
B)  $8.26 
C)  $10.55 
D)  $12.40

Question 20

Decent Donuts  
-Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

Accepted Answer

A)  86 dozen donuts per day 
B)  22 dozen donuts per day 
C)  17.2 dozen donuts per day 
D)  64 dozen donuts per day 
A)  86 dozen donuts per day 
B)  22 dozen donuts per day 
C)  17.2 dozen donuts per day 
D)  64 dozen donuts per day

Exam 11: Output and Costs

-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. Average variable cost (AVC) is lowest when output is equal to

When the marginal product of labor exceeds the average product of labor, the average product must increase when employment increases.

Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

A firm increases both its plant and its labor force by the same percentage and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

-Using the data in the above table, if the firm employs 5 workers, total product (measured in units per day) and average product and marginal product of the fifth worker (measured in units per worker) are

Marginal cost is calculated as

When a firm's long-run average cost is constant as output increases, the firm is experiencing constant returns to scale.

A period of time in which the quantity of at least one factor of production used by a firm is fixed is called the

Health care costs are expected to rise more than 10 percent into 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs is expected to solely come from increased costs to buy MRI and X-ray machines, then for the health care industry:

Constant returns to scale means that as all inputs are increased,

Total variable cost is the sum of all

The long run is a time frame in which

A decrease in the price of a fixed factor of production decreases total cost and

-Based on the production data for Pat's Pizza Parlor in the above table, the marginal product of the 4th worker is ________ pizzas.

In the long run, a firm has

Which of the following statements is true?

Decent Donuts -Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

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