Question 1

An example of ʺrealʺ capital is

Accepted Answer

A) shares in a corporation. 
B) corporate bonds. 
C) a firmʹs balance in a bank account. 
D) a firmʹs computer systems. 
E) a firmʹs retained earnings. 
A) shares in a corporation. 
B) corporate bonds. 
C) a firmʹs balance in a bank account. 
D) a firmʹs computer systems. 
E) a firmʹs retained earnings.

Question 2

Suppose sport-fishermen on the Campbell River in British Columbia are catching fewer fish and are having to fish many more hours to catch them.However,the total number of fish caught on the river continues to increase.The river is experiencing

Accepted Answer

A) diminishing total returns. 
B) constant marginal returns. 
C) increasing marginal returns. 
D) diminishing marginal returns. 
E) increasing average returns. 
A) diminishing total returns. 
B) constant marginal returns. 
C) increasing marginal returns. 
D) diminishing marginal returns. 
E) increasing average returns.

Question 3

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.   TABLE 7-4
-Refer to Table 7-4.The average product of labour is highest when the firm hires ________ units of labour.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) 5 
A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Question 4

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.   TABLE 7-4
-Refer to Table 7-4.Diminishing marginal productivity of labour is first observed when the firm changes the amount of labour hired from

Accepted Answer

A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units. 
A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units.

Question 5

The table below provides the total revenues and costs for a small landscaping company in a recent year.   TABLE 7-2
-Refer to Table 7-2.The accounting profits for this firm are

Accepted Answer

A) $32 300. 
B) $32 700. 
C) $63 100. 
D) $63 500. 
E) $71 500. 
A) $32 300. 
B) $32 700. 
C) $63 100. 
D) $63 500. 
E) $71 500.

Question 6

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.   TABLE 7-5
-Refer to Table 7-5.What is the average total cost of producing 30 chairs?

Accepted Answer

A) $13 
B) $14 
C) $22 
D) $23 
E) $33.67 
A) $13 
B) $14 
C) $22 
D) $23 
E) $33.67

Question 7

The period of time over which the firm can vary any of its inputs for a given production technology is called the

Accepted Answer

A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run. 
A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run.

Question 8

An example of debt financing for any form of business organization is

Accepted Answer

A) issuing new stock. 
B) buying back bonds. 
C) borrowing from a bank. 
D) using undistributed profits. 
E) buying back previously issued stock. 
A) issuing new stock. 
B) buying back bonds. 
C) borrowing from a bank. 
D) using undistributed profits. 
E) buying back previously issued stock.

Question 9

The opportunity cost of any factor of production is

Accepted Answer

A) its accounting cost. 
B) the money actually paid to the factors of production. 
C) the benefit forgone by not using it in its worst alternative. 
D) the benefit forgone by not using it in its best alternative. 
E) its explicit cost. 
A) its accounting cost. 
B) the money actually paid to the factors of production. 
C) the benefit forgone by not using it in its worst alternative. 
D) the benefit forgone by not using it in its best alternative. 
E) its explicit cost.

Question 10

The relationship between factors of production used in the production process and the resulting output is called a(n)

Accepted Answer

A) consumption possibilities boundary. 
B) economic function. 
C) production boundary. 
D) cost function. 
E) production function. 
A) consumption possibilities boundary. 
B) economic function. 
C) production boundary. 
D) cost function. 
E) production function.

Question 11

In economics,the term ʺfixed costsʺ means

Accepted Answer

A) implicit costs. 
B) opportunity costs. 
C) costs that are never accounted for. 
D) costs incurred in the past that involve no implicit costs. 
E) costs that do not vary with the level of output produced. 
A) implicit costs. 
B) opportunity costs. 
C) costs that are never accounted for. 
D) costs incurred in the past that involve no implicit costs. 
E) costs that do not vary with the level of output produced.

Question 12

A firmʹs short-run marginal cost curve is decreasing when

Accepted Answer

A) average fixed cost is increasing. 
B) total fixed cost is decreasing. 
C) marginal product is decreasing. 
D) marginal product is increasing. 
E) capacity is reached. 
A) average fixed cost is increasing. 
B) total fixed cost is decreasing. 
C) marginal product is decreasing. 
D) marginal product is increasing. 
E) capacity is reached.

Question 13

Consider a firm in the short run.If the AP curve is rising,then the MP curve

Accepted Answer

A) must lie above the average-product curve over this range and must also be rising. 
B) must lie above the average-product curve over this range. 
C) can be either above or below the average-product curve,although it must be rising over the entire range. 
D) must lie below the average-product curve over this range. 
E) must be falling. 
A) must lie above the average-product curve over this range and must also be rising. 
B) must lie above the average-product curve over this range. 
C) can be either above or below the average-product curve,although it must be rising over the entire range. 
D) must lie below the average-product curve over this range. 
E) must be falling.

Question 14

Suppose Jodiʹs widget business is using two inputs,labour and capital.If the price of labour increases,which of the following will happen?

Accepted Answer

A) Jodi will shut down her business. 
B) The firmʹs average total cost curve will shift upward. 
C) The firmʹs marginal cost curve will remain unchanged. 
D) Jodi will hire more labour. 
E) The firmʹs average fixed cost curve will shift upward. 
A) Jodi will shut down her business. 
B) The firmʹs average total cost curve will shift upward. 
C) The firmʹs marginal cost curve will remain unchanged. 
D) Jodi will hire more labour. 
E) The firmʹs average fixed cost curve will shift upward.

Question 15

When a corporation issues a bond

Accepted Answer

A) the purchaser of the bond assumes ownership rights in the corporation. 
B) it is making a promise to pay interest each year and to repay the principal at a stated time in the future. 
C) it is called equity capital. 
D) it is called financing through the stock market. 
E) it is making a promise to pay interest each year but not repay the principal. 
A) the purchaser of the bond assumes ownership rights in the corporation. 
B) it is making a promise to pay interest each year and to repay the principal at a stated time in the future. 
C) it is called equity capital. 
D) it is called financing through the stock market. 
E) it is making a promise to pay interest each year but not repay the principal.

Question 16

The period of time over which at least one factor of production is fixed is called the

Accepted Answer

A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run. 
A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run.

Question 17

Consider a firm in the short run.When the total-product curve is increasing at an increasing rate

Accepted Answer

A) average product is zero. 
B) marginal product is positive but declining. 
C) the marginal-product curve lies below the average-product curve. 
D) marginal product is positive and increasing. 
E) average product is falling. 
A) average product is zero. 
B) marginal product is positive but declining. 
C) the marginal-product curve lies below the average-product curve. 
D) marginal product is positive and increasing. 
E) average product is falling.

Question 18

The table below provides the annual revenues and costs for a family-owned firm producing catered meals.   TABLE 7-1
-Refer to Table 7-1.The explicit costs for this family-owned firm are

Accepted Answer

A) $115 000. 
B) $490 000. 
C) $500 000. 
D) $505 000. 
E) $605 000. 
A) $115 000. 
B) $490 000. 
C) $500 000. 
D) $505 000. 
E) $605 000.

Question 19

In the short run,the firmʹs product curves show

Accepted Answer

A) AP is at its minimum when MP = AP. 
B) TP is at its maximum when MP = O. 
C) TP begins to decrease when AP begins to decrease. 
D) when MP > AP,AP is decreasing. 
E) when the MP curve cuts the AP curve from below,the AP curve begins to fall. 
A) AP is at its minimum when MP = AP. 
B) TP is at its maximum when MP = O. 
C) TP begins to decrease when AP begins to decrease. 
D) when MP > AP,AP is decreasing. 
E) when the MP curve cuts the AP curve from below,the AP curve begins to fall.

Question 20

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.   TABLE 7-3
-Refer to Table 7-3.At what level of output does average total cost reach a minimum?

Accepted Answer

A) 30 
B) 90 
C) 132 
D) 150 
E) ATC declines continuously over the range of output shown. 
A) 30 
B) 90 
C) 132 
D) 150 
E) ATC declines continuously over the range of output shown.

Exam 7: Producers in the Short Run

An example of ʺrealʺ capital is

Suppose sport-fishermen on the Campbell River in British Columbia are catching fewer fish and are having to fish many more hours to catch them.However,the total number of fish caught on the river continues to increase.The river is experiencing

The table below provides the total revenues and costs for a small landscaping company in a recent year. TABLE 7-2 -Refer to Table 7-2.The accounting profits for this firm are

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars. TABLE 7-5 -Refer to Table 7-5.What is the average total cost of producing 30 chairs?

The period of time over which the firm can vary any of its inputs for a given production technology is called the

An example of debt financing for any form of business organization is

The opportunity cost of any factor of production is

The relationship between factors of production used in the production process and the resulting output is called a(n)

In economics,the term ʺfixed costsʺ means

A firmʹs short-run marginal cost curve is decreasing when

Consider a firm in the short run.If the AP curve is rising,then the MP curve

Suppose Jodiʹs widget business is using two inputs,labour and capital.If the price of labour increases,which of the following will happen?

When a corporation issues a bond

The period of time over which at least one factor of production is fixed is called the

Consider a firm in the short run.When the total-product curve is increasing at an increasing rate

The table below provides the annual revenues and costs for a family-owned firm producing catered meals. TABLE 7-1 -Refer to Table 7-1.The explicit costs for this family-owned firm are

In the short run,the firmʹs product curves show

Economic Issues and Concepts

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Demand, supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Long Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

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How Factor Markets Work

Labour Markets and Income Inequality

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

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