Question 1

-A decrease in the long-run average costs resulting from increasing output is referred to as

Accepted Answer

A) diseconomies of scale. 
B) constant return to scale. 
C) a scale invariant process. 
D) economies of scale. 
A) diseconomies of scale. 
B) constant return to scale. 
C) a scale invariant process. 
D) economies of scale.

Question 2

Another term for the total quantity of output is

Accepted Answer

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

Question 3

-In the above figure, if this firm produces output level Q2, it has average variable costs of

Accepted Answer

A) OF. 
B) OE. 
C) OC. 
D) OD. 
A) OF. 
B) OE. 
C) OC. 
D) OD.

Question 4

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

Accepted Answer

The short run is the time period when at

Question 5

-Using the above table, the TVC, the TC, and the MC when output is 4 units are

Accepted Answer

A) $67, $72, and $22, respectively. 
B) $16.75, $21.75, and $22, respectively. 
C) $16.75, $21.75, and $30, respectively. 
D) $67, $62, and $22, respectively. 
A) $67, $72, and $22, respectively. 
B) $16.75, $21.75, and $22, respectively. 
C) $16.75, $21.75, and $30, respectively. 
D) $67, $62, and $22, respectively.

Question 6

-In the above table, total fixed costs are

Accepted Answer

A) $10.00. 
B) $5.00. 
C) $8.00. 
D) $18.00. 
A) $10.00. 
B) $5.00. 
C) $8.00. 
D) $18.00.

Question 7

When total product is rising,

Accepted Answer

A) fixed cost must be rising. 
B) marginal product must be positive. 
C) variable cost must be declining. 
D) marginal product must be negative. 
A) fixed cost must be rising. 
B) marginal product must be positive. 
C) variable cost must be declining. 
D) marginal product must be negative.

Question 8

When increasing its output results in falling costs, a firm that can adjust all inputs is experiencing

Accepted Answer

A) diseconomies of scale. 
B) economies of scale. 
C) loss. 
D) capital gains. 
A) diseconomies of scale. 
B) economies of scale. 
C) loss. 
D) capital gains.

Question 9

The point of saturation occurs when a firm

Accepted Answer

A) has total returns equal to zero. 
B) first encounters negative marginal product. 
C) first experiences positive marginal product. 
D) maximizes its total returns. 
A) has total returns equal to zero. 
B) first encounters negative marginal product. 
C) first experiences positive marginal product. 
D) maximizes its total returns.

Question 10

What factors generate economies of scale?

Accepted Answer

Economies of scale can be generated by s

Question 11

-Refer to the above table. When output rises from 2 units to 3 units, marginal costs are

Accepted Answer

A) $7. 
B) $10. 
C) $22. 
D) $41. 
A) $7. 
B) $10. 
C) $22. 
D) $41.

Question 12

A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firm's total costs are therefore

Accepted Answer

A) $1,250. 
B) $1,350. 
C) $1,150. 
D) $1,500. 
A) $1,250. 
B) $1,350. 
C) $1,150. 
D) $1,500.

Question 13

The planning curve is the

Accepted Answer

A) long-run average cost curve. 
B) production function. 
C) short-run marginal cost curve. 
D) short-run average cost curve. 
A) long-run average cost curve. 
B) production function. 
C) short-run marginal cost curve. 
D) short-run average cost curve.

Question 14

When output is 100 units, the firm's total fixed cost is $500. What will this firm's total fixed cost be if output doubles to 200 units?

Accepted Answer

A) $1,000 
B) $500 
C) $250 
D) Can't tell from the information provided 
A) $1,000 
B) $500 
C) $250 
D) Can't tell from the information provided

Question 15

Increases in long-run average cost that result from output increases is

Accepted Answer

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

Question 16

-Refer to the above figure. Minimum efficient scale is at output rate

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 17

Total product divided by the variable input 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 18

If a firm can vary all of its factors of production, it is operating in

Accepted Answer

A) the long run. 
B) the immediate run. 
C) equilibrium. 
D) the short run. 
A) the long run. 
B) the immediate run. 
C) equilibrium. 
D) the short run.

Question 19

Which of the following is a long-run adjustment?

Accepted Answer

A) A restaurant hires a new chef. 
B) A company builds a new manufacturing plant. 
C) A bank hires a new CEO. 
D) A company hires ten new management trainees. 
A) A restaurant hires a new chef. 
B) A company builds a new manufacturing plant. 
C) A bank hires a new CEO. 
D) A company hires ten new management trainees.

Question 20

The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant returns of scale. 
D) minimum efficient scale. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant returns of scale. 
D) minimum efficient scale.

Exam 22: The Firm: Cost and Output Determination

-A decrease in the long-run average costs resulting from increasing output is referred to as

Another term for the total quantity of output is

-In the above figure, if this firm produces output level Q2, it has average variable costs of

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

-Using the above table, the TVC, the TC, and the MC when output is 4 units are

-In the above table, total fixed costs are

When total product is rising,

When increasing its output results in falling costs, a firm that can adjust all inputs is experiencing

The point of saturation occurs when a firm

What factors generate economies of scale?

-Refer to the above table. When output rises from 2 units to 3 units, marginal costs are

A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firm's total costs are therefore

The planning curve is the

When output is 100 units, the firm's total fixed cost is $500. What will this firm's total fixed cost be if output doubles to 200 units?

Increases in long-run average cost that result from output increases is

-Refer to the above figure. Minimum efficient scale is at output rate

Total product divided by the variable input is

If a firm can vary all of its factors of production, it is operating in

Which of the following is a long-run adjustment?

The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is

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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