Question 1

Marginal costs are defined as

Accepted Answer

A) the change in total costs due to a one-unit change in production. 
B) costs that are viewed as marginal; of little or small importance. 
C) costs that represent a change, but one that cannot be measured correctly. 
D) the change in the decisions that are made by households and firms. 
A) the change in total costs due to a one-unit change in production. 
B) costs that are viewed as marginal; of little or small importance. 
C) costs that represent a change, but one that cannot be measured correctly. 
D) the change in the decisions that are made by households and firms. A

Question 2

The change in output caused by a one-unit change in labor is referred to as the

Accepted Answer

A) compounded physical product of labor. 
B) average physical product of labor. 
C) marginal physical product of labor. 
D) total physical product of labor. 
A) compounded physical product of labor. 
B) average physical product of labor. 
C) marginal physical product of labor. 
D) total physical product of labor. C

Question 3

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

Accepted Answer

Disagree. It is true that the average variable cost curve and average total cost curve are U-shaped, but the average fixed cost curve is continuously downward sloping. Because fixed costs do not vary, an increase in output only reduces average fixed costs.

Question 4

-In the above figure, the long-run cost curve between points C and D illustrates

Accepted Answer

A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale. 
A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale.

Question 5

The average product of labor is equal to

Accepted Answer

A) total product divided by quantity of labor. 
B) change in total product divided by quantity of labor. 
C) total product divided by change in quantity of labor. 
D) change in total product divided by change in quantity of labor. 
A) total product divided by quantity of labor. 
B) change in total product divided by quantity of labor. 
C) total product divided by change in quantity of labor. 
D) change in total product divided by change in quantity of labor.

Question 6

Marginal cost begins to rise when

Accepted Answer

A) diminishing marginal product begins. 
B) diminishing marginal product ends. 
C) average total cost falls. 
D) fixed cost falls. 
A) diminishing marginal product begins. 
B) diminishing marginal product ends. 
C) average total cost falls. 
D) fixed cost falls.

Question 7

-Refer to the above table. What are total fixed costs at an output of 2 units?

Accepted Answer

A) $50 
B) $100 
C) $150 
D) $200 
A) $50 
B) $100 
C) $150 
D) $200

Question 8

-In the above table, how many workers are employed when marginal product reaches its maximum?

Accepted Answer

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

Question 9

When long-run average costs rise as output increases, the firm is experiencing

Accepted Answer

A) diseconomies of scale. 
B) diminishing returns. 
C) constant returns to scale. 
D) economies of scale. 
A) diseconomies of scale. 
B) diminishing returns. 
C) constant returns to scale. 
D) economies of scale.

Question 10

Notice the costs as given in the table below. What is the total fixed cost in the table below?

Accepted Answer

A) $5 
B) $0 
C) $10 
D) $9 
A) $5 
B) $0 
C) $10 
D) $9

Question 11

Recently Apple Computer developed Apple's new iTunes Music Store, which offers more than 200,000 songs from five major record labels, for use with Apple's iPod and iMac. More than a million songs were downloaded the first week alone! In economic terms, CEO Steve Jobs helped convert capital and labor inputs into products consumers use. Any activity that results in the conversion of resources into products that can be used in consumption is

Accepted Answer

A) not profitable. 
B) a start up venture. 
C) demand. 
D) production. 
A) not profitable. 
B) a start up venture. 
C) demand. 
D) production.

Question 12

When the minimum efficient scale occurs at a high level of industry output

Accepted Answer

A) the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B) there will only be a few firms in the industry. 
C) the government will have to take over the production of the good since it will be unprofitable for firms. 
D) there will be a lot of firms in this industry. 
A) the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B) there will only be a few firms in the industry. 
C) the government will have to take over the production of the good since it will be unprofitable for firms. 
D) there will be a lot of firms in this industry.

Question 13

If a firm is experiencing diseconomies of scale, then

Accepted Answer

A) proportional increases in all inputs result in proportional increases in output. 
B) the long-run average cost curve is rising as output expands. 
C) the long-run average cost curve is decreasing as output expands. 
D) the firm should expand the size of its operation. 
A) proportional increases in all inputs result in proportional increases in output. 
B) the long-run average cost curve is rising as output expands. 
C) the long-run average cost curve is decreasing as output expands. 
D) the firm should expand the size of its operation.

Question 14

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Accepted Answer

A) $19. 
B) $10. 
C) $22. 
D) $31. 
A) $19. 
B) $10. 
C) $22. 
D) $31.

Question 15

The production function illustrates the amount of total physical product that can be produced with a given set of

Accepted Answer

A) inputs. 
B) outputs. 
C) marginal product. 
D) marginal input. 
A) inputs. 
B) outputs. 
C) marginal product. 
D) marginal input.

Question 16

What is the law of diminishing marginal product?

Accepted Answer

The law of diminishing marginal product

Question 17

-Refer to the above table. At an output of 3 units, average variable costs are

Accepted Answer

A) $42. 
B) $30. 
C) $44. 
D) $14. 
A) $42. 
B) $30. 
C) $44. 
D) $14.

Question 18

When total product is decreasing, marginal product is

Accepted Answer

A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative. 
A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative.

Question 19

Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC?

Accepted Answer

A) $2 
B) $5 
C) $7 
D) $10 
A) $2 
B) $5 
C) $7 
D) $10

Question 20

Which of the following is NOT a reason a firm might experience economies of scale?

Accepted Answer

A) Specialization 
B) Dimensional factors 
C) Increasing long-run average costs 
D) More productive equipment 
A) Specialization 
B) Dimensional factors 
C) Increasing long-run average costs 
D) More productive equipment

Marginal costs are defined as

The change in output caused by a one-unit change in labor is referred to as the

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

-In the above figure, the long-run cost curve between points C and D illustrates

The average product of labor is equal to

Marginal cost begins to rise when

-Refer to the above table. What are total fixed costs at an output of 2 units?

-In the above table, how many workers are employed when marginal product reaches its maximum?

When long-run average costs rise as output increases, the firm is experiencing

Notice the costs as given in the table below. What is the total fixed cost in the table below?

When the minimum efficient scale occurs at a high level of industry output

If a firm is experiencing diseconomies of scale, then

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

The production function illustrates the amount of total physical product that can be produced with a given set of

What is the law of diminishing marginal product?

-Refer to the above table. At an output of 3 units, average variable costs are

When total product is decreasing, marginal product is

Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC?

Which of the following is NOT a reason a firm might experience economies of scale?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 22: The Firm: Cost and Output Determination

Marginal costs are defined as

The change in output caused by a one-unit change in labor is referred to as the

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

-In the above figure, the long-run cost curve between points C and D illustrates

The average product of labor is equal to

Marginal cost begins to rise when

-Refer to the above table. What are total fixed costs at an output of 2 units?

-In the above table, how many workers are employed when marginal product reaches its maximum?

When long-run average costs rise as output increases, the firm is experiencing

Notice the costs as given in the table below. What is the total fixed cost in the table below?

When the minimum efficient scale occurs at a high level of industry output

If a firm is experiencing diseconomies of scale, then

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

The production function illustrates the amount of total physical product that can be produced with a given set of

What is the law of diminishing marginal product?

-Refer to the above table. At an output of 3 units, average variable costs are

When total product is decreasing, marginal product is

Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC?

Which of the following is NOT a reason a firm might experience economies of scale?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters