Question 1

A firm's average total cost is $60, its average variable cost is $30, and its total fixed cost is $600. Its output is

Accepted Answer

A)  50 units. 
B)  20 units. 
C)  40 units. 
D)  30 units. 
A)  50 units. 
B)  20 units. 
C)  40 units. 
D)  30 units.

Question 2

Which of the following statements is true?

Accepted Answer

A)  Average total cost always falls as output increases. 
B)  Average fixed cost equals total fixed cost divided by total output. 
C)  Average fixed cost equals average total cost plus average variable cost. 
D)  Average variable cost is always greater than average fixed cost. 
A)  Average total cost always falls as output increases. 
B)  Average fixed cost equals total fixed cost divided by total output. 
C)  Average fixed cost equals average total cost plus average variable cost. 
D)  Average variable cost is always greater than average fixed cost.

Question 3

The marginal product of labour is the

Accepted Answer

A)  maximum output attainable with fixed factors of production when labour is the only variable factor of production. 
B)  change in output resulting from a one- unit increase in labour with all other inputs remaining the same. 
C)  output level above which the rate of total product per unit of labour falls. 
D)  output level above which the slope of the total product curve falls. 
A)  maximum output attainable with fixed factors of production when labour is the only variable factor of production. 
B)  change in output resulting from a one- unit increase in labour with all other inputs remaining the same. 
C)  output level above which the rate of total product per unit of labour falls. 
D)  output level above which the slope of the total product curve falls.

Question 4

The long run is a time frame in which

Accepted Answer

A)  the quantities of all factors of production are fixed. 
B)  all costs are sunk costs. 
C)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
D)  the quantities of all factors of production can be varied. 
A)  the quantities of all factors of production are fixed. 
B)  all costs are sunk costs. 
C)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
D)  the quantities of all factors of production can be varied.

Question 5

-The average total cost curves for plants A, B, C and D are shown in the above figure. It is possible that the long- run average cost curve runs through points

Accepted Answer

A)  d, e and f. 
B)  b, d and e. 
C)  a, b and c. 
D)  c and d. 
A)  d, e and f. 
B)  b, d and e. 
C)  a, b and c. 
D)  c and d.

Question 6

The marginal product of labour is equal to the

Accepted Answer

A)  total product divided by the total number of workers hired. 
B)  slope of the marginal product of labour curve. 
C)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
D)  None of the above answers is correct. 
A)  total product divided by the total number of workers hired. 
B)  slope of the marginal product of labour curve. 
C)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
D)  None of the above answers is correct.

Question 7

In a diagram with the total cost curve and the total variable cost curve, as output increases, the vertical distance between these two curves

Accepted Answer

A)  decreases. 
B)  increases. 
C)  is constant. 
D)  gets smaller and then bigger again. 
A)  decreases. 
B)  increases. 
C)  is constant. 
D)  gets smaller and then bigger again.

Question 8

Total product is

Accepted Answer

A)  the maximum output that a given quantity of labour can produce. 
B)  the increase in output that results from a one- unit increase in the quantity of labour employed with all other inputs remaining the same. 
C)  the maximum amount of output produced by a given quantity of labour divided by the given quantity of labour employed. 
D)  the maximum amount of amount of output produced by a given quantity of labour divided by price of the output. 
A)  the maximum output that a given quantity of labour can produce. 
B)  the increase in output that results from a one- unit increase in the quantity of labour employed with all other inputs remaining the same. 
C)  the maximum amount of output produced by a given quantity of labour divided by the given quantity of labour employed. 
D)  the maximum amount of amount of output produced by a given quantity of labour divided by price of the output.

Question 9

-In the above figure, between 20 and 25 units per hour, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  increasing total fixed costs. 
D)  diseconomies of scale. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  increasing total fixed costs. 
D)  diseconomies of scale.

Question 10

Diminishing marginal returns to labour occur because

Accepted Answer

A)  workers become more efficient over time. 
B)  after a while it is hard to find a good worker. 
C)  larger companies are less efficient. 
D)  the capital resources used by the firm are fixed in the short run. 
A)  workers become more efficient over time. 
B)  after a while it is hard to find a good worker. 
C)  larger companies are less efficient. 
D)  the capital resources used by the firm are fixed in the short run.

Question 11

Among the opportunity costs of a firm are all of the following EXCEPT

Accepted Answer

A)  economic profits. 
B)  normal profits. 
C)  the owner's forgone wage. 
D)  the cost of resources bought in markets, such as labour. 
A)  economic profits. 
B)  normal profits. 
C)  the owner's forgone wage. 
D)  the cost of resources bought in markets, such as labour.

Question 12

When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

Accepted Answer

A)  minimum output attainable for each quantity of labour employed. 
B)  maximum output attainable for each quantity of labour employed. 
C)  minimum cost of producing a given amount of output using different techniques. 
D)  maximum profit attainable for each unit of output sold per unit of labour employed. 
A)  minimum output attainable for each quantity of labour employed. 
B)  maximum output attainable for each quantity of labour employed. 
C)  minimum cost of producing a given amount of output using different techniques. 
D)  maximum profit attainable for each unit of output sold per unit of labour employed.

Question 13

The average total cost curve

Accepted Answer

A)  increases eventually because of diminishing returns. 
B)  diminishes initially because average fixed costs diminish. 
C)  is U- shaped. 
D)  All of the above answers are correct. 
A)  increases eventually because of diminishing returns. 
B)  diminishes initially because average fixed costs diminish. 
C)  is U- shaped. 
D)  All of the above answers are correct.

Question 14

Wanda takes $3,000 from her savings account that pays 5 per cent interest per year and uses the funds to purchase a computer for $3,000 for her business. At the end of the year the computer is worth $2,000. Wanda pays an implicit rental rate of _______ a year.

Accepted Answer

A)  $1,150 
B)  $4,000 
C)  zero 
D)  $3,150 
A)  $1,150 
B)  $4,000 
C)  zero 
D)  $3,150

Question 15

An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is

Accepted Answer

A)  $40,000. 
B)  $45,000. 
C)  $85,000. 
D)  $5,000. 
A)  $40,000. 
B)  $45,000. 
C)  $85,000. 
D)  $5,000.

Question 16

A firm's long- run average cost curve

Accepted Answer

A)  tells the firm which plant size to use and which quantity of labour to use to minimise the cost of producing any level of output. 
B)  is U- shaped. 
C)  shows the lowest attainable average total cost of producing any level of output when the plant and labour are variable. 
D)  All of the above. 
A)  tells the firm which plant size to use and which quantity of labour to use to minimise the cost of producing any level of output. 
B)  is U- shaped. 
C)  shows the lowest attainable average total cost of producing any level of output when the plant and labour are variable. 
D)  All of the above.

Question 17

The most important goal of the firm is to

Accepted Answer

A)  maximise its sales volume. 
B)  maximise its revenues. 
C)  minimise its costs. 
D)  maximise its profits. 
A)  maximise its sales volume. 
B)  maximise its revenues. 
C)  minimise its costs. 
D)  maximise its profits.

Question 18

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is BEST to use to produce 20 units per day?

Accepted Answer

A)  Plant A 
B)  Plant B 
C)  Plant C 
D)  Plant D 
A)  Plant A 
B)  Plant B 
C)  Plant C 
D)  Plant D

Question 19

Economies of scale refer to

Accepted Answer

A)  a feature of short- run production functions but not long- run production functions. 
B)  the point at which marginal cost equals average cost. 
C)  the fact that, in the long run, fixed costs remain constant as output increases. 
D)  the range of output over which the long- run average cost falls as output increases. 
A)  a feature of short- run production functions but not long- run production functions. 
B)  the point at which marginal cost equals average cost. 
C)  the fact that, in the long run, fixed costs remain constant as output increases. 
D)  the range of output over which the long- run average cost falls as output increases.

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Total fixed cost plus total variable cost equals total cost. 
B)  As output increases, total cost and total fixed cost increase by the same amount. 
C)  As output increases, total cost and total fixed cost increase but not necessarily by the same amount. 
D)  As output increases, total cost increases and total fixed cost decreases. 
A)  Total fixed cost plus total variable cost equals total cost. 
B)  As output increases, total cost and total fixed cost increase by the same amount. 
C)  As output increases, total cost and total fixed cost increase but not necessarily by the same amount. 
D)  As output increases, total cost increases and total fixed cost decreases.

A firm's average total cost is $60, its average variable cost is $30, and its total fixed cost is $600. Its output is

Which of the following statements is true?

The marginal product of labour is the

The long run is a time frame in which

-The average total cost curves for plants A, B, C and D are shown in the above figure. It is possible that the long- run average cost curve runs through points

The marginal product of labour is equal to the

In a diagram with the total cost curve and the total variable cost curve, as output increases, the vertical distance between these two curves

Total product is

-In the above figure, between 20 and 25 units per hour, the firm experiences

Diminishing marginal returns to labour occur because

Among the opportunity costs of a firm are all of the following EXCEPT

When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

The average total cost curve

Wanda takes $3,000 from her savings account that pays 5 per cent interest per year and uses the funds to purchase a computer for $3,000 for her business. At the end of the year the computer is worth $2,000. Wanda pays an implicit rental rate of _______ a year.

An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is

A firm's long- run average cost curve

The most important goal of the firm is to

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is BEST to use to produce 20 units per day?

Economies of scale refer to

Which of the following statements is correct?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters

Exam 13: Producer Choices and Constraints

A firm's average total cost is $60, its average variable cost is $30, and its total fixed cost is $600. Its output is

Which of the following statements is true?

The marginal product of labour is the

The long run is a time frame in which

-The average total cost curves for plants A, B, C and D are shown in the above figure. It is possible that the long- run average cost curve runs through points

The marginal product of labour is equal to the

In a diagram with the total cost curve and the total variable cost curve, as output increases, the vertical distance between these two curves

Total product is

-In the above figure, between 20 and 25 units per hour, the firm experiences

Diminishing marginal returns to labour occur because

Among the opportunity costs of a firm are all of the following EXCEPT

When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

The average total cost curve

Wanda takes $3,000 from her savings account that pays 5 per cent interest per year and uses the funds to purchase a computer for $3,000 for her business. At the end of the year the computer is worth $2,000. Wanda pays an implicit rental rate of _______ a year.

An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is

A firm's long- run average cost curve

The most important goal of the firm is to

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is BEST to use to produce 20 units per day?

Economies of scale refer to

Which of the following statements is correct?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters