Question 1

If the marginal product of labor is greater than the average product of labor, then the

Accepted Answer

A)  marginal product must be increasing. 
B)  average product must be increasing. 
C)  marginal product must be decreasing. 
D)  average product must be decreasing. 
A)  marginal product must be increasing. 
B)  average product must be increasing. 
C)  marginal product must be decreasing. 
D)  average product must be decreasing.

Question 2

Refer to the information provided in Figure 7.7 below to answer the question(s) that follow.   Figure 7.7
-Refer to Figure 7.7 above. If Roller Skates Unlimited moves from isoquant A to isoquant B, the number of roller skates produced

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains constant, but Roller Skates Unlimited uses more capital and more labor. 
D)  remains constant, but input prices have risen. 
A)  decreases. 
B)  increases. 
C)  remains constant, but Roller Skates Unlimited uses more capital and more labor. 
D)  remains constant, but input prices have risen.

Question 3

If the marginal product of labor is less than the average product of labor, then the

Accepted Answer

A)  marginal product must be increasing. 
B)  average product must be decreasing. 
C)  marginal product must be decreasing. 
D)  Both B and C 
A)  marginal product must be increasing. 
B)  average product must be decreasing. 
C)  marginal product must be decreasing. 
D)  Both B and C

Question 4

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 average product of four workers is

Accepted Answer

A)  2. 
B)  12.5. 
C)  20. 
D)  34. 
A)  2. 
B)  12.5. 
C)  20. 
D)  34.

Question 5

A graph showing ________ is an isoquant.

Accepted Answer

A)  all combinations of capital and labor that have the same total cost 
B)  all combinations of capital and labor that a firm can use to produce a given amount of output 
C)  all combinations of products desired by consumers 
D)  all combinations of products that yield the same total utility 
A)  all combinations of capital and labor that have the same total cost 
B)  all combinations of capital and labor that a firm can use to produce a given amount of output 
C)  all combinations of products desired by consumers 
D)  all combinations of products that yield the same total utility

Question 6

The Sweet Success Bakery sells 800 cakes at a price of $20 per cake. Its total economic costs for producing 800 cakes are $4,800. The Sweet Success Bakery's economic profits are

Accepted Answer

A)  $4,800. 
B)  $11,200. 
C)  $16,000. 
D)  indeterminate from this information. 
A)  $4,800. 
B)  $11,200. 
C)  $16,000. 
D)  indeterminate from this information.

Question 7

One worker produces 10 rocking chairs. If diminishing returns have already set in, a firm will need to hire more than two workers to produce 20 rocking chairs.

Accepted Answer

A) True 
 B)False

Question 8

The specific technology chosen by a profit-maximizing clothing manufacturer depends on

Accepted Answer

A)  input prices. 
B)  output prices. 
C)  demand for the output. 
D)  supply of the output. 
A)  input prices. 
B)  output prices. 
C)  demand for the output. 
D)  supply of the output.

Question 9

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 labor is $42, then the price of capital is

Accepted Answer

A)  $21. 
B)  $42. 
C)  $63. 
D)  $84. 
A)  $21. 
B)  $42. 
C)  $63. 
D)  $84.

Question 10

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. If the price of capital is $30, then along isocost line AB total cost is

Accepted Answer

A)  $1,200. 
B)  $1,800. 
C)  $2,400. 
D)  indeterminate from this information, as the price of labor is not given. 
A)  $1,200. 
B)  $1,800. 
C)  $2,400. 
D)  indeterminate from this information, as the price of labor is not given.

Question 11

The rate of return on capital that is just sufficient to keep owners and investors satisfied is called

Accepted Answer

A)  economic profit. 
B)  a minimum efficient scale. 
C)  the price-earnings ratio. 
D)  a normal rate of return. 
A)  economic profit. 
B)  a minimum efficient scale. 
C)  the price-earnings ratio. 
D)  a normal rate of return.

Question 12

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 labor intensive?

Accepted Answer

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

Question 13

Assume that capital and labor are complementary inputs. If the firm decreases the amount of capital it employs, this would

Accepted Answer

A)  cause the firm to move down along the MP schedule for labor. 
B)  cause the firm to move up along its MP schedule for labor. 
C)  shift the firmʹs MP schedule for labor to the left. 
D)  shift the firmʹs MP schedule for labor to the right. 
A)  cause the firm to move down along the MP schedule for labor. 
B)  cause the firm to move up along its MP schedule for labor. 
C)  shift the firmʹs MP schedule for labor to the left. 
D)  shift the firmʹs MP schedule for labor to the right.

Question 14

Firms in an economy with high labor costs have an incentive to use more ________ techniques.

Accepted Answer

A)  labor-intensive 
B)  capital-intensive 
C)  capital-saving 
D)  labor-dependent 
A)  labor-intensive 
B)  capital-intensive 
C)  capital-saving 
D)  labor-dependent

Question 15

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 is currently along isocost CE. If the price of labor is $24, then the price of labor is

Accepted Answer

A)  $16. 
B)  $24. 
C)  $36. 
D)  $80. 
A)  $16. 
B)  $24. 
C)  $36. 
D)  $80.

Question 16

For a firm, its economic profit is usually greater than its accounting profit.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the information provided in Figure 7.2 below to answer the question(s) that follow.   Figure 7.2
-Refer to Figure 7.2. The marginal product of the first worker is ________ lawns moved.

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  11 
A)  3 
B)  4 
C)  5 
D)  11

Question 18

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 most labor intensive?

Accepted Answer

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

Question 19

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 average product with five workers is

Accepted Answer

A)  1. 
B)  2.5. 
C)  5. 
D)  11. 
A)  1. 
B)  2.5. 
C)  5. 
D)  11.

Question 20

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow.   Figure 7.10
-Refer to Figure 7.10. At Point A the absolute value of the slope of the q1 = 100 isoquant is

Accepted Answer

A)  less than 2. 
B)  exactly equal to 2. 
C)  greater than 2. 
D)  indeterminate from this information. 
A)  less than 2. 
B)  exactly equal to 2. 
C)  greater than 2. 
D)  indeterminate from this information.

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

If the marginal product of labor is greater than the average product of labor, then the

Refer to the information provided in Figure 7.7 below to answer the question(s) that follow. Figure 7.7 -Refer to Figure 7.7 above. If Roller Skates Unlimited moves from isoquant A to isoquant B, the number of roller skates produced

If the marginal product of labor is less than the average product of labor, then the

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 average product of four workers is

A graph showing ________ is an isoquant.

The Sweet Success Bakery sells 800 cakes at a price of $20 per cake. Its total economic costs for producing 800 cakes are $4,800. The Sweet Success Bakery's economic profits are

One worker produces 10 rocking chairs. If diminishing returns have already set in, a firm will need to hire more than two workers to produce 20 rocking chairs.

The specific technology chosen by a profit-maximizing clothing manufacturer depends on

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 labor is $42, then the price of capital is

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. If the price of capital is $30, then along isocost line AB total cost is

The rate of return on capital that is just sufficient to keep owners and investors satisfied is called

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 Technology Units of Capital Number of Employees A 16 8 B 12 12 C 8 20 D 6 24 -Refer to Table 7.2. Which technology is the least labor intensive?

Assume that capital and labor are complementary inputs. If the firm decreases the amount of capital it employs, this would

Firms in an economy with high labor costs have an incentive to use more ________ techniques.

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 is currently along isocost CE. If the price of labor is $24, then the price of labor is

For a firm, its economic profit is usually greater than its accounting profit.

Refer to the information provided in Figure 7.2 below to answer the question(s) that follow. Figure 7.2 -Refer to Figure 7.2. The marginal product of the first worker is ________ lawns moved.

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 Technology Units of Capital Number of Employees A 16 8 B 12 12 C 8 20 D 6 24 -Refer to Table 7.2. Which technology is the most labor intensive?

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 average product with five workers is

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10 -Refer to Figure 7.10. At Point A the absolute value of the slope of the q1 = 100 isoquant is

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

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10 -Refer to Figure 7.10. At Point A the absolute value of the slope of the q¹ = 100 isoquant is