Question 1

-Using the above table, the TVC, the TC, and MC when output is 3 units are

Accepted Answer

A) $45, $50, and $15, respectively. 
B) $15, $20, and $15, respectively. 
C) $45, $18, and $15, respectively. 
D) $15, $45, and $15, respectively. 
A) $45, $50, and $15, respectively. 
B) $15, $20, and $15, respectively. 
C) $45, $18, and $15, respectively. 
D) $15, $45, and $15, respectively.

Question 2

Which of the following statements with respect to the figure below is INCORRECT?

Accepted Answer

A) All the possible short-run average cost curves that correspond to the different plant sizes are shown as   -   . 
B) If the anticipated permanent rate of output per unit time period is   in panel (a), the optimal plant would correspond to   . 
C) If the permanent rate of output increases to   in panel (a), it will be more profitable to have a plant size corresponding to   . 
D) The long-run average cost curve LAC in panel (b)is sometimes called the planning curve representing the locus (path)of points. 
A) All the possible short-run average cost curves that correspond to the different plant sizes are shown as   -   . 
B) If the anticipated permanent rate of output per unit time period is   in panel (a), the optimal plant would correspond to   . 
C) If the permanent rate of output increases to   in panel (a), it will be more profitable to have a plant size corresponding to   . 
D) The long-run average cost curve LAC in panel (b)is sometimes called the planning curve representing the locus (path)of points.

Question 3

The law of diminishing marginal product is a statement

Accepted Answer

A) that concerns changes in variable input and changes in output. 
B) that concerns the long run. 
C) that concerns changes in profits. 
D) that relates to plant size. 
A) that concerns changes in variable input and changes in output. 
B) that concerns the long run. 
C) that concerns changes in profits. 
D) that relates to plant size.

Question 4

-In the above table, what is the marginal cost to produce the 4th unit of output?

Accepted Answer

A) $30 
B) $60 
C) $55 
D) $20 
A) $30 
B) $60 
C) $55 
D) $20

Question 5

A firm has the following production relationship between labor and output, for a fixed capital stock.  
-According to the above table, what is the marginal product of the 5th unit of labor?

Accepted Answer

A) 3 
B) 4 
C) 5.2 
D) 5 
A) 3 
B) 4 
C) 5.2 
D) 5

Question 6

-In the above table, average physical product is 30 snowboards when

Accepted Answer

A) 4 workers are employed. 
B) 3 workers are employed. 
C) 2 workers are employed. 
D) 1 worker is employed. 
A) 4 workers are employed. 
B) 3 workers are employed. 
C) 2 workers are employed. 
D) 1 worker is employed.

Question 7

-Using the above table, we see that when output is 4 units, average total cost equals

Accepted Answer

A) $24.00. 
B) $14.00. 
C) $3.50. 
D) $6.00. 
A) $24.00. 
B) $14.00. 
C) $3.50. 
D) $6.00.

Question 8

-Short-run cost relationships for a firm are

Accepted Answer

A) determined by the law of diminishing marginal product. 
B) determined by the specific long-run relationships that exist. 
C) due to the level of wages relative to other input prices. 
D) due to the normal contractual relations in a market. 
A) determined by the law of diminishing marginal product. 
B) determined by the specific long-run relationships that exist. 
C) due to the level of wages relative to other input prices. 
D) due to the normal contractual relations in a market.

Question 9

Explain how the long-run average cost curve is constructed graphically.

Accepted Answer

The long-run average cost curv

Question 10

What is the relationship between marginal cost and marginal physical product?

Accepted Answer

Assuming labor is the only variable inpu

Question 11

Fixed costs are

Accepted Answer

A) costs that never change. 
B) costs that a firm incurs even when output is zero. 
C) not actually costs since they do not affect the decisions of a firm. 
D) costs that increase at a constant rate when output increases. 
A) costs that never change. 
B) costs that a firm incurs even when output is zero. 
C) not actually costs since they do not affect the decisions of a firm. 
D) costs that increase at a constant rate when output increases.

Question 12

Which of the following statements is not true about the short run and the long run?

Accepted Answer

A) The short run for a firm is today while the long run is next week. 
B) These terms apply to the planning decisions of firms. 
C) The firm is always operating in the short run. 
D) In the short run, the firm can change the amount of variable inputs. 
A) The short run for a firm is today while the long run is next week. 
B) These terms apply to the planning decisions of firms. 
C) The firm is always operating in the short run. 
D) In the short run, the firm can change the amount of variable inputs.

Question 13

Which of the following is a short-run decision for a firm?

Accepted Answer

A) Downsizing the firm's manufacturing plant 
B) Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C) Firing workers 
D) Investing in a new addition to the firm's manufacturing plant 
A) Downsizing the firm's manufacturing plant 
B) Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C) Firing workers 
D) Investing in a new addition to the firm's manufacturing plant

Question 14

In the above table, the marginal cost of the ninth unit is

Accepted Answer

A) $4.00. 
B) $5.00. 
C) $6.00. 
D) $7.00. 
A) $4.00. 
B) $5.00. 
C) $6.00. 
D) $7.00.

Question 15

The best way to think of the short run and the long run is as

Accepted Answer

A) specific periods of time, although the time periods may differ across industries. 
B) planning terms that apply to managers. 
C) concepts that apply to all people who work for a firm. 
D) a concept that only accountants are concerned with. 
A) specific periods of time, although the time periods may differ across industries. 
B) planning terms that apply to managers. 
C) concepts that apply to all people who work for a firm. 
D) a concept that only accountants are concerned with.

Question 16

-Use the above figure. The AFC at output level 20 is

Accepted Answer

A) $10.00. 
B) $0.50. 
C) $3.00. 
D) $1.00. 
A) $10.00. 
B) $0.50. 
C) $3.00. 
D) $1.00.

Question 17

-After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as

Accepted Answer

A) the long run. 
B) the law of diminishing marginal product. 
C) marginal physical product. 
D) short run average cost. 
A) the long run. 
B) the law of diminishing marginal product. 
C) marginal physical product. 
D) short run average cost.

Question 18

The average fixed cost curve

Accepted Answer

A) is parallel to the x-axis. 
B) is the distance between the TC and TVC curves. 
C) slopes downward as output increases. 
D) increases as the cost of inputs rise. 
A) is parallel to the x-axis. 
B) is the distance between the TC and TVC curves. 
C) slopes downward as output increases. 
D) increases as the cost of inputs rise.

Question 19

Fred's Franks originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Fred purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been successful. When Fred's Franks expanded to two locations, which of the following did NOT occur?

Accepted Answer

A) Fred's production function changed. 
B) Production increased. 
C) The company increased the inputs it employs. 
D) The firm employed additional capital. 
A) Fred's production function changed. 
B) Production increased. 
C) The company increased the inputs it employs. 
D) The firm employed additional capital.

Question 20

-The marginal cost curve intersects

Accepted Answer

A) the average fixed cost curve at its minimum. 
B) the average total cost curve at its maximum. 
C) the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D) the minimum of the average variable cost and average total cost curves. 
A) the average fixed cost curve at its minimum. 
B) the average total cost curve at its maximum. 
C) the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D) the minimum of the average variable cost and average total cost curves.

-Using the above table, the TVC, the TC, and MC when output is 3 units are

Which of the following statements with respect to the figure below is INCORRECT?

The law of diminishing marginal product is a statement

-In the above table, what is the marginal cost to produce the 4th unit of output?

A firm has the following production relationship between labor and output, for a fixed capital stock. -According to the above table, what is the marginal product of the 5th unit of labor?

-In the above table, average physical product is 30 snowboards when

-Using the above table, we see that when output is 4 units, average total cost equals

-Short-run cost relationships for a firm are

Explain how the long-run average cost curve is constructed graphically.

What is the relationship between marginal cost and marginal physical product?

Fixed costs are

Which of the following statements is not true about the short run and the long run?

Which of the following is a short-run decision for a firm?

In the above table, the marginal cost of the ninth unit is

The best way to think of the short run and the long run is as

-Use the above figure. The AFC at output level 20 is

-After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as

The average fixed cost curve

-The marginal cost curve intersects

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

-Using the above table, the TVC, the TC, and MC when output is 3 units are

Which of the following statements with respect to the figure below is INCORRECT?

The law of diminishing marginal product is a statement

-In the above table, what is the marginal cost to produce the 4th unit of output?

A firm has the following production relationship between labor and output, for a fixed capital stock. -According to the above table, what is the marginal product of the 5th unit of labor?

-In the above table, average physical product is 30 snowboards when

-Using the above table, we see that when output is 4 units, average total cost equals

-Short-run cost relationships for a firm are

Explain how the long-run average cost curve is constructed graphically.

What is the relationship between marginal cost and marginal physical product?

Fixed costs are

Which of the following statements is not true about the short run and the long run?

Which of the following is a short-run decision for a firm?

In the above table, the marginal cost of the ninth unit is

The best way to think of the short run and the long run is as

-Use the above figure. The AFC at output level 20 is

-After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as

The average fixed cost curve

-The marginal cost curve intersects

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