Question 1

If labor is a variable input in production, the law of diminishing marginal returns implies that in the short run

Accepted Answer

A)  labor's marginal product is constant. 
B)  labor's marginal product decreases after a certain point. 
C)  total product is negative. 
D)  total product is negative after a certain point has been reached. 
A)  labor's marginal product is constant. 
B)  labor's marginal product decreases after a certain point. 
C)  total product is negative. 
D)  total product is negative after a certain point has been reached.

Question 2

The marginal products of the first, second, and third workers are 50, 34, and 22, respectively. If four workers can produce 116 units of output, then the marginal product of the fourth worker is

Accepted Answer

A)  10. 
B)  12. 
C)  22. 
D)  116. 
A)  10. 
B)  12. 
C)  22. 
D)  116.

Question 3

Refer to Scenario 7.5 below to answer the question(s) that follow.
SCENARIO 7.5: You own and are the only employee of a company that customizes bicycles.
Last year your total revenue was $60,000. Your costs for rent and supplies were $25,000.
To start this business you invested an amount of your own capital that could pay you a $45,000 a year return.
-Refer to Scenario 7.5. Your accounting profit last year was

Accepted Answer

A)  -$10,000. 
B)  $15,000. 
C)  $35,000. 
D)  $60,000. 
A)  -$10,000. 
B)  $15,000. 
C)  $35,000. 
D)  $60,000.

Question 4

Refer to Scenario 7.8 below to answer the question(s) that follow.
SCENARIO 7.8: A swimming pool cleaning company has the following production possibilities. With one, two, three, and four workers, the company can clean 5, 12, 17, and 20 pools per day, respectively.
-Refer to Scenario 7.8. Diminishing returns to labor set in with the ________ worker.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth 
A)  first 
B)  second 
C)  third 
D)  fourth

Question 5

Refer to the information provided in Figure 7.9 below to answer the question(s) that follow.   Figure 7.9
-Refer to Figure 7.9. The firm is currently along isocost CD. If the price of capital is $30, then the price of labor is

Accepted Answer

A)  $4. 
B)  $30. 
C)  $180. 
D)  indeterminate from this information. 
A)  $4. 
B)  $30. 
C)  $180. 
D)  indeterminate from this information.

Question 6

The formula Δq/ΔL represents

Accepted Answer

A)  total product. 
B)  the average product of labor. 
C)  the capital-to-labor ratio. 
D)  the marginal product of labor. 
A)  total product. 
B)  the average product of labor. 
C)  the capital-to-labor ratio. 
D)  the marginal product of labor.

Question 7

The slope of the ________ is -MPL/MPK.

Accepted Answer

A)  isoquant 
B)  total utility curve 
C)  isocost line 
D)  marginal utility curve 
A)  isoquant 
B)  total utility curve 
C)  isocost line 
D)  marginal utility curve

Question 8

In the short run, firms can enter an industry but not exit an industry.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow.   Figure 7.11
-Refer to Figure 7.11. At Point C, the slope of isoquant q2 = 200 is

Accepted Answer

A)  -2. 
B)  -1/2. 
C)  -1. 
D)  indeterminate from this information. 
A)  -2. 
B)  -1/2. 
C)  -1. 
D)  indeterminate from this information.

Question 10

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.

Accepted Answer

A)  40; 20 
B)  20; 100 
C)  13.33; 6.67 
D)  120; 100 
A)  40; 20 
B)  20; 100 
C)  13.33; 6.67 
D)  120; 100

Question 11

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow.   Figure 7.4
-Refer to Figure 7.4. The marginal product of the fifth worker is

Accepted Answer

A)  0. 
B)  5. 
C)  11. 
D)  55. 
A)  0. 
B)  5. 
C)  11. 
D)  55.

Question 12

Related to the Economics in Practice on page 155: Suppose you own a truck and use it to deliver merchandise to retailers and hire a driver to make such deliveries. At higher rates of speed the truck gets fewer miles per gallon of gas. Holding all else constant, as the price of gasoline continues to rise

Accepted Answer

A)  you will instruct your driver to drive faster. 
B)  you will instruct your driver to drive slower. 
C)  you will ask your driver to change their driving in any way. 
D)  you will make more deliveries to cover the increasing cost of fuel. 
A)  you will instruct your driver to drive faster. 
B)  you will instruct your driver to drive slower. 
C)  you will ask your driver to change their driving in any way. 
D)  you will make more deliveries to cover the increasing cost of fuel.

Question 13

Firms make decisions with the goal of maximizing total revenue.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow.   Figure 7.8
-Refer to Figure 7.8 The firm's isocost line could shift from AB to CD if

Accepted Answer

A)  the price of capital increased. 
B)  the firm's total expenditures decreased by 25%. 
C)  the price of capital and labor each decreased by 33%. 
D)  the firm's total expenditures increased by 33% or the price of capital and labor each decreased by 25%. 
A)  the price of capital increased. 
B)  the firm's total expenditures decreased by 25%. 
C)  the price of capital and labor each decreased by 33%. 
D)  the firm's total expenditures increased by 33% or the price of capital and labor each decreased by 25%.

Question 15

The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is

Accepted Answer

A)  -$100. 
B)  $3,500. 
C)  $4,500. 
D)  indeterminate from this information. 
A)  -$100. 
B)  $3,500. 
C)  $4,500. 
D)  indeterminate from this information.

Question 16

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 30, 27, and 21 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

Accepted Answer

A)  6. 
B)  17. 
C)  57. 
D)  78. 
A)  6. 
B)  17. 
C)  57. 
D)  78.

Question 17

Refer to the information provided in Figure 7.3 below to answer the question(s) that follow.   Figure 7.3
-Refer to Figure 7.3. The average product with two workers is ________ yards raked.

Accepted Answer

A)  4 
B)  13.5 
C)  14 
D)  27 
A)  4 
B)  13.5 
C)  14 
D)  27

Question 18

You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?

Accepted Answer

A)  18% 
B)  Less than 18% 
C)  Above 18% 
D)  The rate on government bonds 
A)  18% 
B)  Less than 18% 
C)  Above 18% 
D)  The rate on government bonds

Question 19

Use the information provided in Table 7.2 below to answer the question(s) that follow. 
Inputs Required to Produce a Product Using Alternative Technologies
$\begin{array} { c c c } 
\hline \text { Technology } & \text { Units of Capital } & \text { Number of Employees } \
\hline \text { A } & 16 & 8 \
\text { B } & 12 & 12 \
\text { C } & 8 & 20 \
\text { D } & 6 & 24 \
\hline
\end{array}$

-Refer to Table 7.2. Which technology is the least capital intensive?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

Refer to Scenario 7.7 below to answer the question(s) that follow.
SCENARIO 7.7: A lawn service company has the following production possibilities. With one, two, three, and four workers, the company can mow 4, 9, 12, and 14 lawns per day, respectively.
-Refer to Scenario 7.7. The marginal product of the fourth worker is

Accepted Answer

A)  2. 
B)  3. 
C)  12. 
D)  14. 
A)  2. 
B)  3. 
C)  12. 
D)  14.

If labor is a variable input in production, the law of diminishing marginal returns implies that in the short run

The marginal products of the first, second, and third workers are 50, 34, and 22, respectively. If four workers can produce 116 units of output, then the marginal product of the fourth worker is

Refer to the information provided in Figure 7.9 below to answer the question(s) that follow. Figure 7.9 -Refer to Figure 7.9. The firm is currently along isocost CD. If the price of capital is $30, then the price of labor is

The formula Δq/ΔL represents

The slope of the ________ is -MP_L/MP_K.

In the short run, firms can enter an industry but not exit an industry.

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow. Figure 7.11 -Refer to Figure 7.11. At Point C, the slope of isoquant q² = 200 is

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is , and the marginal product of the third worker is .

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow. Figure 7.4 -Refer to Figure 7.4. The marginal product of the fifth worker is

Firms make decisions with the goal of maximizing total revenue.

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8 The firm's isocost line could shift from AB to CD if

The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 30, 27, and 21 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

Refer to the information provided in Figure 7.3 below to answer the question(s) that follow. Figure 7.3 -Refer to Figure 7.3. The average product with two workers is ________ yards raked.

You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 7: The Production Process: the Behavior of Profit-Maximizing Firms

If labor is a variable input in production, the law of diminishing marginal returns implies that in the short run

The marginal products of the first, second, and third workers are 50, 34, and 22, respectively. If four workers can produce 116 units of output, then the marginal product of the fourth worker is

Refer to the information provided in Figure 7.9 below to answer the question(s) that follow. Figure 7.9 -Refer to Figure 7.9. The firm is currently along isocost CD. If the price of capital is $30, then the price of labor is

The formula Δq/ΔL represents

The slope of the ________ is -MPL/MPK.

In the short run, firms can enter an industry but not exit an industry.

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow. Figure 7.11 -Refer to Figure 7.11. At Point C, the slope of isoquant q2 = 200 is

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow. Figure 7.4 -Refer to Figure 7.4. The marginal product of the fifth worker is

Firms make decisions with the goal of maximizing total revenue.

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8 The firm's isocost line could shift from AB to CD if

The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 30, 27, and 21 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

Refer to the information provided in Figure 7.3 below to answer the question(s) that follow. Figure 7.3 -Refer to Figure 7.3. The average product with two workers is ________ yards raked.

You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

The slope of the ________ is -MP_L/MP_K.

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow. Figure 7.11 -Refer to Figure 7.11. At Point C, the slope of isoquant q² = 200 is

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is , and the marginal product of the third worker is .