Question 1

In the figure above,the wage rate is $600 and total fixed cost is $15,000.When there are 40 workers,what is average variable cost?

Accepted Answer

A) $0.23 
B) $5.00 
C) $4.10 
D) $6.00 
E) $12.00 
A) $0.23 
B) $5.00 
C) $4.10 
D) $6.00 
E) $12.00

Question 2

If marginal product is decreasing,then it must be the case that

Accepted Answer

A) average product is decreasing. 
B) average product is greater than marginal product. 
C) average product is less than marginal product. 
D) both a and c 
E) none of the above. 
A) average product is decreasing. 
B) average product is greater than marginal product. 
C) average product is less than marginal product. 
D) both a and c 
E) none of the above.

Question 3

A fixed cost is

Accepted Answer

A) the cost of any input with a fixed price per unit. 
B) a cost which increases in a fixed proportion as output increases. 
C) a cost that does not vary with output and the firm must pay it even if output is zero. 
D) a cost that does not vary with output but the firm can avoid paying it if output is zero. 
A) the cost of any input with a fixed price per unit. 
B) a cost which increases in a fixed proportion as output increases. 
C) a cost that does not vary with output and the firm must pay it even if output is zero. 
D) a cost that does not vary with output but the firm can avoid paying it if output is zero.

Question 4

If a firm is producing a given level of output in an economically efficient manner,then it must be the case that

Accepted Answer

A) this is the lowest cost method of producing that output. 
B) each input is producing its maximum marginal product. 
C) this output level is the most that can be produced with the given level of inputs. 
D) both a and c 
E) none of the above 
A) this is the lowest cost method of producing that output. 
B) each input is producing its maximum marginal product. 
C) this output level is the most that can be produced with the given level of inputs. 
D) both a and c 
E) none of the above

Question 5

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average} \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,if the firm produces 20 units of output,what is average fixed cost?

Accepted Answer

A) $1.50 
B) $50 
C) $150 
D) $600 
E) none of the above 
A) $1.50 
B) $50 
C) $150 
D) $600 
E) none of the above

Question 6

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.   When the firm uses 120 units of labor,how much output does it produce?

Accepted Answer

A) 7,000 units 
B) 70 units 
C) 8,400 units 
D) 9,200 units 
E) 7,500 units 
A) 7,000 units 
B) 70 units 
C) 8,400 units 
D) 9,200 units 
E) 7,500 units

Question 7

production function measures the relation between

Accepted Answer

A) input prices and output prices. 
B) the quantity of inputs and the quantity of output. 
C) input prices and the quantity of output. 
D) the quantity of inputs and input prices. 
E) none of the above 
A) input prices and output prices. 
B) the quantity of inputs and the quantity of output. 
C) input prices and the quantity of output. 
D) the quantity of inputs and input prices. 
E) none of the above

Question 8

Based on the following table,what is average fixed cost when 150 units of output are produced? $\begin{array}{llcc}
  \text {  Output} & \text { Total Cost }  \
0 &\$300\
50&800\
100&1050\
150 &1650\
200 &2400\
\end{array}$

Accepted Answer

A) $2 
B) $9 
C) $11 
D) $16.50 
E) none of the above 
A) $2 
B) $9 
C) $11 
D) $16.50 
E) none of the above

Question 9

For a short-run production function in which output is determined by the number of workers utilized (capital stock held constant),which of the following is FALSE?

Accepted Answer

A) In general,when there are few workers the marginal product of labor will be increasing. 
B) When the marginal product of labor is negative,total product is falling. 
C) To determine the marginal product of labor,the capital stock must be held constant. 
D) When diminishing returns set in,adding one more worker decreases output. 
E) none of the above 
A) In general,when there are few workers the marginal product of labor will be increasing. 
B) When the marginal product of labor is negative,total product is falling. 
C) To determine the marginal product of labor,the capital stock must be held constant. 
D) When diminishing returns set in,adding one more worker decreases output. 
E) none of the above

Question 10

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital. $$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Units of Capital }\
\begin{array} { c c c c c c } 
& & 1 & 2 & 3 & 4 \
 & 1 & 20 & 36 & 48 & 53 \
\text { Units } & 2 & 38 & 68 & 88 & 94 \
\text { of } & 3 & 53 & 94 & 122 & 133 \
\text { Iabar } & 4 & 63 & 112 & 148 & 164 \
& 5 & 68 & 120 & 164 & 184
\end{array}
\end{array}$$ Which of the following input combinations can produce the same level of output?

Accepted Answer

A) 4K,2L and 3K,2L 
B) 3K,2L and 2K,3L 
C) 2K,3L and 4K,2L 
D) all of the above 
A) 4K,2L and 3K,2L 
B) 3K,2L and 2K,3L 
C) 2K,3L and 4K,2L 
D) all of the above

Question 11

-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At its minimum value,average variable cost is $__________.

Accepted Answer

A) $1,000/2,025 
B) $1,000/1,925 
C) $1,000/1,800 
D) $1,000/825 
E) none of the above 
A) $1,000/2,025 
B) $1,000/1,925 
C) $1,000/1,800 
D) $1,000/825 
E) none of the above

Question 12

Given the table below,how much does the 13th worker add to total output? $\begin{array}{cccc}
\begin{array}{c}
\text { Number of } \
\text { Workers }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Product }
\end{array} & \begin{array}{c}
\text { Average } \
\text { Product }
\end{array} & \begin{array}{c}
\text { Morginal } \
\text { Product }
\end{array} \
\hline 5 & -&28 & -\
10 & - & - & 30 \
15 & 420 & - &- \
20 & -& -&22 \
\hline
\end{array}$

Accepted Answer

A) 28 units 
B) 29 units 
C) 130 units 
D) 420 units 
E) none of the above 
A) 28 units 
B) 29 units 
C) 130 units 
D) 420 units 
E) none of the above

Question 13

In the above figure,what is the AVERAGE total cost of producing 10 units of output?

Accepted Answer

A) $4 
B) $8 
C) $12 
D) $50 
E) $360 
A) $4 
B) $8 
C) $12 
D) $50 
E) $360

Question 14

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,how much does the 23rd unit of output add to the firm's total cost?

Accepted Answer

A) $75 
B) $135 
C) $750 
D) $1,350 
E) none of the above 
A) $75 
B) $135 
C) $750 
D) $1,350 
E) none of the above

Question 15

If a firm is producing a given level of output in a technically efficient manner,then it must be the case that

Accepted Answer

A) this is the lowest cost method of producing that output. 
B) each input is producing its maximum marginal product. 
C) this output level is the most that can be produced with the given levels of inputs. 
D) both a and c 
E) all of the above 
A) this is the lowest cost method of producing that output. 
B) each input is producing its maximum marginal product. 
C) this output level is the most that can be produced with the given levels of inputs. 
D) both a and c 
E) all of the above

Question 16

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily."
Today,at the Huffy bicycle factory,

Accepted Answer

A) the total product is 15,000 bicycles per day. 
B) the marginal product of labor is 10 additional bicycles per additional employee. 
C) the average product of labor is 8.8 bicycles per employees. 
D) both a and b 
E) both a and c 
A) the total product is 15,000 bicycles per day. 
B) the marginal product of labor is 10 additional bicycles per additional employee. 
C) the average product of labor is 8.8 bicycles per employees. 
D) both a and b 
E) both a and c

Question 17

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.When the firm uses 6 units of labor,what is marginal cost?

Accepted Answer

A) $0.25 
B) $5 
C) $6.67 
D) $7.06 
E) $10.25 
A) $0.25 
B) $5 
C) $6.67 
D) $7.06 
E) $10.25

Question 18

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. $$\begin{array} { c c } 
\text { Units of } & \text { Units of } \
\text { Labor } & \text { Output } \
\hline 5 & 40 \
10 & 100 \
15 & 180 \
20 & 220
\end{array}$$ If the firm produces 40 units of output,what is average fixed cost?

Accepted Answer

A) $7.50 
B) $25 
C) $120 
D) $600 
E) none of the above 
A) $7.50 
B) $25 
C) $120 
D) $600 
E) none of the above

Question 19

Based on the following table,the additional cost of producing the 60th unit of output is: $\begin{array}{llcc}
  \text {  Output} & \text { Total Cost }  \
0 &\$300\
50&800\
100&1050\
150 &1650\
200 &2400\
\end{array}$

Accepted Answer

A) $5 
B) $250 
C) $8 
D) $120 
E) $80 
A) $5 
B) $250 
C) $8 
D) $120 
E) $80

Question 20

Given the table below,if capital is fixed at two units,what is the marginal product of the fourth unit of labor? $$\begin{array}{l}
\quad\quad\quad\quad\quad\text { Units of Capital }\
\begin{array} { c c c c c } 
\hline & & 1 & 2 & 3 \
\text { Units } & 1 & 80 & 100 & 120 \
\text { of } & 2 & 180 & 220 & 260 \
\text { Labor } & 3 & 270 & 330 & 390 \
& 4 & 340 & 420 & 500 \
& 5 & 390 & 490 & 590 \
& 6 & 410 & 530 & 650
\end{array}
\end{array}$$ Amount of total output produced from various combinations of labor and capital.

Accepted Answer

A) 60 
B) 80 
C) 100 
D) 420 
E) none of the above 
A) 60 
B) 80 
C) 100 
D) 420 
E) none of the above

In the figure above,the wage rate is $600 and total fixed cost is $15,000.When there are 40 workers,what is average variable cost?

If marginal product is decreasing,then it must be the case that

A fixed cost is

If a firm is producing a given level of output in an economically efficient manner,then it must be the case that

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. Output Average Variable Cost 10 \ 40 20 30 30 45 40 60 Given the above,if the firm produces 20 units of output,what is average fixed cost?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,how much output does it produce?

production function measures the relation between

Based on the following table,what is average fixed cost when 150 units of output are produced? Output Total Cost 0 \3 00 50 800 100 1050 150 1650 200 2400

For a short-run production function in which output is determined by the number of workers utilized (capital stock held constant),which of the following is FALSE?

-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At its minimum value,average variable cost is $__________.

Given the table below,how much does the 13th worker add to total output? Number of Workers Total Product Average Product Morginal Product 5 - 28 - 10 - - 30 15 420 - - 20 - - 22

In the above figure,what is the AVERAGE total cost of producing 10 units of output?

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. Output Average Variable Cost 10 \ 40 20 30 30 45 40 60 Given the above,how much does the 23rd unit of output add to the firm's total cost?

If a firm is producing a given level of output in a technically efficient manner,then it must be the case that

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily." Today,at the Huffy bicycle factory,

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.When the firm uses 6 units of labor,what is marginal cost?

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. Units of Units of Labor Output 5 40 10 100 15 180 20 220 If the firm produces 40 units of output,what is average fixed cost?

Based on the following table,the additional cost of producing the 60th unit of output is: Output Total Cost 0 \3 00 50 800 100 1050 150 1650 200 2400

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 8: Production and Cost in the Short Run

In the figure above,the wage rate is $600 and total fixed cost is $15,000.When there are 40 workers,what is average variable cost?

If marginal product is decreasing,then it must be the case that

A fixed cost is

If a firm is producing a given level of output in an economically efficient manner,then it must be the case that

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. Output Average Variable Cost 10 \ 40 20 30 30 45 40 60 Given the above,if the firm produces 20 units of output,what is average fixed cost?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,how much output does it produce?

production function measures the relation between

Based on the following table,what is average fixed cost when 150 units of output are produced? Output Total Cost 0 \3 00 50 800 100 1050 150 1650 200 2400

For a short-run production function in which output is determined by the number of workers utilized (capital stock held constant),which of the following is FALSE?

-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At its minimum value,average variable cost is $__________.

Given the table below,how much does the 13th worker add to total output? Number of Workers Total Product Average Product Morginal Product 5 - 28 - 10 - - 30 15 420 - - 20 - - 22

In the above figure,what is the AVERAGE total cost of producing 10 units of output?

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. Output Average Variable Cost 10 \ 40 20 30 30 45 40 60 Given the above,how much does the 23rd unit of output add to the firm's total cost?

If a firm is producing a given level of output in a technically efficient manner,then it must be the case that

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily." Today,at the Huffy bicycle factory,

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.When the firm uses 6 units of labor,what is marginal cost?

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. Units of Units of Labor Output 5 40 10 100 15 180 20 220 If the firm produces 40 units of output,what is average fixed cost?

Based on the following table,the additional cost of producing the 60th unit of output is: Output Total Cost 0 \3 00 50 800 100 1050 150 1650 200 2400

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters