Question 1

The long run is

Accepted Answer

A) over one year. 
B) over five years. 
C) when all factors of production are fixed. 
D) the time period in which all factors of production can be varied. 
A) over one year. 
B) over five years. 
C) when all factors of production are fixed. 
D) the time period in which all factors of production can be varied.

Question 2

If the price of labor is constant and a firm experiences diminishing marginal product, then its

Accepted Answer

A) marginal costs decrease. 
B) fixed costs increase. 
C) average variable cost increases. 
D) total costs decrease. 
A) marginal costs decrease. 
B) fixed costs increase. 
C) average variable cost increases. 
D) total costs decrease.

Question 3

In the short run, average total cost is

Accepted Answer

A) higher than average variable cost. 
B) equal to average variable cost. 
C) less than average variable cost. 
D) sometimes higher and sometimes lower than average variable cost. 
A) higher than average variable cost. 
B) equal to average variable cost. 
C) less than average variable cost. 
D) sometimes higher and sometimes lower than average variable cost.

Question 4

The concept of the production function implies that a firm using resources inefficiently will

Accepted Answer

A) obtain less output than the theoretical production function shows. 
B) obtain more output than the theoretical production function shows. 
C) obtain exactly the amount that the theoretical production function shows. 
D) not be subject to diminishing marginal product. 
A) obtain less output than the theoretical production function shows. 
B) obtain more output than the theoretical production function shows. 
C) obtain exactly the amount that the theoretical production function shows. 
D) not be subject to diminishing marginal product.

Question 5

The law of diminishing marginal product

Accepted Answer

A) holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B) does not hold in the short run because of fixed costs. 
C) does not hold in the long run because there are no fixed inputs in the long run. 
D) holds in the short and long run because of economies to scale. 
A) holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B) does not hold in the short run because of fixed costs. 
C) does not hold in the long run because there are no fixed inputs in the long run. 
D) holds in the short and long run because of economies to scale.

Question 6

Diseconomies to scale are illustrated by

Accepted Answer

A) a downward sloping long-run average cost curve. 
B) a horizontal long-run average cost curve. 
C) an upward sloping long-run average cost curve. 
D) a long-run average cost curve that is shaped like an upside down U. 
A) a downward sloping long-run average cost curve. 
B) a horizontal long-run average cost curve. 
C) an upward sloping long-run average cost curve. 
D) a long-run average cost curve that is shaped like an upside down U.

Question 7

When marginal costs are rising,

Accepted Answer

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

Question 8

The minimum efficient scale in the figure below shows that

Accepted Answer

A) point A is the minimum efficient scale (MES)for the firm. 
B) point B is the minimum efficient scale (MES)for the firm. 
C) the long-run average cost curve (LA
C) reaches a minimum point at B. 
D) the minimum efficient scale (MES)illustrates maximum average costs. 
A) point A is the minimum efficient scale (MES)for the firm. 
B) point B is the minimum efficient scale (MES)for the firm. 
C) the long-run average cost curve (LA
C) reaches a minimum point at B. 
D) the minimum efficient scale (MES)illustrates maximum average costs.

Question 9

The law of diminishing marginal product is NOT responsible for the shape of

Accepted Answer

A) the total cost curve. 
B) the average variable cost curve. 
C) total fixed cost curve. 
D) marginal cost curve. 
A) the total cost curve. 
B) the average variable cost curve. 
C) total fixed cost curve. 
D) marginal cost curve.

Question 10

-Refer to the above table. What does total product equal when 4 units of labor are used?

Accepted Answer

A) 1328 
B) 332 
C) 320 
D) 960 
A) 1328 
B) 332 
C) 320 
D) 960

Question 11

-Refer to the above figure. Average total costs are represented by curve

Accepted Answer

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

Question 12

Why might firms experience diseconomies of scale?

Accepted Answer

The main reason for firms to experience

Question 13

In the short run, total costs equal

Accepted Answer

A) the sum of total fixed costs and total variable costs. 
B) the sum of total fixed costs and total explicit costs. 
C) the sum of total variable costs and total implicit costs. 
D) the sum of total fixed costs and total implicit costs. 
A) the sum of total fixed costs and total variable costs. 
B) the sum of total fixed costs and total explicit costs. 
C) the sum of total variable costs and total implicit costs. 
D) the sum of total fixed costs and total implicit costs.

Question 14

-Suppose there are fixed costs and marginal costs that are constant. Then we know that

Accepted Answer

A) average total costs are also constant. 
B) average variable costs decrease continuously as output increases, and lie above the marginal cost curve. 
C) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which also is decreasing continuously. 
D) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which is constant. 
A) average total costs are also constant. 
B) average variable costs decrease continuously as output increases, and lie above the marginal cost curve. 
C) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which also is decreasing continuously. 
D) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which is constant.

Question 15

-In the above table, when the firm employs 3 workers, the marginal product will be

Accepted Answer

A) 42 snowboards. 
B) 30 snowboards. 
C) 36.67 snowboards. 
D) 208 snowboards. 
A) 42 snowboards. 
B) 30 snowboards. 
C) 36.67 snowboards. 
D) 208 snowboards.

Question 16

If four laborers were hired and we discovered that we could produce 88 units of production, what is the average physical product of labor?

Accepted Answer

A) 44 
B) 352 
C) 11 
D) 22 
A) 44 
B) 352 
C) 11 
D) 22

Question 17

Which of the following is NOT correct?

Accepted Answer

A) MC = change in TC/change in Q 
B) ATC = TC/Q 
C) AVC = TVC/Q 
D) ATC + AVC = AFC 
A) MC = change in TC/change in Q 
B) ATC = TC/Q 
C) AVC = TVC/Q 
D) ATC + AVC = AFC

Question 18

Which of the following is correct?

Accepted Answer

A) TC = TFC + TVC 
B) TC = TFC - TVC 
C) TC = TFC * TVC 
D) TC = TFC / TVC 
A) TC = TFC + TVC 
B) TC = TFC - TVC 
C) TC = TFC * TVC 
D) TC = TFC / TVC

Question 19

-In the above table, what is the average variable cost to produce 4 units of output?

Accepted Answer

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

Question 20

If the price of labor is constant and a firm experiences diminishing marginal product, then its

Accepted Answer

A) marginal costs increase. 
B) marginal costs decrease. 
C) fixed costs increase. 
D) total costs decrease. 
A) marginal costs increase. 
B) marginal costs decrease. 
C) fixed costs increase. 
D) total costs decrease.

Exam 22: The Firm: Cost and Output Determination

The long run is

If the price of labor is constant and a firm experiences diminishing marginal product, then its

In the short run, average total cost is

The concept of the production function implies that a firm using resources inefficiently will

The law of diminishing marginal product

Diseconomies to scale are illustrated by

When marginal costs are rising,

The minimum efficient scale in the figure below shows that

The law of diminishing marginal product is NOT responsible for the shape of

-Refer to the above table. What does total product equal when 4 units of labor are used?

-Refer to the above figure. Average total costs are represented by curve

Why might firms experience diseconomies of scale?

In the short run, total costs equal

-Suppose there are fixed costs and marginal costs that are constant. Then we know that

-In the above table, when the firm employs 3 workers, the marginal product will be

If four laborers were hired and we discovered that we could produce 88 units of production, what is the average physical product of labor?

Which of the following is NOT correct?

Which of the following is correct?

-In the above table, what is the average variable cost to produce 4 units of output?

If the price of labor is constant and a firm experiences diminishing marginal product, then its

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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