Question 1

Which one of the following statements is correct?

Accepted Answer

A) When marginal product is increasing, average product is decreasing. 
B) When average product is less than zero, marginal product is positive. 
C) When marginal product is increasing and greater than average product, average product is increasing. 
D) When marginal product is zero, total product is at its minimum. 
E) When average product exceeds marginal product, marginal product is increasing. 
A) When marginal product is increasing, average product is decreasing. 
B) When average product is less than zero, marginal product is positive. 
C) When marginal product is increasing and greater than average product, average product is increasing. 
D) When marginal product is zero, total product is at its minimum. 
E) When average product exceeds marginal product, marginal product is increasing. C

Question 2

The long run refers to a time period

Accepted Answer

A) of one year or less. 
B) in which all factors of production are variable. 
C) in which labour is variable, but plant is fixed. 
D) when there is at least one variable factor of production. 
E) of at least 5 years. 
A) of one year or less. 
B) in which all factors of production are variable. 
C) in which labour is variable, but plant is fixed. 
D) when there is at least one variable factor of production. 
E) of at least 5 years. B

Question 3

When the 7th worker is hired,output increases from 100 units per week to 110 units per week.When the 8th worker is hired,output increases from 110 units to 118 units.This is an example of

Accepted Answer

A) diminishing marginal returns. 
B) diminishing marginal cost. 
C) decreasing returns to scale. 
D) labour-intensive production. 
E) increasing returns to scale. 
A) diminishing marginal returns. 
B) diminishing marginal cost. 
C) decreasing returns to scale. 
D) labour-intensive production. 
E) increasing returns to scale. A

Question 4

The total product curve is a graph that shows the

Accepted Answer

A) minimum cost of producing a given amount of output using a given technology. 
B) maximum profit from each unit of output sold. 
C) maximum output that a given quantity of labour can produce. 
D) maximum output that can be produced as technology advances. 
E) change in total product for a given change in marginal product. 
A) minimum cost of producing a given amount of output using a given technology. 
B) maximum profit from each unit of output sold. 
C) maximum output that a given quantity of labour can produce. 
D) maximum output that can be produced as technology advances. 
E) change in total product for a given change in marginal product.

Question 5

The long run is a time frame in which

Accepted Answer

A) the firm can hire all the workers it wants to employ, but it does not have sufficient time to buy more equipment. 
B) the firm is able to maximize revenue. 
C) the firm may want to build a bigger plant, but cannot do so. 
D) economic efficiency is achieved. 
E) the quantities of all factors of production can be varied. 
A) the firm can hire all the workers it wants to employ, but it does not have sufficient time to buy more equipment. 
B) the firm is able to maximize revenue. 
C) the firm may want to build a bigger plant, but cannot do so. 
D) economic efficiency is achieved. 
E) the quantities of all factors of production can be varied.

Question 6

A firm will want to increase its scale of plant if

Accepted Answer

A) it is persistently producing on the upward-sloping part of its short-run average total cost curve. 
B) it is persistently producing on the downward-sloping part of its short-run average total cost curve. 
C) it is producing below minimum efficient scale. 
D) marginal cost is below average total cost. 
E) marginal cost is below average variable cost. 
A) it is persistently producing on the upward-sloping part of its short-run average total cost curve. 
B) it is persistently producing on the downward-sloping part of its short-run average total cost curve. 
C) it is producing below minimum efficient scale. 
D) marginal cost is below average total cost. 
E) marginal cost is below average variable cost.

Question 7

At that amount of output where diminishing marginal returns first sets in,

Accepted Answer

A) average product begins to decrease. 
B) total product begins to decrease. 
C) marginal cost begins to decrease. 
D) marginal product begins to decrease. 
E) All of the above. 
A) average product begins to decrease. 
B) total product begins to decrease. 
C) marginal cost begins to decrease. 
D) marginal product begins to decrease. 
E) All of the above.

Question 8

If constant returns to scale are present

Accepted Answer

A) average total cost is decreasing. 
B) average total cost is increasing. 
C) the LRAC curve is horizontal. 
D) the LRAC curve is downward sloping. 
E) the LRAC curve is upward sloping. 
A) average total cost is decreasing. 
B) average total cost is increasing. 
C) the LRAC curve is horizontal. 
D) the LRAC curve is downward sloping. 
E) the LRAC curve is upward sloping.

Question 9

Economies of scale are present when

Accepted Answer

A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases. 
A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases.

Question 10

If the total product of three workers is 214 and the total product of four workers is 221,then the marginal product of the fourth worker is

Accepted Answer

A) 71.3. 
B) 55.25. 
C) 7. 
D) 62.14. 
E) 1.75. 
A) 71.3. 
B) 55.25. 
C) 7. 
D) 62.14. 
E) 1.75.

Question 11

Marginal cost equals

Accepted Answer

A) Q/TVC. 
B)   
C)   
D)   
E) (TC-TV
C) /Q. 
A) Q/TVC. 
B)   
C)   
D)   
E) (TC-TV
C) /Q.

Question 12

Use the figure below to answer the following questions.
   
Figure 11.4.1
-Refer to Figure 11.4.1,which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the

Accepted Answer

A) price of the inputs. 
B) price of the output. 
C) law of diminishing marginal returns. 
D) law of economies of scale. 
E) fact that capital and labour cannot be substituted for each other. 
A) price of the inputs. 
B) price of the output. 
C) law of diminishing marginal returns. 
D) law of economies of scale. 
E) fact that capital and labour cannot be substituted for each other.

Question 13

The steeper the slope of the total product curve,

Accepted Answer

A) the smaller the average product. 
B) the smaller the marginal product. 
C) the greater the total cost. 
D) the more efficient the technology employed. 
E) the greater the marginal product. 
A) the smaller the average product. 
B) the smaller the marginal product. 
C) the greater the total cost. 
D) the more efficient the technology employed. 
E) the greater the marginal product.

Question 14

The range over which average variable cost is decreasing is the same as the range over which

Accepted Answer

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

Question 15

Marginal cost is the amount that

Accepted Answer

A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced. 
A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced.

Question 16

If energy (E)is the only input used to produce output (Q),what is the formula for marginal product of energy?

Accepted Answer

A) Q*E 
B) Q/E 
C)   
D)   
E) E/Q 
A) Q*E 
B) Q/E 
C)   
D)   
E) E/Q

Question 17

The short run is a time frame in which

Accepted Answer

A) the firm is not able to hire more workers. 
B) the amount of output produced is fixed. 
C) there is a shortage of most factors of production. 
D) at least one factor of production is fixed. 
E) there is not enough time to make all of the decisions necessary to maximize profit. 
A) the firm is not able to hire more workers. 
B) the amount of output produced is fixed. 
C) there is a shortage of most factors of production. 
D) at least one factor of production is fixed. 
E) there is not enough time to make all of the decisions necessary to maximize profit.

Question 18

Suppose the marginal product of energy equals the average product of energy.This implies that

Accepted Answer

A) marginal product is negative. 
B) average product is at its maximum value. 
C) marginal product is at its maximum value. 
D) the marginal product curve is upward sloping. 
E) average product is at its minimum value. 
A) marginal product is negative. 
B) average product is at its maximum value. 
C) marginal product is at its maximum value. 
D) the marginal product curve is upward sloping. 
E) average product is at its minimum value.

Question 19

Use the table below to answer the following questions.
Table 11.3.2
  
-Refer to Table 11.3.2,which gives Tania's total cost schedule.When output increases from 8 to 12 teapots,the marginal cost of one of the 4 teapots is

Accepted Answer

A) $20. 
B) $5. 
C) $1. 
D) $6.67. 
E) $2. 
A) $20. 
B) $5. 
C) $1. 
D) $6.67. 
E) $2.

Question 20

Use the figure below to answer the following questions.
   
Figure 11.3.2
-Refer to Figure 11.3.2,which illustrates the short-run average and marginal cost curves.The marginal cost curve is curve

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) none of the above. 
A) A. 
B) B. 
C) C. 
D) D. 
E) none of the above.

Exam 11: Output and Costs

Which one of the following statements is correct?

The long run refers to a time period

When the 7th worker is hired,output increases from 100 units per week to 110 units per week.When the 8th worker is hired,output increases from 110 units to 118 units.This is an example of

The total product curve is a graph that shows the

The long run is a time frame in which

A firm will want to increase its scale of plant if

At that amount of output where diminishing marginal returns first sets in,

If constant returns to scale are present

Economies of scale are present when

If the total product of three workers is 214 and the total product of four workers is 221,then the marginal product of the fourth worker is

Marginal cost equals

Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1,which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the

The steeper the slope of the total product curve,

The range over which average variable cost is decreasing is the same as the range over which

Marginal cost is the amount that

If energy (E)is the only input used to produce output (Q),what is the formula for marginal product of energy?

The short run is a time frame in which

Suppose the marginal product of energy equals the average product of energy.This implies that

Use the table below to answer the following questions. Table 11.3.2 -Refer to Table 11.3.2,which gives Tania's total cost schedule.When output increases from 8 to 12 teapots,the marginal cost of one of the 4 teapots is

Use the figure below to answer the following questions. Figure 11.3.2 -Refer to Figure 11.3.2,which illustrates the short-run average and marginal cost curves.The marginal cost curve is curve

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