Question 1

The time period during which all factors of production can be varied 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 2

A decrease in long-run average costs resulting from decreases in output is

Accepted Answer

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

Question 3

Costs that do not vary with output are

Accepted Answer

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

Question 4

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?

Accepted Answer

A) 335; 341 
B) 335; 0 
C) 5; 0 
D) 0; 5 
A) 335; 341 
B) 335; 0 
C) 5; 0 
D) 0; 5

Question 5

-In the above table, the marginal product of the second worker is

Accepted Answer

A) 68. 
B) 98. 
C) 38. 
D) It cannot be determined. 
A) 68. 
B) 98. 
C) 38. 
D) It cannot be determined.

Question 6

An increase in long-run average costs resulting from decreases in output is

Accepted Answer

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

Question 7

The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called the

Accepted Answer

A) foreseeable future. 
B) minimum efficient time period. 
C) non-adjustment period. 
D) planning horizon. 
A) foreseeable future. 
B) minimum efficient time period. 
C) non-adjustment period. 
D) planning horizon.

Question 8

-Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the

Accepted Answer

A) law of increasing opportunities. 
B) law of demand. 
C) law of diminishing marginal utility. 
D) law of diminishing product. 
A) law of increasing opportunities. 
B) law of demand. 
C) law of diminishing marginal utility. 
D) law of diminishing product.

Question 9

Which of the following statements is correct?

Accepted Answer

A) Average variable costs always exceed average total costs. 
B) Average fixed costs are constant. 
C) Average variable cost reaches its minimum when average product equals its maximum. 
D) Average fixed costs are always less than average variable costs. 
A) Average variable costs always exceed average total costs. 
B) Average fixed costs are constant. 
C) Average variable cost reaches its minimum when average product equals its maximum. 
D) Average fixed costs are always less than average variable costs.

Question 10

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

Accepted Answer

A) specialization 
B) the dimensional factor 
C) improved productive equipment 
D) depreciation 
A) specialization 
B) the dimensional factor 
C) improved productive equipment 
D) depreciation

Question 11

When the average physical product is rising,

Accepted Answer

A) total cost is falling. 
B) average total cost is increasing. 
C) average variable cost is falling. 
D) marginal cost is always rising. 
A) total cost is falling. 
B) average total cost is increasing. 
C) average variable cost is falling. 
D) marginal cost is always rising.

Question 12

The ratio of total costs to the quantity produced is referred to as

Accepted Answer

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

Question 13

The time period during which a firm's capital is fixed but its labor is variable is called

Accepted Answer

A) the planning horizon. 
B) the short run. 
C) the long run. 
D) the very long run. 
A) the planning horizon. 
B) the short run. 
C) the long run. 
D) the very long run.

Question 14

If the long-run average cost curve continuously slopes upward as output rises, minimum efficient scale would be

Accepted Answer

A) zero. 
B) at the midpoint of the long-run average cost curve. 
C) at the rate of output associated with the smallest sized plant the firm can build. 
D) nonexistent. 
A) zero. 
B) at the midpoint of the long-run average cost curve. 
C) at the rate of output associated with the smallest sized plant the firm can build. 
D) nonexistent.

Question 15

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average fixed costs of $20. The firm's total variable cost at this output level is

Accepted Answer

A) $120. 
B) $80. 
C) $8,000. 
D) $12,000. 
A) $120. 
B) $80. 
C) $8,000. 
D) $12,000.

Question 16

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

Accepted Answer

A) is zero. 
B) is at its minimum. 
C) is at its maximum. 
D) has a vertical slope. 
A) is zero. 
B) is at its minimum. 
C) is at its maximum. 
D) has a vertical slope.

Question 17

-Refer to the above table. At an output of 4 units, average variable costs are

Accepted Answer

A) $16. 
B) $22. 
C) $38.50. 
D) $44. 
A) $16. 
B) $22. 
C) $38.50. 
D) $44.

Question 18

-Using the above table, the marginal product of the 2nd worker is

Accepted Answer

A) 12. 
B) 14. 
C) 15. 
D) 13. 
A) 12. 
B) 14. 
C) 15. 
D) 13.

Question 19

-In the above table, the marginal 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 20

Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

Accepted Answer

The production function is the relations

Exam 22: The Firm: Cost and Output Determination

The time period during which all factors of production can be varied is the

A decrease in long-run average costs resulting from decreases in output is

Costs that do not vary with output are

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?

-In the above table, the marginal product of the second worker is

An increase in long-run average costs resulting from decreases in output is

The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called the

-Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the

Which of the following statements is correct?

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

When the average physical product is rising,

The ratio of total costs to the quantity produced is referred to as

The time period during which a firm's capital is fixed but its labor is variable is called

If the long-run average cost curve continuously slopes upward as output rises, minimum efficient scale would be

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average fixed costs of $20. The firm's total variable cost at this output level is

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

-Refer to the above table. At an output of 4 units, average variable costs are

-Using the above table, the marginal product of the 2nd worker is

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

Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

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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