Question 1

The vertical distance between the TC and TVC curves

Accepted Answer

A) decreases as output increases. 
B) increases as output increases. 
C) is equal to AFC. 
D) is equal to TFC. 
E) is equal to MC. 
A) decreases as output increases. 
B) increases as output increases. 
C) is equal to AFC. 
D) is equal to TFC. 
E) is equal to MC.

Question 2

When the marginal product curve is ________,the marginal cost curve is falling.When the average product curve is ________,the average variable cost curve is falling.Maximum MP occurs at the same output as ________.Maximum AP occurs at the same output as ________.

Accepted Answer

A) rising;rising;maximum MC;maximum AVC 
B) falling;falling;minimum MC;minimum AVC 
C) rising;rising;minimum MC;minimum AVC 
D) falling;falling;maximum MC;maximum AVC 
E) rising;rising;minimum MC;minimum ATC 
A) rising;rising;maximum MC;maximum AVC 
B) falling;falling;minimum MC;minimum AVC 
C) rising;rising;minimum MC;minimum AVC 
D) falling;falling;maximum MC;maximum AVC 
E) rising;rising;minimum MC;minimum ATC

Question 3

Which one of the following statements is true?

Accepted Answer

A) The highest value of average product occurs where average product is greater than marginal product. 
B) When the average product curve is rising, marginal product is less than average product. 
C) When the average product curve is falling, marginal product is greater than average product. 
D) The maximum total product occurs at minimum marginal product. 
E) The highest value of average product occurs where average product equals marginal product. 
A) The highest value of average product occurs where average product is greater than marginal product. 
B) When the average product curve is rising, marginal product is less than average product. 
C) When the average product curve is falling, marginal product is greater than average product. 
D) The maximum total product occurs at minimum marginal product. 
E) The highest value of average product occurs where average product equals marginal product.

Question 4

Which one of the following statements is false?

Accepted Answer

A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost. 
A) The average total cost curve and average variable cost curve are U-shaped. 
B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. 
C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. 
D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost. 
E) The marginal cost curve intersects the average total cost curve at minimum average total cost.

Question 5

The marginal product of capital is the

Accepted Answer

A) change in total product resulting from a 1-unit increase in the quantity of labour employed, holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed, holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed, holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed, holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product, holding constant the quantity of labour. 
A) change in total product resulting from a 1-unit increase in the quantity of labour employed, holding the quantity of the capital constant. 
B) change in total product resulting from a 1-unit increase in the quantity of capital employed, holding the quantity of the labour constant. 
C) total product divided by the total quantity of capital employed, holding the quantity of the labour constant. 
D) total product divided by the total quantity of labour employed, holding the quantity of the capital constant. 
E) change in the quantity of capital used resulting from a 1-unit increase in total product, holding constant the quantity of labour.

Question 6

If ATC is rising then MC must be

Accepted Answer

A) rising. 
B) falling. 
C) equal to ATC. 
D) above ATC. 
E) both A and D. 
A) rising. 
B) falling. 
C) equal to ATC. 
D) above ATC. 
E) both A and D.

Question 7

Use the figure below to answer the following questions.
   
Figure 11.2.1
-Refer to Figure 11.2.1 which illustrates Tania's total product curve.Which one of the following statements is false?

Accepted Answer

A) All the points above the curve are unattainable. 
B) All the points below the curve are attainable. 
C) All the points below the curve are inefficient. 
D) The cost of producing at point B equals the cost of producing at point C. 
E) All the points on the curve are attainable. 
A) All the points above the curve are unattainable. 
B) All the points below the curve are attainable. 
C) All the points below the curve are inefficient. 
D) The cost of producing at point B equals the cost of producing at point C. 
E) All the points on the curve are attainable.

Question 8

The law of diminishing marginal returns refers to the tendency for ________ to eventually decrease as more labour is employed,everything else remaining the same.

Accepted Answer

A) average total cost 
B) marginal cost 
C) total product 
D) marginal product of labour 
E) average product of labour 
A) average total cost 
B) marginal cost 
C) total product 
D) marginal product of labour 
E) average product of labour

Question 9

The marginal cost (MC)curve intersects the

Accepted Answer

A) ATC, AVC, and AFC curves at their minimum points. 
B) ATC and AFC curves at their minimum points. 
C) AVC and AFC curves at their minimum points. 
D) ATC and AVC curves at their minimum points. 
E) TC and TVC curves at their minimum points. 
A) ATC, AVC, and AFC curves at their minimum points. 
B) ATC and AFC curves at their minimum points. 
C) AVC and AFC curves at their minimum points. 
D) ATC and AVC curves at their minimum points. 
E) TC and TVC curves at their minimum points.

Question 10

The MC curve shifts upward if

Accepted Answer

A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above. 
E) none of the above. 
A) factor prices rise. 
B) a new technology is introduced. 
C) more workers are hired. 
D) all of the above. 
E) none of the above.

Question 11

Use the figure below to answer the following question.
   
Figure 11.4.3
-Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve.An increase in production from Q? to Q? sweaters per day produces

Accepted Answer

A) the minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale. 
A) the minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale.

Question 12

Table 11.2.1
  
-Refer to Table 11.2.1 which gives Tania's total product schedule.The average product when the firm hires two workers is

Accepted Answer

A) 3 teapots per worker. 
B) 6 teapots per worker. 
C) 7 teapots per worker. 
D) 9 teapots per worker. 
E) 12 teapots per worker. 
A) 3 teapots per worker. 
B) 6 teapots per worker. 
C) 7 teapots per worker. 
D) 9 teapots per worker. 
E) 12 teapots per worker.

Question 13

If an increase in output from 5 to 10 teapots increases total cost from $100 to $200,the marginal cost of one of those 5 teapots is

Accepted Answer

A) $10. 
B) $20. 
C) $22. 
D) $25. 
E) dependent upon the amount of extra labour used. 
A) $10. 
B) $20. 
C) $22. 
D) $25. 
E) dependent upon the amount of extra labour used.

Question 14

The average product of labour is

Accepted Answer

A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the average product of labour. 
E) calculated as total product divided by the total quantity of labour employed. 
A) the inverse of the average product of capital. 
B) the slope of the marginal product of labour curve. 
C) the slope of the total product curve. 
D) greater than the average product of labour. 
E) calculated as total product divided by the total quantity of labour employed.

Question 15

Use the information below to answer the following questions.
Fact 11.1.1
January 31, 2008: Starbucks will open 75 more stores abroad than originally predicted, for a total of 975.
February 25, 2008: For three hours on Tuesday, Starbucks will shut down every single one of its 7,100 stores so that baristas can receive a refresher course.
June 2, 2008: Starbucks replaces baristas with vending machines.
July 18, 2008: Starbucks is closing 616 stores by the end of March.
-Refer to Fact 11.1.1.The decisions made on ________ are short-run decisions because they ________.

Accepted Answer

A) January 31 and July 18;change the number of stores but not necessarily the number of employees 
B) February 25 and June 2;change a variable factor of production but not a fixed factor of production 
C) February 25, June 2, and July 18;deal with stores located in the United States 
D) June 2 and July 18;are the more recent decisions 
E) None of the above. 
A) January 31 and July 18;change the number of stores but not necessarily the number of employees 
B) February 25 and June 2;change a variable factor of production but not a fixed factor of production 
C) February 25, June 2, and July 18;deal with stores located in the United States 
D) June 2 and July 18;are the more recent decisions 
E) None of the above.

Question 16

An increase in the cost of labour shifts the

Accepted Answer

A) total, average, and marginal product curves upward and total, average, and marginal cost curves upward. 
B) total, average, and marginal product curves upward and total, average, and marginal cost curves downward. 
C) total, average, and marginal product curves downward and total, average, and marginal cost curves upward. 
D) total, average, and marginal product curves downward and total, average, and marginal cost curves downward. 
E) none of the above. 
A) total, average, and marginal product curves upward and total, average, and marginal cost curves upward. 
B) total, average, and marginal product curves upward and total, average, and marginal cost curves downward. 
C) total, average, and marginal product curves downward and total, average, and marginal cost curves upward. 
D) total, average, and marginal product curves downward and total, average, and marginal cost curves downward. 
E) none of the above.

Question 17

A rise in the price of a fixed input shifts a firm's

Accepted Answer

A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward. 
A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward.

Question 18

Table 11.2.1
  
-Refer to Table 11.2.1 which gives Tania's total product schedule.Average product of labour reaches its maximum for the ________ worker.

Accepted Answer

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

Question 19

Diminishing returns to capital ________ occur as the quantity of capital increases because for a given quantity of ________ each additional unit of ________ will result in ________ incremental amounts of output.

Accepted Answer

A) do not;capital;labour;greater 
B) do;labour;capital;smaller 
C) do not;labour;capital;greater 
D) do;capital;labour;smaller 
E) do not;labour;capital;smaller 
A) do not;capital;labour;greater 
B) do;labour;capital;smaller 
C) do not;labour;capital;greater 
D) do;capital;labour;smaller 
E) do not;labour;capital;smaller

Question 20

Which one of the following is false?

Accepted Answer

A) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points. 
B) When marginal cost is greater than average variable cost, average variable cost is increasing. 
C) When marginal cost is greater than average total cost, average total cost is increasing. 
D) The average total cost curve is U-shaped. 
E) The average fixed cost curve is downward sloping. 
A) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points. 
B) When marginal cost is greater than average variable cost, average variable cost is increasing. 
C) When marginal cost is greater than average total cost, average total cost is increasing. 
D) The average total cost curve is U-shaped. 
E) The average fixed cost curve is downward sloping.

Exam 11: Output and Costs

The vertical distance between the TC and TVC curves

When the marginal product curve is ________,the marginal cost curve is falling.When the average product curve is ________,the average variable cost curve is falling.Maximum MP occurs at the same output as ________.Maximum AP occurs at the same output as ________.

Which one of the following statements is true?

Which one of the following statements is false?

The marginal product of capital is the

If ATC is rising then MC must be

Use the figure below to answer the following questions. Figure 11.2.1 -Refer to Figure 11.2.1 which illustrates Tania's total product curve.Which one of the following statements is false?

The law of diminishing marginal returns refers to the tendency for ________ to eventually decrease as more labour is employed,everything else remaining the same.

The marginal cost (MC)curve intersects the

The MC curve shifts upward if

Use the figure below to answer the following question. Figure 11.4.3 -Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve.An increase in production from Q? to Q? sweaters per day produces

Table 11.2.1 -Refer to Table 11.2.1 which gives Tania's total product schedule.The average product when the firm hires two workers is

If an increase in output from 5 to 10 teapots increases total cost from $100 to $200,the marginal cost of one of those 5 teapots is

The average product of labour is

An increase in the cost of labour shifts the

A rise in the price of a fixed input shifts a firm's

Table 11.2.1 -Refer to Table 11.2.1 which gives Tania's total product schedule.Average product of labour reaches its maximum for the ________ worker.

Diminishing returns to capital ________ occur as the quantity of capital increases because for a given quantity of ________ each additional unit of ________ will result in ________ incremental amounts of output.

Which one of the following is false?

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

When the marginal product curve is ,the marginal cost curve is falling.When the average product curve is ,the average variable cost curve is falling.Maximum MP occurs at the same output as .Maximum AP occurs at the same output as .

Diminishing returns to capital occur as the quantity of capital increases because for a given quantity of each additional unit of will result in incremental amounts of output.