Question 1

A firm's isocost line shifts parallel outward from the original isocost line as its

Accepted Answer

A)  total cost for capital and labor increases. 
B)  total cost for capital and labor decreases. 
C)  total cost for capital increases and its total cost for labor decreases. 
D)  total cost for capital decreases and its total cost for labor increases. 
A)  total cost for capital and labor increases. 
B)  total cost for capital and labor decreases. 
C)  total cost for capital increases and its total cost for labor decreases. 
D)  total cost for capital decreases and its total cost for labor increases.

Question 2

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 second worker is

Accepted Answer

A)  3. 
B)  4. 
C)  5. 
D)  9. 
A)  3. 
B)  4. 
C)  5. 
D)  9.

Question 3

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 $60, then the price of labor is

Accepted Answer

A)  $40. 
B)  $60. 
C)  $80. 
D)  $90. 
A)  $40. 
B)  $60. 
C)  $80. 
D)  $90.

Question 4

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

Accepted Answer

A) True 
 B)False

Question 5

If Overstock.com earns a rate of return exactly equal to what is necessary for it to continue operations, then its

Accepted Answer

A)  total revenue exceeds its economic costs. 
B)  economic costs exceed its total revenue. 
C)  normal profit is zero. 
D)  economic profit is zero. 
A)  total revenue exceeds its economic costs. 
B)  economic costs exceed its total revenue. 
C)  normal profit is zero. 
D)  economic profit is zero.

Question 6

Refer to Scenario 7.1 below to answer the question(s) that follow.
SCENARIO 7.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.
-Refer to Scenario 7.1. Your economic profit last year was

Accepted Answer

A)  -$40,000. 
B)  -$10,000. 
C)  $10,000. 
D)  $30,000. 
A)  -$40,000. 
B)  -$10,000. 
C)  $10,000. 
D)  $30,000.

Question 7

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. The Oh So Humble Bakery's economic profits are

Accepted Answer

A)  $35. 
B)  $50. 
C)  $250. 
D)  indeterminate from this information. 
A)  $35. 
B)  $50. 
C)  $250. 
D)  indeterminate from this information.

Question 8

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 20, 17, and 11 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

Accepted Answer

A)  3. 
B)  17. 
C)  37. 
D)  48. 
A)  3. 
B)  17. 
C)  37. 
D)  48.

Question 9

Use the information provided in Table 7.4 below to answer the question(s) that follow.
Table 7.4
Inputs Required to Produce a Product Using Alternative Technologies
 $$\begin{array} { c c c } 
\hline \text { Technology } & \text { Units d Capital } & \begin{array} { l } 
\text { Number of } \
\text { Employees }
\end{array} \
\hline \text { A } & 8 & 36 \
\hline \text { B } & 12 & 24 \
\hline \text { C } & 16 & 16 \
\hline \text { D } & 24 & 12 \
\hline
\end{array}$$
-Refer to Table 7.4. Which technology is the most capital intensive?

Accepted Answer

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

Question 10

When total product is maximized, marginal product

Accepted Answer

A)  and average product are zero. 
B)  is positive, but average product is zero. 
C)  is zero, but average product is positive. 
D)  and average product are positive. 
A)  and average product are zero. 
B)  is positive, but average product is zero. 
C)  is zero, but average product is positive. 
D)  and average product are positive.

Question 11

Hannah's House of Hotcakes serves 30 customers in an hour when it hires one worker. It serves 60 customers in an hour when it hires two workers. The marginal product of the second worker is ________ customers served per hour.

Accepted Answer

A)  20 
B)  30 
C)  50 
D)  67.5 
A)  20 
B)  30 
C)  50 
D)  67.5

Question 12

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 second worker is

Accepted Answer

A)  10. 
B)  16. 
C)  20. 
D)  32. 
A)  10. 
B)  16. 
C)  20. 
D)  32.

Question 13

Assume the prices of labor and capital remain the same, but the average educational level of workers decreases and therefore labor productivity decreases. This would lead a firm to

Accepted Answer

A)  use a more capital-intensive production technology. 
B)  use a more labor-intensive technology. 
C)  not change its production technology, but produce fewer units of output. 
D)  use only capital to produce the product. 
A)  use a more capital-intensive production technology. 
B)  use a more labor-intensive technology. 
C)  not change its production technology, but produce fewer units of output. 
D)  use only capital to produce the product.

Question 14

Economic profit accounts for both implicit and explicit costs.

Accepted Answer

A) True 
 B)False

Question 15

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 marginal product of the second worker is ________ yards raked.

Accepted Answer

A)  2 
B)  13.5 
C)  17 
D)  27 
A)  2 
B)  13.5 
C)  17 
D)  27

Question 16

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

Accepted Answer

A)  $50. 
B)  $100. 
C)  $250. 
D)  $350. 
A)  $50. 
B)  $100. 
C)  $250. 
D)  $350.

Question 17

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 sixth worker is

Accepted Answer

A)  -50. 
B)  -5. 
C)  5. 
D)  8.33. 
A)  -50. 
B)  -5. 
C)  5. 
D)  8.33.

Question 18

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 would shift from CD to CE if

Accepted Answer

A)  the price of capital fell. 
B)  the firm's total expenditure on inputs increased. 
C)  the price of labor fell. 
D)  either the price of labor fell or the firm's total expenditure on inputs increased. 
A)  the price of capital fell. 
B)  the firm's total expenditure on inputs increased. 
C)  the price of labor fell. 
D)  either the price of labor fell or the firm's total expenditure on inputs increased.

Question 19

Assume that capital and labor are complementary inputs. If the firm increases 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 firm's MP schedule for labor to the left. 
D)  shift the firm's 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 firm's MP schedule for labor to the left. 
D)  shift the firm's MP schedule for labor to the right.

Question 20

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. If the hourly price of labor is $10 and the hourly price of capital is $1, which production technology should be selected?

Accepted Answer

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

A firm's isocost line shifts parallel outward from the original isocost line as its

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 $60, then the price of labor is

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

If Overstock.com earns a rate of return exactly equal to what is necessary for it to continue operations, then its

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. The Oh So Humble Bakery's economic profits are

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 20, 17, and 11 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

When total product is maximized, marginal product

Hannah's House of Hotcakes serves 30 customers in an hour when it hires one worker. It serves 60 customers in an hour when it hires two workers. The marginal product of the second worker is ________ customers served per hour.

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 second worker is

Assume the prices of labor and capital remain the same, but the average educational level of workers decreases and therefore labor productivity decreases. This would lead a firm to

Economic profit accounts for both implicit and explicit costs.

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 marginal product of the second worker is ________ yards raked.

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

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 sixth worker 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. The firm's isocost line would shift from CD to CE if

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

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

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

A firm's isocost line shifts parallel outward from the original isocost line as its

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 $60, then the price of labor is

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

If Overstock.com earns a rate of return exactly equal to what is necessary for it to continue operations, then its

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. The Oh So Humble Bakery's economic profits are

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 20, 17, and 11 customers served, respectively. The total product (number of customers served) of the first two sales clerks is

When total product is maximized, marginal product

Hannah's House of Hotcakes serves 30 customers in an hour when it hires one worker. It serves 60 customers in an hour when it hires two workers. The marginal product of the second worker is ________ customers served per hour.

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 second worker is

Assume the prices of labor and capital remain the same, but the average educational level of workers decreases and therefore labor productivity decreases. This would lead a firm to

Economic profit accounts for both implicit and explicit costs.

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 marginal product of the second worker is ________ yards raked.

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

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 sixth worker 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. The firm's isocost line would shift from CD to CE if

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

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