Question 1

If energy (E)is the only input used to produce output (Q),what is the formula for marginal product of energy?

Accepted Answer

A) Q*E 
B) Q/E 
C) ΔQ/ΔE 
D) ΔE/ΔQ 
E) E/Q 
A) Q*E 
B) Q/E 
C) ΔQ/ΔE 
D) ΔE/ΔQ 
E) E/Q

Question 2

Use the figure below to answer the following questions.
   Figure 11.3.2
-Refer to Figure 11.3.2,which illustrates the short-run average and marginal cost curves.The average variable cost curve is curve

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) none of the above. 
A) A. 
B) B. 
C) C. 
D) D. 
E) none of the above.

Question 3

The marginal cost curve slopes downward at low outputs because of ________.The marginal cost curve eventually slopes upward because of ________.

Accepted Answer

A) greater specialization and division of labour;the law of diminishing returns 
B) the law of diminishing returns;increasing average fixed cost 
C) falling average fixed cost;the law of diminishing returns 
D) the law of diminishing returns;greater specialization and division of labour 
E) greater specialization and division of labour;rising average fixed cost 
A) greater specialization and division of labour;the law of diminishing returns 
B) the law of diminishing returns;increasing average fixed cost 
C) falling average fixed cost;the law of diminishing returns 
D) the law of diminishing returns;greater specialization and division of labour 
E) greater specialization and division of labour;rising average fixed cost

Question 4

Economies of scale refer to the range of output over which

Accepted Answer

A) long-run average cost rises as output increases. 
B) marginal cost exceeds average cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour decreases. 
E) marginal product equals average product. 
A) long-run average cost rises as output increases. 
B) marginal cost exceeds average cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour decreases. 
E) marginal product equals average product.

Question 5

The marginal product of capital is the

Accepted Answer

A) change in total product resulting from a 1-unit increase in the quantity of labour employed,holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed,holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed,holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed,holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product,holding constant the quantity of labour. 
A) change in total product resulting from a 1-unit increase in the quantity of labour employed,holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed,holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed,holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed,holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product,holding constant the quantity of labour.

Question 6

Use the figure below to answer the following questions.
   Figure 11.4.2
-Refer to Figure 11.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

Accepted Answer

A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD 
E) either ATCC or ATCD 
A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD 
E) either ATCC or ATCD

Question 7

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Accepted Answer

A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant. 
A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant.

Question 8

Which of the following statements by a restaurant owner refers to the law of diminishing marginal returns?

Accepted Answer

A) "The higher the quality of the ingredients we use,the higher the cost of producing each meal." 
B) "If we double the size of our premises and double everything else - kitchen staff,serving staff,equipment - we can increase the number of meals we serve,but not to double the current levels." 
C) "We can increase the number of meals we serve by just adding more kitchen staff,but each additional worker adds less meals than the previous worker because traffic in the kitchen will get worse." 
D) "We can serve the same number of meals with fewer kitchen staff,but we would have to buy more labour-saving kitchen equipment." 
E) "We can serve the same number of meals with less kitchen equipment,but we would have to hire more kitchen staff." 
A) "The higher the quality of the ingredients we use,the higher the cost of producing each meal." 
B) "If we double the size of our premises and double everything else - kitchen staff,serving staff,equipment - we can increase the number of meals we serve,but not to double the current levels." 
C) "We can increase the number of meals we serve by just adding more kitchen staff,but each additional worker adds less meals than the previous worker because traffic in the kitchen will get worse." 
D) "We can serve the same number of meals with fewer kitchen staff,but we would have to buy more labour-saving kitchen equipment." 
E) "We can serve the same number of meals with less kitchen equipment,but we would have to hire more kitchen staff."

Question 9

The long-run average cost curve is the relationship between the lowest attainable average total cost and output,when plant size is ________ and labour is ________.The long-run average cost curve is made up of the segments of individual average ________ cost curves with the lowest average ________ cost for a given output.

Accepted Answer

A) varied;varied;variable;variable 
B) varied;varied;total;total 
C) varied;held constant;variable;variable 
D) held constant;varied;total;total 
E) held constant;varied;variable;variable 
A) varied;varied;variable;variable 
B) varied;varied;total;total 
C) varied;held constant;variable;variable 
D) held constant;varied;total;total 
E) held constant;varied;variable;variable

Question 10

Use the figure below to answer the following questions.
   Figure 11.4.4
-Refer to Figure 11.4.4,which illustrates the long-run average total cost curve.Which one of the following statements is false?

Accepted Answer

A) Economies of scale exist between 0 and Q0 units of output. 
B) Diseconomies of scale exist between 0 and Q1 units of output. 
C) Constant returns to scale exist between Q1 and Q2 units of output. 
D) Diseconomies of scale exist at quantities greater than Q2 units of output. 
E) Constant returns to scale exist between Q0 and Q1 units of output. 
A) Economies of scale exist between 0 and Q0 units of output. 
B) Diseconomies of scale exist between 0 and Q1 units of output. 
C) Constant returns to scale exist between Q1 and Q2 units of output. 
D) Diseconomies of scale exist at quantities greater than Q2 units of output. 
E) Constant returns to scale exist between Q0 and Q1 units of output.

Question 11

When the marginal product of labour is greater than the average product of labour,

Accepted Answer

A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the firm is experiencing constant returns. 
A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the firm is experiencing constant returns.

Question 12

The average product of labour is

Accepted Answer

A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the average product of labour. 
E) calculated as total product divided by the total quantity of labour employed. 
A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the average product of labour. 
E) calculated as total product divided by the total quantity of labour employed.

Question 13

Marginal cost ________.

Accepted Answer

A) is constantly increasing,but as output increases it increases by smaller and smaller amounts 
B) decreases at low outputs until it reaches its minimum value,then remains constant 
C) decreases at low outputs and increases at high outputs 
D) increases at low outputs until it reaches its maximum value,then remains constant 
E) is constantly decreasing,but as output increases it decreases by smaller and smaller amounts 
A) is constantly increasing,but as output increases it increases by smaller and smaller amounts 
B) decreases at low outputs until it reaches its minimum value,then remains constant 
C) decreases at low outputs and increases at high outputs 
D) increases at low outputs until it reaches its maximum value,then remains constant 
E) is constantly decreasing,but as output increases it decreases by smaller and smaller amounts

Question 14

The average variable cost curve will shift upward if

Accepted Answer

A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases. 
A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases.

Question 15

The marginal product of labour initially ________ and eventually ________.The average product of labour initially ________ and eventually ________.

Accepted Answer

A) increases;decreases;increases;decreases 
B) decreases;increases;decreases;increases 
C) increases;decreases;decreases;increases 
D) decreases;increases;increases;decreases 
E) increases;is constant;increases;decreases 
A) increases;decreases;increases;decreases 
B) decreases;increases;decreases;increases 
C) increases;decreases;decreases;increases 
D) decreases;increases;increases;decreases 
E) increases;is constant;increases;decreases

Question 16

Choose the correct statement.

Accepted Answer

A) The long run is a period of time in which the quantity of at least one input is fixed. 
B) The short run is a period of time in which the firm has sufficient time to change all its inputs. 
C) The long run is a time frame that lasts for 10 years. 
D) In the short run,the firm's plant is fixed. 
E) A firm always has plenty of time to make decisions about changing its inputs no matter if it is in a short run or long run position. 
A) The long run is a period of time in which the quantity of at least one input is fixed. 
B) The short run is a period of time in which the firm has sufficient time to change all its inputs. 
C) The long run is a time frame that lasts for 10 years. 
D) In the short run,the firm's plant is fixed. 
E) A firm always has plenty of time to make decisions about changing its inputs no matter if it is in a short run or long run position.

Question 17

As soon as diminishing returns set in,a firm's

Accepted Answer

A) marginal product increases. 
B) average fixed cost decreases. 
C) marginal cost decreases. 
D) marginal cost increases. 
E) total cost decreases. 
A) marginal product increases. 
B) average fixed cost decreases. 
C) marginal cost decreases. 
D) marginal cost increases. 
E) total cost decreases.

Question 18

Use the information below to answer the following questions.
Fact 11.1.1
January 31,2008: Starbucks will open 75 more stores abroad than originally predicted,for a total of 975.
February 25,2008: For three hours on Tuesday,Starbucks will shut down every single one of its 7,100 stores so that baristas can receive a refresher course.
June 2,2008: Starbucks replaces baristas with vending machines.
July 18,2008: Starbucks is closing 616 stores by the end of March.
-Refer to Fact 11.1.1.The decisions made on ________ are long-run decisions because they ________.

Accepted Answer

A) June 2;are changes to labour which affect people for the long term 
B) January 31 and July 18;change Starbucks' plant 
C) February 25,June 2,and July 18;all deal with stores located in the United States 
D) January 31 and February 25;are the earliest decisions 
E) None of the above. 
A) June 2;are changes to labour which affect people for the long term 
B) January 31 and July 18;change Starbucks' plant 
C) February 25,June 2,and July 18;all deal with stores located in the United States 
D) January 31 and February 25;are the earliest decisions 
E) None of the above.

Question 19

Use the table below to answer the following questions.
Table 11.4.1
Swanky's output levels
 $$\begin{array}{l}
\text { Labour } \quad \text { Plant Size (knitting machines) }\
\begin{array} { c c c c } 
\hline \text { (workers per day) } & 1 & 2 & 3 \
\hline 1 & 5 & 11 & 14 \
2 & 11 & 16 & 19 \
3 & 14 & 19 & 23 \
4 & 16 & 21 & 25 \
5 & 17 & 22 & 26 \
\hline
\end{array}
\end{array}$$
-Refer to Table 11.4.1,which represents Swanky's production possibilities as the firm varies the quantities of knitting machines and workers per day.If Swanky increases the number of knitting machines from 2 to 3 and increases the number of workers employed from 2 to 3,the factory experiences

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) constant marginal product. 
E) minimum efficient scale. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) constant marginal product. 
E) minimum efficient scale.

Question 20

Which one of the following statements is false?

Accepted Answer

A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost. 
A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost.

If energy (E)is the only input used to produce output (Q),what is the formula for marginal product of energy?

Use the figure below to answer the following questions. Figure 11.3.2 -Refer to Figure 11.3.2,which illustrates the short-run average and marginal cost curves.The average variable cost curve is curve

The marginal cost curve slopes downward at low outputs because of .The marginal cost curve eventually slopes upward because of .

Economies of scale refer to the range of output over which

The marginal product of capital is the

Use the figure below to answer the following questions. Figure 11.4.2 -Refer to Figure 11.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Which of the following statements by a restaurant owner refers to the law of diminishing marginal returns?

The long-run average cost curve is the relationship between the lowest attainable average total cost and output,when plant size is and labour is .The long-run average cost curve is made up of the segments of individual average cost curves with the lowest average cost for a given output.

Use the figure below to answer the following questions. Figure 11.4.4 -Refer to Figure 11.4.4,which illustrates the long-run average total cost curve.Which one of the following statements is false?

When the marginal product of labour is greater than the average product of labour,

The average product of labour is

Marginal cost ________.

The average variable cost curve will shift upward if

The marginal product of labour initially and eventually .The average product of labour initially and eventually .

Choose the correct statement.

As soon as diminishing returns set in,a firm's

Which one of the following statements is false?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 11: Output and Costs

If energy (E)is the only input used to produce output (Q),what is the formula for marginal product of energy?

Use the figure below to answer the following questions. Figure 11.3.2 -Refer to Figure 11.3.2,which illustrates the short-run average and marginal cost curves.The average variable cost curve is curve

The marginal cost curve slopes downward at low outputs because of ________.The marginal cost curve eventually slopes upward because of ________.

Economies of scale refer to the range of output over which

The marginal product of capital is the

Use the figure below to answer the following questions. Figure 11.4.2 -Refer to Figure 11.4.2,which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

Which of the following statements by a restaurant owner refers to the law of diminishing marginal returns?

Use the figure below to answer the following questions. Figure 11.4.4 -Refer to Figure 11.4.4,which illustrates the long-run average total cost curve.Which one of the following statements is false?

When the marginal product of labour is greater than the average product of labour,

The average product of labour is

Marginal cost ________.

The average variable cost curve will shift upward if

The marginal product of labour initially ________ and eventually ________.The average product of labour initially ________ and eventually ________.

Choose the correct statement.

As soon as diminishing returns set in,a firm's

Which one of the following statements is false?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

The marginal cost curve slopes downward at low outputs because of .The marginal cost curve eventually slopes upward because of .

The marginal product of labour initially and eventually .The average product of labour initially and eventually .