Question 1

When the marginal physical product is falling,

Accepted Answer

A) marginal cost is rising. 
B) average fixed costs are rising. 
C) total costs are falling. 
D) average variable costs are falling. 
A) marginal cost is rising. 
B) average fixed costs are rising. 
C) total costs are falling. 
D) average variable costs are falling.

Question 2

Summing all of the costs that do not change as output varies yields

Accepted Answer

A) variable costs. 
B) fixed costs. 
C) implicit costs. 
D) explicit costs. 
A) variable costs. 
B) fixed costs. 
C) implicit costs. 
D) explicit costs.

Question 3

Graphically, what does the marginal product curve for a labor input look like? Explain in words.

Accepted Answer

Typically, the marginal product of labor

Question 4

When Super Stuff Corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is Super Stuff's average fixed cost?

Accepted Answer

A) $75,000 
B) $30 
C) $225,000 
D) $15 
A) $75,000 
B) $30 
C) $225,000 
D) $15

Question 5

-Refer to the above table. What are total 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 6

-Refer to the above figure. The curve reflects

Accepted Answer

A) the law of diminishing marginal product in labor. 
B) the law of increasing marginal product in labor. 
C) the law of diminishing marginal product in capital. 
D) the law of increasing marginal product in capital. 
A) the law of diminishing marginal product in labor. 
B) the law of increasing marginal product in labor. 
C) the law of diminishing marginal product in capital. 
D) the law of increasing marginal product in capital.

Question 7

-Refer to the above table. At what quantity of labor does the law of diminishing marginal product set in?

Accepted Answer

A) After 1 unit. 
B) After 2 units. 
C) After 3 units. 
D) After 6 units. 
A) After 1 unit. 
B) After 2 units. 
C) After 3 units. 
D) After 6 units.

Question 8

How is the long-run average cost curve found? What is its importance to the firm?

Accepted Answer

The long-run average cost curve is the l

Question 9

Average total cost equals

Accepted Answer

A) TC/Q. 
B) TVC/Q. 
C) TFC/Q. 
D) change in total cost/change in output. 
A) TC/Q. 
B) TVC/Q. 
C) TFC/Q. 
D) change in total cost/change in output.

Question 10

"The long-run average cost curve is derived from adding all short-run average cost curves together." Do you agree or disagree? Explain.

Accepted Answer

Disagree. The long-run average cost curv

Question 11

-If the marginal product curve is intersecting the average product curve, we know that

Accepted Answer

A) the average variable cost curve is intersecting the average total cost curve. 
B) the marginal cost curve is intersecting the average fixed cost curve. 
C) the average total cost curve lies above the marginal cost curve. 
D) the marginal cost curve is intersecting the average total cost curve. 
A) the average variable cost curve is intersecting the average total cost curve. 
B) the marginal cost curve is intersecting the average fixed cost curve. 
C) the average total cost curve lies above the marginal cost curve. 
D) the marginal cost curve is intersecting the average total cost curve.

Question 12

The firm's short-run costs contain

Accepted Answer

A) only variable costs. 
B) only fixed costs. 
C) both variable and fixed costs. 
D) only opportunity costs. 
A) only variable costs. 
B) only fixed costs. 
C) both variable and fixed costs. 
D) only opportunity costs.

Question 13

In the short run, the additional output that results from hiring an additional unit of a variable input is the

Accepted Answer

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

Question 14

-Refer to the above table. At what quantity of labor does the average variable cost curve start to increase?

Accepted Answer

A) After 1 unit 
B) After 2 units 
C) After 3 units 
D) After 6 units 
A) After 1 unit 
B) After 2 units 
C) After 3 units 
D) After 6 units

Question 15

Notice the costs as given in the table below. What is the marginal cost when total cost is $23?

Accepted Answer

A) $5 
B) $3 
C) $2 
D) $1 
A) $5 
B) $3 
C) $2 
D) $1

Question 16

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

Accepted Answer

A) the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B) the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C) long-run average total cost is lowest at that rate of output. 
D) total fixed costs are minimized at that rate of output. 
A) the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B) the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C) long-run average total cost is lowest at that rate of output. 
D) total fixed costs are minimized at that rate of output.

Question 17

-Using the above table, the total product and average physical product when 5 workers are employed are

Accepted Answer

A) 61 and 21, respectively. 
B) 62 and 13, respectively. 
C) 62 and 15, respectively. 
D) 61 and 12.2, respectively. 
A) 61 and 21, respectively. 
B) 62 and 13, respectively. 
C) 62 and 15, respectively. 
D) 61 and 12.2, respectively.

Question 18

-In the above figure, for any output level less than Q2, this firm experiences

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant economies of scale. 
D) decreasing long run average costs. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant economies of scale. 
D) decreasing long run average costs.

Question 19

At an output at which ATC is greater than MC,

Accepted Answer

A) the ATC curve is downward sloping. 
B) the ATC curve is upward sloping. 
C) the AFC curve is upward sloping. 
D) the AVC curve is upward sloping. 
A) the ATC curve is downward sloping. 
B) the ATC curve is upward sloping. 
C) the AFC curve is upward sloping. 
D) the AVC curve is upward sloping.

Question 20

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the average product of the first two workers?

Accepted Answer

A) 15 cookies 
B) 20 cookies 
C) 17.5 cookies 
D) 35 cookies 
A) 15 cookies 
B) 20 cookies 
C) 17.5 cookies 
D) 35 cookies

Exam 22: The Firm: Cost and Output Determination

When the marginal physical product is falling,

Summing all of the costs that do not change as output varies yields

Graphically, what does the marginal product curve for a labor input look like? Explain in words.

When Super Stuff Corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is Super Stuff's average fixed cost?

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

-Refer to the above figure. The curve reflects

-Refer to the above table. At what quantity of labor does the law of diminishing marginal product set in?

How is the long-run average cost curve found? What is its importance to the firm?

Average total cost equals

"The long-run average cost curve is derived from adding all short-run average cost curves together." Do you agree or disagree? Explain.

-If the marginal product curve is intersecting the average product curve, we know that

The firm's short-run costs contain

In the short run, the additional output that results from hiring an additional unit of a variable input is the

-Refer to the above table. At what quantity of labor does the average variable cost curve start to increase?

Notice the costs as given in the table below. What is the marginal cost when total cost is $23?

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

-Using the above table, the total product and average physical product when 5 workers are employed are

-In the above figure, for any output level less than Q2, this firm experiences

At an output at which ATC is greater than MC,

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the average product of the first two workers?

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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