Question 1

The long-run average cost curve is the relationship between the highest attainable average total cost and output when both the plant size and labor are varied.

Accepted Answer

A) True 
 B)False

Question 2

The long-run average cost curve is the

Accepted Answer

A)  change in total product divided by the change in capital when the quantity of labor is constant. 
B)  change in output resulting from a one-unit increase in the quantity of capital. 
C)  relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. 
D)  relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed. 
A)  change in total product divided by the change in capital when the quantity of labor is constant. 
B)  change in output resulting from a one-unit increase in the quantity of capital. 
C)  relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. 
D)  relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed.

Question 3

-The above table shows the short-run total product schedule for the campus book store. When the fifth employee is hired, the marginal product is ________ and is ________ the average product.

Accepted Answer

A)  increasing; greater than 
B)  increasing; less than 
C)  decreasing; greater than 
D)  decreasing; less than 
A)  increasing; greater than 
B)  increasing; less than 
C)  decreasing; greater than 
D)  decreasing; less than

Question 4

Decent Donuts  
-Use the data in the above table and suppose that labor is the only variable factor of production. At what level of output does the marginal cost start to rise at Decent Donuts?

Accepted Answer

A)  0 dozen donuts 
B)  111 dozen donuts 
C)  128 dozen donuts 
D)  There is not enough information given to determine when the marginal cost starts to increase. 
A)  0 dozen donuts 
B)  111 dozen donuts 
C)  128 dozen donuts 
D)  There is not enough information given to determine when the marginal cost starts to increase.

Question 5

-The above table shows the short-run total product schedule for the campus book store. When the book store hires the 3rd employee,

Accepted Answer

A)  the bookstore is still experiencing increasing marginal returns. 
B)  the book store has already begun to experience diminishing marginal returns, but average product is still rising. 
C)  both marginal and average product have already begun to decline. 
D)  marginal product is at its maximum. 
A)  the bookstore is still experiencing increasing marginal returns. 
B)  the book store has already begun to experience diminishing marginal returns, but average product is still rising. 
C)  both marginal and average product have already begun to decline. 
D)  marginal product is at its maximum.

Question 6

"Diseconomies of scale" occur in

Accepted Answer

A)  the long run, but not the short run. 
B)  the short run, but not the long run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run. 
A)  the long run, but not the short run. 
B)  the short run, but not the long run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run.

Question 7

-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. What is the marginal cost of producing the 200th pizza?

Accepted Answer

A)  $5.09 
B)  $7.00 
C)  $10.55 
D)  $4.40 
A)  $5.09 
B)  $7.00 
C)  $10.55 
D)  $4.40

Question 8

As output increases, total cost ________, total fixed cost ________, and total variable cost ________.

Accepted Answer

A)  increases; increases; increases 
B)  increases; increases; does not change 
C)  increases; does not change; increases 
D)  does not change; increases; increases 
A)  increases; increases; increases 
B)  increases; increases; does not change 
C)  increases; does not change; increases 
D)  does not change; increases; increases

Question 9

Which of the following would be classified as a fixed cost for the proprietor who owns and operates the local Texaco station?

Accepted Answer

A)  The federal excise tax paid on each gallon of Texaco gasoline sold. 
B)  The state income tax on the profit earned. 
C)  The rent paid on the 10 year lease for the property on which the station is located. 
D)  The Social Security tax the owner pays the federal government on the owner's income. 
A)  The federal excise tax paid on each gallon of Texaco gasoline sold. 
B)  The state income tax on the profit earned. 
C)  The rent paid on the 10 year lease for the property on which the station is located. 
D)  The Social Security tax the owner pays the federal government on the owner's income.

Question 10

-The above table gives some of the costs of the Delicious Pie Company. The marginal cost of increasing pie output from 200 to 300 pies equals ________ per pie.

Accepted Answer

A)  $1.800 
B)  $1,000 
C)  $8 
D)  $6 
A)  $1.800 
B)  $1,000 
C)  $8 
D)  $6

Question 11

Pat's Catering finds that when it caters 20 meals a week, its total cost is $6,000. If Pat has total variable cost of $5,000, what is Pat's total fixed cost?

Accepted Answer

A)  $50 
B)  $250 
C)  $1,000 
D)  $6,000 
A)  $50 
B)  $250 
C)  $1,000 
D)  $6,000

Question 12

In the long run, a firm can vary

Accepted Answer

A)  its capital but not its labor. 
B)  its labor but not its capital. 
C)  both its labor and its capital. 
D)  neither its labor nor its capital. 
A)  its capital but not its labor. 
B)  its labor but not its capital. 
C)  both its labor and its capital. 
D)  neither its labor nor its capital.

Question 13

The vertical distance between the average variable cost curve and the average total cost curve equals average fixed cost.

Accepted Answer

A) True 
 B)False

Question 14

-The above table shows the short-run total product schedule for the campus book store. What is the average product (AP) of the 4th employee?

Accepted Answer

A)  58 books sold 
B)  14.5 books sold 
C)  18 books sold 
D)  13.3 books sold 
A)  58 books sold 
B)  14.5 books sold 
C)  18 books sold 
D)  13.3 books sold

Question 15

-The above table shows the short-run total product schedule for the campus book store. Which employee has the highest marginal product (MP)?

Accepted Answer

A)  the 10th employee 
B)  the 5th employee 
C)  the 4th employee 
D)  the 1st employee 
A)  the 10th employee 
B)  the 5th employee 
C)  the 4th employee 
D)  the 1st employee

Question 16

Average variable cost is at a minimum at the same amount of output at which

Accepted Answer

A)  average product is at a maximum. 
B)  marginal product is at a maximum. 
C)  average product is at a minimum. 
D)  marginal product is at a minimum. 
A)  average product is at a maximum. 
B)  marginal product is at a maximum. 
C)  average product is at a minimum. 
D)  marginal product is at a minimum.

Question 17

-In the above figure, economies of scale are present up to an output level of

Accepted Answer

A)  5,000 pounds of coffee. 
B)  10,000 pounds of coffee. 
C)  13,000 pounds of coffee. 
D)  15,000 pounds of coffee. 
A)  5,000 pounds of coffee. 
B)  10,000 pounds of coffee. 
C)  13,000 pounds of coffee. 
D)  15,000 pounds of coffee.

Question 18

If as output increases average product increases, then ________.

Accepted Answer

A)  average total cost decreases 
B)  average fixed cost decreases 
C)  marginal cost decreases 
D)  average variable cost decreases 
A)  average total cost decreases 
B)  average fixed cost decreases 
C)  marginal cost decreases 
D)  average variable cost decreases

Question 19

Which of the following would be classified as a variable cost for the local Texaco station?

Accepted Answer

A)  Interest payments to a local bank for a 5-year loan. 
B)  The total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week. 
C)  The premiums paid for liability insurance, which are constant throughout the life of the contract. 
D)  The opportunity cost of money used to finance the installation of some new pumps. 
A)  Interest payments to a local bank for a 5-year loan. 
B)  The total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week. 
C)  The premiums paid for liability insurance, which are constant throughout the life of the contract. 
D)  The opportunity cost of money used to finance the installation of some new pumps.

Question 20

When plotted against the total output, what does the total fixed cost curve look like?

Accepted Answer

The total fixed cost curve is

Exam 11: Output and Costs

The long-run average cost curve is the relationship between the highest attainable average total cost and output when both the plant size and labor are varied.

The long-run average cost curve is the

-The above table shows the short-run total product schedule for the campus book store. When the fifth employee is hired, the marginal product is ________ and is ________ the average product.

Decent Donuts -Use the data in the above table and suppose that labor is the only variable factor of production. At what level of output does the marginal cost start to rise at Decent Donuts?

-The above table shows the short-run total product schedule for the campus book store. When the book store hires the 3rd employee,

"Diseconomies of scale" occur in

As output increases, total cost ________, total fixed cost ________, and total variable cost ________.

Which of the following would be classified as a fixed cost for the proprietor who owns and operates the local Texaco station?

-The above table gives some of the costs of the Delicious Pie Company. The marginal cost of increasing pie output from 200 to 300 pies equals ________ per pie.

Pat's Catering finds that when it caters 20 meals a week, its total cost is $6,000. If Pat has total variable cost of $5,000, what is Pat's total fixed cost?

In the long run, a firm can vary

The vertical distance between the average variable cost curve and the average total cost curve equals average fixed cost.

-The above table shows the short-run total product schedule for the campus book store. What is the average product (AP) of the 4th employee?

-The above table shows the short-run total product schedule for the campus book store. Which employee has the highest marginal product (MP)?

Average variable cost is at a minimum at the same amount of output at which

-In the above figure, economies of scale are present up to an output level of

If as output increases average product increases, then ________.

Which of the following would be classified as a variable cost for the local Texaco station?

When plotted against the total output, what does the total fixed cost curve look like?

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 above table shows the short-run total product schedule for the campus book store. When the fifth employee is hired, the marginal product is and is the average product.

As output increases, total cost , total fixed cost , and total variable cost .