Question 1

One reason for diseconomies of scale is that, at very large scales, management systems can become

Accepted Answer

A)  more efficient because they can effectively manage more workers. 
B)  increasingly complex and inefficient. 
C)  more numerous than the workers they manage. 
D)  none of the above 
A)  more efficient because they can effectively manage more workers. 
B)  increasingly complex and inefficient. 
C)  more numerous than the workers they manage. 
D)  none of the above

Question 2

Output (pizzas per day)  
-Tony's Pizza's production function is shown in the table above.
a) Suppose Tony operates Plant 2. He hires 2 workers and produces 20 pizzas a day. Is the pizzeria technologically efficient? Why or why not?
b) Suppose Tony operates Plant 1. He hires 2 workers and produces 18 pizzas per day. Is Tony's Pizza technologically efficient? Why or why not? Can Tony increase production to 22 pizzas a day in the short run? If yes, how?
c) Suppose Tony operates Plant 3. What is the marginal product of labor when the fourth worker is hired? When operating Plant 3, does Tony experience diminishing marginal returns? Explain.
d) Suppose Tony currently uses Plant 3. Can he increase production from 40 to 50 pizzas per day in the short run? In the long run? If yes, how?

Accepted Answer

a) The firm is not technologically effic

Question 3

-The above (incomplete) table provides information about the relationships between output and various cost measures. The marginal cost per unit when increasing output from 14 to 17 units is

Accepted Answer

A)  $20. 
B)  $30. 
C)  $380. 
D)  None of the above answers is correct. 
A)  $20. 
B)  $30. 
C)  $380. 
D)  None of the above answers is correct.

Question 4

Average variable cost is equal to

Accepted Answer

A)  average total cost minus average fixed cost. 
B)  average total cost multiplied by output. 
C)  total cost divided by output. 
D)  the change in total cost divided by the change in output. 
A)  average total cost minus average fixed cost. 
B)  average total cost multiplied by output. 
C)  total cost divided by output. 
D)  the change in total cost divided by the change in output.

Question 5

The term "fixed cost" refers to the cost a firm incurs to produce a specific fixed quantity of output.

Accepted Answer

A) True 
 B)False

Question 6

If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________.

Accepted Answer

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

Question 7

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

Accepted Answer

The long-run average cost curv

Question 8

The average product of labor is equal to the

Accepted Answer

A)  total product divided by the total number of workers hired. 
B)  total number of workers hired divided by the total product. 
C)  slope of the marginal product of labor curve. 
D)  Both answers B and C are correct. 
A)  total product divided by the total number of workers hired. 
B)  total number of workers hired divided by the total product. 
C)  slope of the marginal product of labor curve. 
D)  Both answers B and C are correct.

Question 9

Health care costs are expected to rise more than 10 percent into 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a fixed cost in a hospital?

Accepted Answer

A)  An MRI machine 
B)  Bandages 
C)  Nurses 
D)  Syringes 
A)  An MRI machine 
B)  Bandages 
C)  Nurses 
D)  Syringes

Question 10

-In the figure above, curve B is the ________ curve.

Accepted Answer

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

Question 11

-In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

Accepted Answer

A)  68 
B)  70 
C)  72 
D)  76 
A)  68 
B)  70 
C)  72 
D)  76

Question 12

-In the figure above, curve A is the ________ curve.

Accepted Answer

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

Question 13

-Cindy's Sweaters' production function is shown in the above table. What is the marginal product of labor when the 4th worker is hired?

Accepted Answer

A)  4 sweaters per day 
B)  2 sweaters per day 
C)  20 sweaters per day 
D)  5 sweaters per day 
A)  4 sweaters per day 
B)  2 sweaters per day 
C)  20 sweaters per day 
D)  5 sweaters per day

Question 14

Based on the above figure, for which of the following levels of output at Ike's Ice Cream Kitchen does the marginal product of labor exceed the average product of labor?

Accepted Answer

A)  at 10 gallons 
B)  at 40 gallons 
C)  at 70 gallons 
D)  all of the above 
A)  at 10 gallons 
B)  at 40 gallons 
C)  at 70 gallons 
D)  all of the above

Question 15

Total Product, Marginal Product, Average Product  
-In the above table, the average product of three workers is

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 16

In the above figure, the average product of labor at point c is

Accepted Answer

A)  10. 
B)  5. 
C)  2. 
D)  None of the above answers is correct. 
A)  10. 
B)  5. 
C)  2. 
D)  None of the above answers is correct.

Question 17

Diminishing marginal returns and diseconomies of scale are two different names for the same thing.

Accepted Answer

A) True 
 B)False

Question 18

At point d in the above figure, the average product of labor equals

Accepted Answer

A)  15. 
B)  4. 
C)  3.75. 
D)  approximately 1. 
A)  15. 
B)  4. 
C)  3.75. 
D)  approximately 1.

Question 19

Economies of scale refer to

Accepted Answer

A)  the point at which marginal cost equals average cost. 
B)  the fact that in the long run, fixed costs remain constant as output increases. 
C)  the range of output over which the long-run average cost falls as output increases. 
D)  a feature of short-run production functions but not long-run production functions. 
A)  the point at which marginal cost equals average cost. 
B)  the fact that in the long run, fixed costs remain constant as output increases. 
C)  the range of output over which the long-run average cost falls as output increases. 
D)  a feature of short-run production functions but not long-run production functions.

Question 20

Cost schedule  
-Using the data in the above table, the average fixed cost of producing 9 units per day is

Accepted Answer

A)  $2.22. 
B)  $5.00. 
C)  $5.55. 
D)  $20.00. 
A)  $2.22. 
B)  $5.00. 
C)  $5.55. 
D)  $20.00.

Exam 11: Output and Costs

One reason for diseconomies of scale is that, at very large scales, management systems can become

-The above (incomplete) table provides information about the relationships between output and various cost measures. The marginal cost per unit when increasing output from 14 to 17 units is

Average variable cost is equal to

The term "fixed cost" refers to the cost a firm incurs to produce a specific fixed quantity of output.

If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________.

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

The average product of labor is equal to the

Health care costs are expected to rise more than 10 percent into 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a fixed cost in a hospital?

-In the figure above, curve B is the ________ curve.

-In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

-In the figure above, curve A is the ________ curve.

-Cindy's Sweaters' production function is shown in the above table. What is the marginal product of labor when the 4th worker is hired?

Based on the above figure, for which of the following levels of output at Ike's Ice Cream Kitchen does the marginal product of labor exceed the average product of labor?

Total Product, Marginal Product, Average Product -In the above table, the average product of three workers is

In the above figure, the average product of labor at point c is

Diminishing marginal returns and diseconomies of scale are two different names for the same thing.

At point d in the above figure, the average product of labor equals

Economies of scale refer to

Cost schedule -Using the data in the above table, the average fixed cost of producing 9 units per day is

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 is less than average variable cost and output increases, average total cost and average variable cost .