Question 1

Other things being equal, when average productivity falls:

Accepted Answer

A)  average fixed cost must rise. 
B)  marginal cost must rise. 
C)  average total cost must rise. 
D)  average variable cost must rise. 
A)  average fixed cost must rise. 
B)  marginal cost must rise. 
C)  average total cost must rise. 
D)  average variable cost must rise.

Question 2

Refer to the table shown. The marginal cost of producing the fourth unit of output is: $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

A)  $2. 
B)  $3. 
C)  $4. 
D)  $5. 
A)  $2. 
B)  $3. 
C)  $4. 
D)  $5.

Question 3

Refer to the graph shown which shows total product. At point B:

Accepted Answer

A)  marginal product is at its minimum. 
B)  marginal product is at its maximum. 
C)  marginal product is zero. 
D)  average product is at its maximum. 
A)  marginal product is at its minimum. 
B)  marginal product is at its maximum. 
C)  marginal product is zero. 
D)  average product is at its maximum.

Question 4

The marginal cost curve is a mirror image of the:

Accepted Answer

A)  total product curve. 
B)  marginal product curve. 
C)  average product curve. 
D)  average variable cost curve. 
A)  total product curve. 
B)  marginal product curve. 
C)  average product curve. 
D)  average variable cost curve.

Question 5

Refer to the table shown. The marginal product of the third worker is: $$\begin{array} { | c | c | } 
\hline \text { Number of workers } & \text { Mar ginal product of workers } \
\hline 1 & 2 \
\hline 2 & 5 \
\hline 3 & 9 \
\hline 4 & 14 \
\hline 5 & 16 \
\hline 6 & 17 \
\hline 7 & 18 \
\hline 8 & 18 \
\hline 9 & 17 \
\hline 10 & 15 \
\hline
\end{array}$$

Accepted Answer

A)  2. 
B)  8. 
C)  9. 
D)  17. 
A)  2. 
B)  8. 
C)  9. 
D)  17.

Question 6

Refer to the table shown. A firm would be most likely to hire between: $$\begin{array} { | c | c | } 
\hline \text { Number of workers } & \text { Mar pinal product of workers } \
\hline 1 & 5 \
\hline 2 & 7 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 11 \
\hline 6 & 7 \
\hline 7 & 5 \
\hline 8 & 3 \
\hline 9 & 0 \
\hline 10 & - 1 \
\hline
\end{array}$$

Accepted Answer

A)  1 and 3 workers. 
B)  3 and 4 workers. 
C)  5 and 8 workers. 
D)  8 and 10 workers. 
A)  1 and 3 workers. 
B)  3 and 4 workers. 
C)  5 and 8 workers. 
D)  8 and 10 workers.

Question 7

Costs that are spent and cannot be changed in the period of time under consideration are called:

Accepted Answer

A)  variable costs. 
B)  total costs. 
C)  marginal costs. 
D)  fixed costs. 
A)  variable costs. 
B)  total costs. 
C)  marginal costs. 
D)  fixed costs.

Question 8

Refer to the graph shown. Total cost of producing Q* is represented by:

Accepted Answer

A)  area 0Q*AF. 
B)  area 0Q*BE. 
C)  area 0Q*CD. 
D)  cannot be determined. 
A)  area 0Q*AF. 
B)  area 0Q*BE. 
C)  area 0Q*CD. 
D)  cannot be determined.

Question 9

Refer to the table shown. When average product is 8, total output is: $$\begin{array} { | c | c | } 
\hline \text { Number of workers } & \text { Mar ginal product of workers } \
\hline 1 & 5 \
\hline 2 & 7 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 11 \
\hline 6 & 7 \
\hline 7 & 5 \
\hline 8 & 3 \
\hline 9 & 0 \
\hline 10 & - 1 \
\hline
\end{array}$$

Accepted Answer

A)  20. 
B)  32. 
C)  40. 
D)  48. 
A)  20. 
B)  32. 
C)  40. 
D)  48.

Question 10

Refer to the table shown. The marginal product of the sixth worker is: $\begin{array}{|c|c|}
\hline \text {Number of warkers}&\text {Total output}\
\hline 1 & 4 \
\hline 2 & 10 \
\hline 3 & 18 \
\hline 4 & 28 \
\hline 5 & 35 \
\hline 6 & 41 \
\hline 7 & 45 \
\hline 8 & 48 \
\hline 9 & 50 \
\hline 10 & 49 \
\hline
\end{array}$

Accepted Answer

A)  6. 
B)  7. 
C)  8. 
D)  9. 
A)  6. 
B)  7. 
C)  8. 
D)  9.

Question 11

If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.25, the average cost of producing 10 sweaters will be:

Accepted Answer

A)  $6.50. 
B)  more than $6.50. 
C)  less than $6.50. 
D)  exactly $6.25. 
A)  $6.50. 
B)  more than $6.50. 
C)  less than $6.50. 
D)  exactly $6.25.

Question 12

If output changes by 10 units while total costs rise by $500, marginal cost is approximately:

Accepted Answer

A)  $500. 
B)  $10. 
C)  $50. 
D)  $5,000. 
A)  $500. 
B)  $10. 
C)  $50. 
D)  $5,000.

Question 13

The marginal cost curve intersects the average total cost curve when average variable costs are:

Accepted Answer

A)  falling. 
B)  rising. 
C)  at a minimum. 
D)  at a maximum. 
A)  falling. 
B)  rising. 
C)  at a minimum. 
D)  at a maximum.

Question 14

If marginal costs are rising, average total costs must be rising.

Accepted Answer

A) True 
 B)False

Question 15

Short-run decisions are:

Accepted Answer

A)  constrained because all inputs are variable. 
B)  constrained because all inputs are fixed. 
C)  constrained because some inputs are fixed and others are variable. 
D)  unconstrained because all inputs are variable. 
A)  constrained because all inputs are variable. 
B)  constrained because all inputs are fixed. 
C)  constrained because some inputs are fixed and others are variable. 
D)  unconstrained because all inputs are variable.

Question 16

If fixed costs are $960, variable costs are $1,440, and output is 12, then average total cost equals:

Accepted Answer

A)  $ 80. 
B)  $100. 
C)  $120. 
D)  $200. 
A)  $ 80. 
B)  $100. 
C)  $120. 
D)  $200.

Question 17

If your cell phone bill is $40 when you use up to 300 minutes per month or $80 when you use between 300 and 400 minutes per month, the marginal cost of the 301st minute is:

Accepted Answer

A)  $0.13. 
B)  $0.27. 
C)  $40. 
D)  $80. 
A)  $0.13. 
B)  $0.27. 
C)  $40. 
D)  $80.

Question 18

Mr. Woodard's cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodard has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is the likely explanation?

Accepted Answer

A)  The law of diminishing marginal utility 
B)  The law of diminishing marginal productivity 
C)  The law of supply 
D)  The law of demand 
A)  The law of diminishing marginal utility 
B)  The law of diminishing marginal productivity 
C)  The law of supply 
D)  The law of demand

Question 19

When production increases, the average variable cost and average total cost curves:

Accepted Answer

A)  spread farther apart. 
B)  become horizontal. 
C)  cross. 
D)  move closer together. 
A)  spread farther apart. 
B)  become horizontal. 
C)  cross. 
D)  move closer together.

Question 20

If fixed costs equal $120, variable costs equal $800, and output is 10, average variable cost equals:

Accepted Answer

A)  $ 40. 
B)  $ 80. 
C)  $ 92. 
D)  $120. 
A)  $ 40. 
B)  $ 80. 
C)  $ 92. 
D)  $120.

Exam 11: Production and Cost Analysis I

Other things being equal, when average productivity falls:

Refer to the table shown. The marginal cost of producing the fourth unit of output is: Units of output Total cost 0 5 1 11 2 16 3 20 4 23 5 25 6 26

Refer to the graph shown which shows total product. At point B:

The marginal cost curve is a mirror image of the:

Refer to the table shown. The marginal product of the third worker is: Number of workers Mar ginal product of workers 1 2 2 5 3 9 4 14 5 16 6 17 7 18 8 18 9 17 10 15

Refer to the table shown. A firm would be most likely to hire between: Number of workers Mar pinal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

Costs that are spent and cannot be changed in the period of time under consideration are called:

Refer to the graph shown. Total cost of producing Q* is represented by:

Refer to the table shown. When average product is 8, total output is: Number of workers Mar ginal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

Refer to the table shown. The marginal product of the sixth worker is: Number of warkers Total output 1 4 2 10 3 18 4 28 5 35 6 41 7 45 8 48 9 50 10 49

If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.25, the average cost of producing 10 sweaters will be:

If output changes by 10 units while total costs rise by $500, marginal cost is approximately:

The marginal cost curve intersects the average total cost curve when average variable costs are:

If marginal costs are rising, average total costs must be rising.

Short-run decisions are:

If fixed costs are $960, variable costs are $1,440, and output is 12, then average total cost equals:

If your cell phone bill is $40 when you use up to 300 minutes per month or $80 when you use between 300 and 400 minutes per month, the marginal cost of the 301st minute is:

Mr. Woodard's cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodard has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is the likely explanation?

When production increases, the average variable cost and average total cost curves:

If fixed costs equal $120, variable costs equal $800, and output is 10, average variable cost equals:

Economics and Economic Reasoning

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Production and Cost Analysis II

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Who Gets What the Distribution of Income

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