Question 1

The marginal physical product of labor is calculated assuming other factor inputs

Accepted Answer

A) increase more than proportionately. 
B) increase less than proportionately. 
C) remain constant. 
D) decrease. 
A) increase more than proportionately. 
B) increase less than proportionately. 
C) remain constant. 
D) decrease.

Question 2

What is the law of diminishing marginal product? Is it a realistic concept for describing the real world? Explain.

Accepted Answer

The law of diminishing marginal product

Question 3

The focus of firm decisions in the short run is primarily on

Accepted Answer

A) variable inputs. 
B) capital investment. 
C) plant size. 
D) economies of scale. 
A) variable inputs. 
B) capital investment. 
C) plant size. 
D) economies of scale.

Question 4

Production

Accepted Answer

A) is a process by which resources are produced. 
B) is a process by which resources are transferred into goods and services. 
C) only applies to manufacturing of goods. 
D) is carried on by corporations, but not by sole proprietorships. 
A) is a process by which resources are produced. 
B) is a process by which resources are transferred into goods and services. 
C) only applies to manufacturing of goods. 
D) is carried on by corporations, but not by sole proprietorships.

Question 5

As a firm continues to produce additional output, which of the following will continue to decline as output expands?

Accepted Answer

A) average total costs 
B) marginal costs 
C) average fixed costs 
D) opportunity costs 
A) average total costs 
B) marginal costs 
C) average fixed costs 
D) opportunity costs

Question 6

-Refer to the above table. What does total product equal when 2 units of labor are used?

Accepted Answer

A) 320 
B) 335 
C) 350 
D) 670 
A) 320 
B) 335 
C) 350 
D) 670

Question 7

-In the above table, the average physical product of the 3rd worker is

Accepted Answer

A) 5. 
B) 4. 
C) 3. 
D) 12. 
A) 5. 
B) 4. 
C) 3. 
D) 12.

Question 8

Which of the following is true?

Accepted Answer

A) The MC curve intersects AFC at its minimum point. 
B) If MC is below AVC, AVC must be increasing. 
C) If MC is above ATC, ATC must be increasing. 
D) None of the above. 
A) The MC curve intersects AFC at its minimum point. 
B) If MC is below AVC, AVC must be increasing. 
C) If MC is above ATC, ATC must be increasing. 
D) None of the above.

Question 9

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

Accepted Answer

A) 21 
B) 17 
C) 63 
D) 189 
A) 21 
B) 17 
C) 63 
D) 189

Question 10

All of the following are reasons for economies of scale EXCEPT

Accepted Answer

A) diminishing marginal product. 
B) specialization. 
C) dimensional factors. 
D) improved production equipment. 
A) diminishing marginal product. 
B) specialization. 
C) dimensional factors. 
D) improved production equipment.

Question 11

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average variable costs of $50. The firm's total fixed costs are

Accepted Answer

A) $50. 
B) $5,000. 
C) $150. 
D) $15,000. 
A) $50. 
B) $5,000. 
C) $150. 
D) $15,000.

Question 12

If in the short run total product is decreasing as more workers are hired, then the marginal physical product is

Accepted Answer

A) increasing. 
B) zero. 
C) negative. 
D) positive. 
A) increasing. 
B) zero. 
C) negative. 
D) positive.

Question 13

A negative value for the marginal physical product would indicate that

Accepted Answer

A) the company has not yet reached the point of saturation. 
B) total output increased by a significant amount. 
C) total output decreased when the extra unit of the variable input was added. 
D) total output increased, but the increase was very small. 
A) the company has not yet reached the point of saturation. 
B) total output increased by a significant amount. 
C) total output decreased when the extra unit of the variable input was added. 
D) total output increased, but the increase was very small.

Question 14

At Phil's Hot Dog Stand, we found the following: 4 laborers produced 66 hot dogs
5 laborers produced 76 hot dogs
6 laborers produced 84 hot dogs
7 laborers produced 88 hot dogs
What was the marginal physical product of the sixth laborer?

Accepted Answer

A) 10 hot dogs 
B) 8 hot dogs 
C) 6 hot dogs 
D) 4 hot dogs 
A) 10 hot dogs 
B) 8 hot dogs 
C) 6 hot dogs 
D) 4 hot dogs

Question 15

-If, in the short run, the level of output is zero, which of the following statement is true?

Accepted Answer

A) total variable cost is zero but total cost equals total fixed cost, and both of the latter exceed zero 
B) total cost and total fixed cost graphs will begin at the origin 
C) total fixed cost will also be zero at first but will rise once output rises 
D) none of the above 
A) total variable cost is zero but total cost equals total fixed cost, and both of the latter exceed zero 
B) total cost and total fixed cost graphs will begin at the origin 
C) total fixed cost will also be zero at first but will rise once output rises 
D) none of the above

Question 16

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

Accepted Answer

Disagree. Diminishing marginal product i

Question 17

The locus of points representing the minimum unit cost of producing any given rate of output is the

Accepted Answer

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

Question 18

Notice the costs of production for a firm in the table below. What are the total costs for outputs of 7 units and 8 units respectively?

Accepted Answer

A) $20.12; $19.33 
B) $17.25; $18.32 
C) $19.33; $20.12 
D) $9.33; $10.12 
A) $20.12; $19.33 
B) $17.25; $18.32 
C) $19.33; $20.12 
D) $9.33; $10.12

Question 19

When the average physical product is falling,

Accepted Answer

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

Question 20

-In the above table, the law of diminishing marginal product sets in after the ________ worker.

Accepted Answer

A) first 
B) sixth 
C) third 
D) fourth 
A) first 
B) sixth 
C) third 
D) fourth

Exam 22: The Firm: Cost and Output Determination

The marginal physical product of labor is calculated assuming other factor inputs

What is the law of diminishing marginal product? Is it a realistic concept for describing the real world? Explain.

The focus of firm decisions in the short run is primarily on

Production

As a firm continues to produce additional output, which of the following will continue to decline as output expands?

-Refer to the above table. What does total product equal when 2 units of labor are used?

-In the above table, the average physical product of the 3rd worker is

Which of the following is true?

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

All of the following are reasons for economies of scale EXCEPT

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average variable costs of $50. The firm's total fixed costs are

If in the short run total product is decreasing as more workers are hired, then the marginal physical product is

A negative value for the marginal physical product would indicate that

At Phil's Hot Dog Stand, we found the following: 4 laborers produced 66 hot dogs 5 laborers produced 76 hot dogs 6 laborers produced 84 hot dogs 7 laborers produced 88 hot dogs What was the marginal physical product of the sixth laborer?

-If, in the short run, the level of output is zero, which of the following statement is true?

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

The locus of points representing the minimum unit cost of producing any given rate of output is the

Notice the costs of production for a firm in the table below. What are the total costs for outputs of 7 units and 8 units respectively?

When the average physical product is falling,

-In the above table, the law of diminishing marginal product sets in after the ________ worker.

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