Question 1

As long as output increases,

Accepted Answer

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

Question 2

When total product is increasing at an increasing rate, marginal product is

Accepted Answer

A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative. 
A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative.

Question 3

The law of diminishing marginal product shows the relationship

Accepted Answer

A) between accounting and economic profits. 
B) between short-run and long-run outputs of a firm. 
C) between inputs and outputs for a firm in the short run. 
D) between inputs and outputs for a firm in the long run. 
A) between accounting and economic profits. 
B) between short-run and long-run outputs of a firm. 
C) between inputs and outputs for a firm in the short run. 
D) between inputs and outputs for a firm in the long run.

Question 4

-Marginal physical product is

Accepted Answer

A) the change in total output from using an additional unit of one variable input, holding other inputs constant. 
B) the change in total output from using an additional unit of all variable inputs. 
C) the total output divided by the number of units of the variable input. 
D) the change in total output divided by the number of units of the variable input, holding constant all other inputs. 
A) the change in total output from using an additional unit of one variable input, holding other inputs constant. 
B) the change in total output from using an additional unit of all variable inputs. 
C) the total output divided by the number of units of the variable input. 
D) the change in total output divided by the number of units of the variable input, holding constant all other inputs.

Question 5

-Refer to the above figure. Diseconomies of scale exist

Accepted Answer

A) over the entire range of output. 
B) from output   to   . 
C) up to output   . 
D) after output   . 
A) over the entire range of output. 
B) from output   to   . 
C) up to output   . 
D) after output   .

Question 6

-In the above table, which two workers have the same marginal physical product?

Accepted Answer

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

Question 7

-Refer to the above table. What are total fixed 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 8

Changes in production functions are associated with changes in

Accepted Answer

A) the level of output. 
B) demand. 
C) the levels of costs. 
D) technology. 
A) the level of output. 
B) demand. 
C) the levels of costs. 
D) technology.

Question 9

-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

Accepted Answer

A) $20, $2.50, and $15, respectively. 
B) $35, $2.50, and $30, respectively. 
C) $30, $2.50, and $40, respectively. 
D) $35, $2.50, and $20, respectively. 
A) $20, $2.50, and $15, respectively. 
B) $35, $2.50, and $30, respectively. 
C) $30, $2.50, and $40, respectively. 
D) $35, $2.50, and $20, respectively.

Question 10

-In the above table, when the firm employs 4 workers, the marginal product will be

Accepted Answer

A) 140 snowboards. 
B) 30 snowboards. 
C) 35 snowboards. 
D) 208 snowboards. 
A) 140 snowboards. 
B) 30 snowboards. 
C) 35 snowboards. 
D) 208 snowboards.

Question 11

-As long as marginal product of labor exceeds the average product of labor, then average product of labor

Accepted Answer

A) must fall. 
B) must rise. 
C) will stay unchanged. 
D) will be at its maximum value. 
A) must fall. 
B) must rise. 
C) will stay unchanged. 
D) will be at its maximum value.

Question 12

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 marginal product of the 3rd worker?

Accepted Answer

A) 21.67 cookies 
B) 65 cookies 
C) 30 cookies 
D) 35 cookies 
A) 21.67 cookies 
B) 65 cookies 
C) 30 cookies 
D) 35 cookies

Question 13

Which of the following would be a fixed input to an automobile firm?

Accepted Answer

A) Steel 
B) A factory in Detroit 
C) Car batteries 
D) Engineers 
A) Steel 
B) A factory in Detroit 
C) Car batteries 
D) Engineers

Question 14

Use the information from the below table to answer following question(s).  
-In the above table, the marginal product of the fourth worker is

Accepted Answer

A) 30. 
B) 25. 
C) 20. 
D) 15. 
A) 30. 
B) 25. 
C) 20. 
D) 15.

Question 15

Average fixed costs will

Accepted Answer

A) rise as output rises. 
B) fall then rise as output rises. 
C) rise then fall as output rises. 
D) fall as output rises. 
A) rise as output rises. 
B) fall then rise as output rises. 
C) rise then fall as output rises. 
D) fall as output rises.

Question 16

Which of the following is correct?

Accepted Answer

A) AFC = TC/Q - TVC/Q 
B) AVC = TVC - AFC 
C) TC = AVC∗Q 
D) MC = TC - TVC 
A) AFC = TC/Q - TVC/Q 
B) AVC = TVC - AFC 
C) TC = AVC∗Q 
D) MC = TC - TVC

Question 17

The time period during at least one input cannot be changed is the

Accepted Answer

A) production time. 
B) calendar year. 
C) long run. 
D) short run. 
A) production time. 
B) calendar year. 
C) long run. 
D) short run.

Question 18

-In the above figure, the long-run cost curve between points A and B illustrates

Accepted Answer

A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale. 
A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale.

Question 19

Every point on the long-run average cost curve is

Accepted Answer

A) also a minimum point on a short-run average cost curve. 
B) on a short-run average total cost curve. 
C) on a short-run average variable cost curve. 
D) on a short-run marginal cost curve. 
A) also a minimum point on a short-run average cost curve. 
B) on a short-run average total cost curve. 
C) on a short-run average variable cost curve. 
D) on a short-run marginal cost curve.

Question 20

For a firm, we define the short run as a period of time during which

Accepted Answer

A) at least one input cannot be changed. 
B) all inputs can be changed. 
C) only the plant size can be changed. 
D) all inputs cannot be changed. 
A) at least one input cannot be changed. 
B) all inputs can be changed. 
C) only the plant size can be changed. 
D) all inputs cannot be changed.

Exam 22: The Firm: Cost and Output Determination

As long as output increases,

When total product is increasing at an increasing rate, marginal product is

The law of diminishing marginal product shows the relationship

-Marginal physical product is

-Refer to the above figure. Diseconomies of scale exist

-In the above table, which two workers have the same marginal physical product?

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

Changes in production functions are associated with changes in

-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

-In the above table, when the firm employs 4 workers, the marginal product will be

-As long as marginal product of labor exceeds the average product of labor, then average product of labor

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 marginal product of the 3rd worker?

Which of the following would be a fixed input to an automobile firm?

Use the information from the below table to answer following question(s). -In the above table, the marginal product of the fourth worker is

Average fixed costs will

Which of the following is correct?

The time period during at least one input cannot be changed is the

-In the above figure, the long-run cost curve between points A and B illustrates

Every point on the long-run average cost curve is

For a firm, we define the short run as a period of time during which

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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