Question 1

Figure 7-7  
-In Figure 7-7 at 100 units, AVC equals

Accepted Answer

A) 8. 
B) 800. 
C) 100. 
D) 1,000. 
A) 8. 
B) 800. 
C) 100. 
D) 1,000.

Question 2

"If it were not for the law of diminishing marginal returns, the world's wheat could be grown in a flower pot." Explain.

Accepted Answer

The law of diminishing returns states th

Question 3

The United Auto Workers union is largely responsible for the historically high pay of American auto workers by negotiating pay raises above those obtained by workers in other industries.In addition to increasing the pay of auto workers, what other long-run effect would this high pay have on the use of auto workers?

Accepted Answer

Over the long run, firms will adjust the

Question 4

Everything else equal, the AC curve will shift downward if

Accepted Answer

A) input prices rise. 
B) input MPPs rise. 
C) output rises. 
D) output falls. 
A) input prices rise. 
B) input MPPs rise. 
C) output rises. 
D) output falls.

Question 5

A firm that is seeking to minimize costs to produce a certain output:

Accepted Answer

A) ​has a fixed budget 
B) ​has a large budget 
C) ​wants to use the smallest possible budget possible 
D) ​wants to use the same budget as that used last year 
A) ​has a fixed budget 
B) ​has a large budget 
C) ​wants to use the smallest possible budget possible 
D) ​wants to use the same budget as that used last year

Question 6

The least costly combination of inputs is influenced by the relative prices of inputs.

Accepted Answer

A) True 
 B)False

Question 7

In the long run,

Accepted Answer

A) all of the firm's input quantities are variable. 
B) the firm can vary the quantities of some but not all inputs. 
C) managers become less efficient. 
D) the total cost of producing any given level of output is greater than or equal to the short-run total cost of producing that level of output. 
A) all of the firm's input quantities are variable. 
B) the firm can vary the quantities of some but not all inputs. 
C) managers become less efficient. 
D) the total cost of producing any given level of output is greater than or equal to the short-run total cost of producing that level of output.

Question 8

Figure 7-12  
-Which of the graphs in Figure 7-12 shows a marginal physical product curve that exhibits first increasing, and then diminishing, marginal returns to sunlight?

Accepted Answer

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

Question 9

Figure 7-10  
-In Figure 7-10, the curve labeled C 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.

Question 10

Marginal cost

Accepted Answer

A) is the increase in total cost resulting from production of one additional unit of output. 
B) is the cost of the marginal unit of output. 
C) and the average cost curve are U-shaped. 
D) All of the above are correct. 
A) is the increase in total cost resulting from production of one additional unit of output. 
B) is the cost of the marginal unit of output. 
C) and the average cost curve are U-shaped. 
D) All of the above are correct.

Question 11

The typical average cost curve

Accepted Answer

A) continually declines as output increases. 
B) is horizontal. 
C) continually increases as output increases. 
D) first declines to a minimum and then increases as output increases. 
A) continually declines as output increases. 
B) is horizontal. 
C) continually increases as output increases. 
D) first declines to a minimum and then increases as output increases.

Question 12

Figure 7-3  
-Government provides many goods and services to the public because they are not provided by free markets.Some economists believe bureaucrats who manage the programs have no interest in maximizing net benefits (profits) but instead maximize the size of a program constrained only by the need to have total benefits exceed total costs.Figure 7-3 shows total benefits and cost curves for a program.What point is the efficient point, and what point will the bureaucrat choose?

Accepted Answer

A) A and B, respectively 
B) B and D, respectively 
C) D and C, respectively 
D) D and A, respectively 
A) A and B, respectively 
B) B and D, respectively 
C) D and C, respectively 
D) D and A, respectively

Question 13

Figure 7-7  
-In Figure 7-7 at 100 units, FC equals

Accepted Answer

A) 1,000. 
B) 1,800. 
C) 800. 
D) 80. 
A) 1,000. 
B) 1,800. 
C) 800. 
D) 80.

Question 14

The rule that states that the marginal revenue product equal to price does not hold when there are more than two inputs.

Accepted Answer

A) True 
 B)False

Question 15

Total physical product shows what happens to the quantity of an output when the firm changes the quantity of an input.

Accepted Answer

A) True 
 B)False

Question 16

Whether or not a production process shows economies of scale depends on

Accepted Answer

A) the number of inputs used. 
B) technology. 
C) technology and input prices. 
D) technology and output prices. 
A) the number of inputs used. 
B) technology. 
C) technology and input prices. 
D) technology and output prices.

Question 17

To determine total cost, the businessperson must know

Accepted Answer

A) input quantity and output price. 
B) output quantity and output price. 
C) output quantity and input price. 
D) input quantity and input price. 
A) input quantity and output price. 
B) output quantity and output price. 
C) output quantity and input price. 
D) input quantity and input price.

Question 18

For most industries, average costs decrease indefinitely as output expands.

Accepted Answer

A) True 
 B)False

Question 19

A firm practices input substitution when it

Accepted Answer

A) retrains Joe the welder as a painter and Pat the painter as a welder. 
B) buys extra machines for its workers to use. 
C) allows fixed cost to become variable. 
D) replaces unskilled labor with automated machinery. 
A) retrains Joe the welder as a painter and Pat the painter as a welder. 
B) buys extra machines for its workers to use. 
C) allows fixed cost to become variable. 
D) replaces unskilled labor with automated machinery.

Question 20

If MRP > P, a firm should use less of that input.

Accepted Answer

A) True 
 B)False

Figure 7-7 -In Figure 7-7 at 100 units, AVC equals

"If it were not for the law of diminishing marginal returns, the world's wheat could be grown in a flower pot." Explain.

Everything else equal, the AC curve will shift downward if

A firm that is seeking to minimize costs to produce a certain output:

The least costly combination of inputs is influenced by the relative prices of inputs.

In the long run,

Figure 7-12 -Which of the graphs in Figure 7-12 shows a marginal physical product curve that exhibits first increasing, and then diminishing, marginal returns to sunlight?

Figure 7-10 -In Figure 7-10, the curve labeled C is

Marginal cost

The typical average cost curve

Figure 7-7 -In Figure 7-7 at 100 units, FC equals

The rule that states that the marginal revenue product equal to price does not hold when there are more than two inputs.

Total physical product shows what happens to the quantity of an output when the firm changes the quantity of an input.

Whether or not a production process shows economies of scale depends on

To determine total cost, the businessperson must know

For most industries, average costs decrease indefinitely as output expands.

A firm practices input substitution when it

If MRP > P, a firm should use less of that input.

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

Filters

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

Figure 7-7 -In Figure 7-7 at 100 units, AVC equals

"If it were not for the law of diminishing marginal returns, the world's wheat could be grown in a flower pot." Explain.

Everything else equal, the AC curve will shift downward if

A firm that is seeking to minimize costs to produce a certain output:

The least costly combination of inputs is influenced by the relative prices of inputs.

In the long run,

Figure 7-12 -Which of the graphs in Figure 7-12 shows a marginal physical product curve that exhibits first increasing, and then diminishing, marginal returns to sunlight?

Figure 7-10 -In Figure 7-10, the curve labeled C is

Marginal cost

The typical average cost curve

Figure 7-7 -In Figure 7-7 at 100 units, FC equals

The rule that states that the marginal revenue product equal to price does not hold when there are more than two inputs.

Total physical product shows what happens to the quantity of an output when the firm changes the quantity of an input.

Whether or not a production process shows economies of scale depends on

To determine total cost, the businessperson must know

For most industries, average costs decrease indefinitely as output expands.

A firm practices input substitution when it

If MRP > P, a firm should use less of that input.

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

Filters