Question 1

If in some production range average cost is rising, the firm is experiencing

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing costs per unit of output. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing costs per unit of output. B

Question 2

Figure 7-5  
-Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
A) (a) 
B) (b) 
C) (c) 
D) (d) A

Question 3

Which of the following will not lead to increase in the marginal revenue product?

Accepted Answer

A) MPP increases without any changes in the price. 
B) Price of the product increases without any changes in MPP. 
C) MPP and price of the product increases. 
D) MPP remains the same and price of the product falls. 
A) MPP increases without any changes in the price. 
B) Price of the product increases without any changes in MPP. 
C) MPP and price of the product increases. 
D) MPP remains the same and price of the product falls. D

Question 4

The average fixed cost curve increases as output increases.

Accepted Answer

A) True 
 B)False

Question 5

If the price of one input changes, generally the firm will change its use of both inputs.

Accepted Answer

A) True 
 B)False

Question 6

Average cost curves have the same shape as

Accepted Answer

A) total cost curves. 
B) marginal cost curves. 
C) total fixed cost curves. 
D) average fixed cost curves. 
A) total cost curves. 
B) marginal cost curves. 
C) total fixed cost curves. 
D) average fixed cost curves.

Question 7

Table 7-4
  
-Table 7-4 shows a production relationship.The cost of one day of labor is $65 and the product price is $1 per unit.How much will the labor input increase if the capital stock were increased from 3 to 4?

Accepted Answer

A) from 3 to 4 
B) from 4 to 5 
C) from 4 to 6 
D) stays the same 
A) from 3 to 4 
B) from 4 to 5 
C) from 4 to 6 
D) stays the same

Question 8

Some costs cannot be varied no matter how long the period in question.These are called

Accepted Answer

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

Question 9

Marginal physical product measures the increase in total output that results from a one-unit increase in an input.

Accepted Answer

A) True 
 B)False

Question 10

The principal determinants of total and average cost curves are the firm's technology and the prices of its inputs.

Accepted Answer

A) True 
 B)False

Question 11

A change in input prices has no impact on the budget line.

Accepted Answer

A) True 
 B)False

Question 12

Complete the table below by computing the missing numbers from those that are given.

Accepted Answer

The answer of Complete the table below by computing the...

Question 13

Total physical product is maximized if marginal physical product is zero.

Accepted Answer

A) True 
 B)False

Question 14

Variable costs increase when output rises.

Accepted Answer

A) True 
 B)False

Question 15

Figure 7-8  
-"Overfishing" impairs the ability of fish stock to replenish itself, so the stock of fish declines.Fishermen then attempt to increase output by adding more boats and fishing longer.Which average cost curve in Figure 7-8 depicts the "overfishing" situation?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 16

Explain briefly the following concepts:

Accepted Answer

Increasing returns to scale: An increase

Question 17

In the short run the firm has no more than one fixed input.

Accepted Answer

A) True 
 B)False

Question 18

Table 7-4
  
-Table 7-4 shows a production relationship.Assuming the labor input is fixed at 4, what will be the optimum capital input assuming an output price of $1 and a $90-per-day cost for one unit of capital?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 19

A firm uses workers and seed to grow lettuce.Its lettuce output rises from 100 tons to 200 tons when the number of workers increases from 25 to 75.Its production process shows

Accepted Answer

A) decreasing returns to scale. 
B) diminishing returns to labor. 
C) increasing long-run average cost. 
D) decreasing short-run average variable cost. 
A) decreasing returns to scale. 
B) diminishing returns to labor. 
C) increasing long-run average cost. 
D) decreasing short-run average variable cost.

Question 20

Figure 7-10  
-In Figure 7-10, the curve B is

Accepted Answer

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

Exam 7: Production Inputs and Cost Building Blocks for Supply Analysis

If in some production range average cost is rising, the firm is experiencing

Figure 7-5 -Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?

Which of the following will not lead to increase in the marginal revenue product?

The average fixed cost curve increases as output increases.

If the price of one input changes, generally the firm will change its use of both inputs.

Average cost curves have the same shape as

Table 7-4 -Table 7-4 shows a production relationship.The cost of one day of labor is $65 and the product price is $1 per unit.How much will the labor input increase if the capital stock were increased from 3 to 4?

Some costs cannot be varied no matter how long the period in question.These are called

Marginal physical product measures the increase in total output that results from a one-unit increase in an input.

The principal determinants of total and average cost curves are the firm's technology and the prices of its inputs.

A change in input prices has no impact on the budget line.

Complete the table below by computing the missing numbers from those that are given.

Total physical product is maximized if marginal physical product is zero.

Variable costs increase when output rises.

Figure 7-8 -"Overfishing" impairs the ability of fish stock to replenish itself, so the stock of fish declines.Fishermen then attempt to increase output by adding more boats and fishing longer.Which average cost curve in Figure 7-8 depicts the "overfishing" situation?

Explain briefly the following concepts:

In the short run the firm has no more than one fixed input.

Table 7-4 -Table 7-4 shows a production relationship.Assuming the labor input is fixed at 4, what will be the optimum capital input assuming an output price of $1 and a $90-per-day cost for one unit of capital?

A firm uses workers and seed to grow lettuce.Its lettuce output rises from 100 tons to 200 tons when the number of workers increases from 25 to 75.Its production process shows

Figure 7-10 -In Figure 7-10, the curve B is

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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