Question 1

The change in total costs due to a one-unit change in the production rate is

Accepted Answer

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

Question 2

The production function does not provide information about

Accepted Answer

A) the technology used in the production process. 
B) the types of inputs used in the production process. 
C) the relationship between changes in quantity of inputs and changes in the quantity of output. 
D) the profits of producing a good. 
A) the technology used in the production process. 
B) the types of inputs used in the production process. 
C) the relationship between changes in quantity of inputs and changes in the quantity of output. 
D) the profits of producing a good.

Question 3

The difference between the short run and the long run is

Accepted Answer

A) economic profits are negative in the short run and positive in the long run. 
B) economic and accounting profits are not equal in the short run but are equal in the long run. 
C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D) the short run is a period less than a year while the long run is a period greater than a year. 
A) economic profits are negative in the short run and positive in the long run. 
B) economic and accounting profits are not equal in the short run but are equal in the long run. 
C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D) the short run is a period less than a year while the long run is a period greater than a year.

Question 4

-Refer to the above table. What is AVC at an output of 2 units?

Accepted Answer

A) $7 
B) $16 
C) $45 
D) $61 
A) $7 
B) $16 
C) $45 
D) $61

Question 5

Which of the following activities is not included in the production process?

Accepted Answer

A) Determining the value of the goods 
B) Making the goods 
C) Packaging the goods 
D) Transporting the goods 
A) Determining the value of the goods 
B) Making the goods 
C) Packaging the goods 
D) Transporting the goods

Question 6

-If average variable costs are increasing while average total costs are decreasing, then

Accepted Answer

A) marginal cost must lie between average variable and average total costs. 
B) marginal cost must equal average variable cost. 
C) marginal cost must equal average total cost. 
D) fixed costs must be zero. 
A) marginal cost must lie between average variable and average total costs. 
B) marginal cost must equal average variable cost. 
C) marginal cost must equal average total cost. 
D) fixed costs must be zero.

Question 7

The law of diminishing marginal product is responsible for

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) none of the long-run relationships. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) none of the long-run relationships.

Question 8

Assume it takes 10 units of labor to produce 4 units of output. When the price of labor is $6 per unit and fixed costs equal $60, what is the total cost of those 4 units of output?

Accepted Answer

A) $60 
B) $70 
C) $120 
D) $84 
A) $60 
B) $70 
C) $120 
D) $84

Question 9

What is minimum efficient scale? Why is it important?

Accepted Answer

Minimum efficient scale (MES)is the lowe

Question 10

-In the above table, the average physical product of the 6th worker is

Accepted Answer

A) 5. 
B) 4. 
C) 3. 
D) 0. 
A) 5. 
B) 4. 
C) 3. 
D) 0.

Question 11

Fixed costs include all but

Accepted Answer

A) a normal rate of return on investment. 
B) temporary labor. 
C) property tax on the existing buildings. 
D) machines that have been producing output. 
A) a normal rate of return on investment. 
B) temporary labor. 
C) property tax on the existing buildings. 
D) machines that have been producing output.

Question 12

-Using the above table, the AFC, the AVC, and the ATC when output is 1 unit are

Accepted Answer

A) $10, $10, and $20, respectively. 
B) $5, $10, and $15, respectively. 
C) $0, $10, and $10, respectively. 
D) $5, $10, and $5, respectively. 
A) $10, $10, and $20, respectively. 
B) $5, $10, and $15, respectively. 
C) $0, $10, and $10, respectively. 
D) $5, $10, and $5, respectively.

Question 13

"The short-run average total cost curve and the long-run average cost curve are both U-shaped for the same reasons." Do you agree or disagree? Why?

Accepted Answer

Disagree. The U-shaped short-run average

Question 14

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

Accepted Answer

When average costs continue to decline a

Question 15

Which of the following statement is correct?

Accepted Answer

A) When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing. 
B) When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing. 
C) When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product. 
D) When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate. 
A) When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing. 
B) When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing. 
C) When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product. 
D) When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate.

Question 16

-Refer to the above table. What are total variable costs at an output of 3 units?

Accepted Answer

A) $90 
B) $120 
C) $150 
D) $270 
A) $90 
B) $120 
C) $150 
D) $270

Question 17

-In the above table, the marginal physical product of the 6th worker is

Accepted Answer

A) 5. 
B) 4. 
C) 3. 
D) 0. 
A) 5. 
B) 4. 
C) 3. 
D) 0.

Question 18

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making a

Accepted Answer

A) long-run decision. 
B) short-run decision. 
C) immediate-run decision. 
D) variable-input decision. 
A) long-run decision. 
B) short-run decision. 
C) immediate-run decision. 
D) variable-input decision.

Question 19

Use the information from the below table to answer following question(s).  
-In the above table, the average product for 3 units of labor is

Accepted Answer

A) 30.0. 
B) 26.7. 
C) 26.3. 
D) 25.0. 
A) 30.0. 
B) 26.7. 
C) 26.3. 
D) 25.0.

Question 20

-Use the above figure. At an output equal to "Q" the total variable cost for the firm will be the area

Accepted Answer

A) OQAB. 
B) OQEB. 
C) OQFA. 
D) OQDC. 
A) OQAB. 
B) OQEB. 
C) OQFA. 
D) OQDC.

Exam 22: The Firm: Cost and Output Determination

The change in total costs due to a one-unit change in the production rate is

The production function does not provide information about

The difference between the short run and the long run is

-Refer to the above table. What is AVC at an output of 2 units?

Which of the following activities is not included in the production process?

-If average variable costs are increasing while average total costs are decreasing, then

The law of diminishing marginal product is responsible for

Assume it takes 10 units of labor to produce 4 units of output. When the price of labor is $6 per unit and fixed costs equal $60, what is the total cost of those 4 units of output?

What is minimum efficient scale? Why is it important?

-In the above table, the average physical product of the 6th worker is

Fixed costs include all but

-Using the above table, the AFC, the AVC, and the ATC when output is 1 unit are

"The short-run average total cost curve and the long-run average cost curve are both U-shaped for the same reasons." Do you agree or disagree? Why?

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

Which of the following statement is correct?

-Refer to the above table. What are total variable costs at an output of 3 units?

-In the above table, the marginal physical product of the 6th worker is

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making a

Use the information from the below table to answer following question(s). -In the above table, the average product for 3 units of labor is

-Use the above figure. At an output equal to "Q" the total variable cost for the firm will be the area

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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