Question 1

-The marginal product of labor may increase rapidly initially as more

Accepted Answer

A) workers are able to specialize. 
B) total product is decreasing. 
C) the amount of other inputs is held constant. 
D) workers will get crowded in a fixed factory. 
A) workers are able to specialize. 
B) total product is decreasing. 
C) the amount of other inputs is held constant. 
D) workers will get crowded in a fixed factory.

Question 2

Marginal physical product and average physical product are measured in

Accepted Answer

A) dollars. 
B) profit terms. 
C) units of production. 
D) the same units as marginal cost and average total cost. 
A) dollars. 
B) profit terms. 
C) units of production. 
D) the same units as marginal cost and average total cost.

Question 3

-Refer to the above figure. The curve represents a

Accepted Answer

A) marginal product curve. 
B) total product curve. 
C) total cost curve. 
D) average total cost curve. 
A) marginal product curve. 
B) total product curve. 
C) total cost curve. 
D) average total cost curve.

Question 4

-Refer to the above table. When output rises from 2 units to 5 units, marginal costs are

Accepted Answer

A) $26.50. 
B) $31. 
C) $21. 
D) $63. 
A) $26.50. 
B) $31. 
C) $21. 
D) $63.

Question 5

Economies of scale exist where the long-run average cost curve is

Accepted Answer

A) horizontal. 
B) downward sloping. 
C) upward sloping. 
D) tangent to the marginal cost curve. 
A) horizontal. 
B) downward sloping. 
C) upward sloping. 
D) tangent to the marginal cost curve.

Question 6

What is the most important determinant of the firm's short-run cost curves?

Accepted Answer

The short-run cost curves owe their shap

Question 7

If the marginal product of an input is falling, then

Accepted Answer

A) average fixed cost is constant. 
B) marginal cost is falling. 
C) average total cost is constant. 
D) marginal cost is rising. 
A) average fixed cost is constant. 
B) marginal cost is falling. 
C) average total cost is constant. 
D) marginal cost is rising.

Question 8

-In the above figure, at an output level of Q1, total variable cost is

Accepted Answer

A) OF times Q1. 
B) OD times Q2. 
C) OF. 
D) OF minus DF. 
A) OF times Q1. 
B) OD times Q2. 
C) OF. 
D) OF minus DF.

Question 9

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?

Accepted Answer

A) $5 
B) $7 
C) $20 
D) $200 
A) $5 
B) $7 
C) $20 
D) $200

Question 10

-Refer to the above table. What are total variable 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 11

Marginal cost is equal to

Accepted Answer

A) change in total cost divided by change in output. 
B) change in total variable cost divided by change in output. 
C) total variable cost divided by quantity of output. 
D) Both A and B are correct. 
A) change in total cost divided by change in output. 
B) change in total variable cost divided by change in output. 
C) total variable cost divided by quantity of output. 
D) Both A and B are correct.

Question 12

-Refer to the above table. What is MC when output rises from 0 unit to 1 unit?

Accepted Answer

A) $0 
B) $25 
C) $90 
D) $115 
A) $0 
B) $25 
C) $90 
D) $115

Question 13

-If we add successive laborers to work a given amount of land on a wheat farm, eventually

Accepted Answer

A) average total cost will fall to zero. 
B) the increases in wheat harvested will rise at a constant rate. 
C) the increases in wheat harvested will get smaller and smaller. 
D) the increases in wheat harvested will get larger and larger. 
A) average total cost will fall to zero. 
B) the increases in wheat harvested will rise at a constant rate. 
C) the increases in wheat harvested will get smaller and smaller. 
D) the increases in wheat harvested will get larger and larger.

Question 14

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that

Accepted Answer

A) the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at the 190th worker. 
B) the total output curve is increasing at an increasing rate from workers 1-89, then increases at a decreasing rate until the 190th worker, after which it decreases. 
C) the total output curve is increasing throughout, although at an increasing rate for the first 190 workers and at a decreasing rate after the 190th worker. 
D) diminishing marginal product sets in with the 190th worker. 
A) the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at the 190th worker. 
B) the total output curve is increasing at an increasing rate from workers 1-89, then increases at a decreasing rate until the 190th worker, after which it decreases. 
C) the total output curve is increasing throughout, although at an increasing rate for the first 190 workers and at a decreasing rate after the 190th worker. 
D) diminishing marginal product sets in with the 190th worker.

Question 15

The physical output that is due to the addition of one more unit of a variable factor of production is

Accepted Answer

A) average total cost. 
B) marginal cost. 
C) average physical product. 
D) marginal physical product. 
A) average total cost. 
B) marginal cost. 
C) average physical product. 
D) marginal physical product.

Question 16

When average variable costs are rising,

Accepted Answer

A) marginal physical product is also rising. 
B) marginal costs is falling. 
C) average physical product is rising. 
D) average physical product is falling. 
A) marginal physical product is also rising. 
B) marginal costs is falling. 
C) average physical product is rising. 
D) average physical product is falling.

Question 17

All of the following are most likely to be fixed costs EXCEPT the cost relating to

Accepted Answer

A) insurance. 
B) taxes. 
C) rent. 
D) packaging. 
A) insurance. 
B) taxes. 
C) rent. 
D) packaging.

Question 18

-If total costs are $50,000 when 1000 units are produced, and total costs are $50,100 when 1001 units are produced, we can conclude that

Accepted Answer

A) average variable costs are $100. 
B) average total costs are $100. 
C) average fixed costs are $100. 
D) marginal costs are $100. 
A) average variable costs are $100. 
B) average total costs are $100. 
C) average fixed costs are $100. 
D) marginal costs are $100.

Question 19

-Use the above figure. The ATC at output 10 is

Accepted Answer

A) $30.00. 
B) $2.67. 
C) $2.00. 
D) $3.00. 
A) $30.00. 
B) $2.67. 
C) $2.00. 
D) $3.00.

Question 20

MC = AVC and MC = ATC at points at which

Accepted Answer

A) the AVC and ATC curves are at their respective maximums. 
B) the AVC and ATC curves are at their respective minimums. 
C) the distance between the ATC and AVC curves is at its minimum. 
D) the distance between the ATC and AVC curves is at its maximum. 
A) the AVC and ATC curves are at their respective maximums. 
B) the AVC and ATC curves are at their respective minimums. 
C) the distance between the ATC and AVC curves is at its minimum. 
D) the distance between the ATC and AVC curves is at its maximum.

Exam 22: The Firm: Cost and Output Determination

-The marginal product of labor may increase rapidly initially as more

Marginal physical product and average physical product are measured in

-Refer to the above figure. The curve represents a

-Refer to the above table. When output rises from 2 units to 5 units, marginal costs are

Economies of scale exist where the long-run average cost curve is

What is the most important determinant of the firm's short-run cost curves?

If the marginal product of an input is falling, then

-In the above figure, at an output level of Q1, total variable cost is

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?

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

Marginal cost is equal to

-Refer to the above table. What is MC when output rises from 0 unit to 1 unit?

-If we add successive laborers to work a given amount of land on a wheat farm, eventually

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that

The physical output that is due to the addition of one more unit of a variable factor of production is

When average variable costs are rising,

All of the following are most likely to be fixed costs EXCEPT the cost relating to

-If total costs are $50,000 when 1000 units are produced, and total costs are $50,100 when 1001 units are produced, we can conclude that

-Use the above figure. The ATC at output 10 is

MC = AVC and MC = ATC at points at which

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

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