Question 1

-Based on the production data for Pat's Pizza Parlour in the above table, which worker has the largest marginal product?

Accepted Answer

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

Question 2

Profit maximisation

Accepted Answer

A)  makes a firm remain small in the long run. 
B)  leads a firm to become the target of a takeover. 
C)  increases the likelihood that a firm will survive. 
D)  makes a firm become as large as possible. 
A)  makes a firm remain small in the long run. 
B)  leads a firm to become the target of a takeover. 
C)  increases the likelihood that a firm will survive. 
D)  makes a firm become as large as possible.

Question 3

Any method of producing a good or service is _______. It _______ the maximum profit a firm can make.

Accepted Answer

A)  an information constraint; always increases 
B)  a technology; limits 
C)  a technology; always increases 
D)  an information constraint; limits 
A)  an information constraint; always increases 
B)  a technology; limits 
C)  a technology; always increases 
D)  an information constraint; limits

Question 4

When the marginal product curve is downward- sloping, the average product curve

Accepted Answer

A)  must be horizontal. 
B)  must also be downward- sloping. 
C)  must be upward- sloping. 
D)  might be either upward- or downward- sloping. 
A)  must be horizontal. 
B)  must also be downward- sloping. 
C)  must be upward- sloping. 
D)  might be either upward- or downward- sloping.

Question 5

In general, increasing marginal returns occur

Accepted Answer

A)  through the entire range of production. 
B)  whenever the slope of the total product curve is positive. 
C)  as output expands at high levels of production. 
D)  as output expands at low levels of production. 
A)  through the entire range of production. 
B)  whenever the slope of the total product curve is positive. 
C)  as output expands at high levels of production. 
D)  as output expands at low levels of production.

Question 6

Which of the following statements is true?

Accepted Answer

A)  If marginal product equals average product, marginal product is at its maximum. 
B)  If marginal product equals average product, average product is at its maximum. 
C)  If marginal product exceeds average product, marginal product increases. 
D)  If average product equals marginal product, average product decreases. 
A)  If marginal product equals average product, marginal product is at its maximum. 
B)  If marginal product equals average product, average product is at its maximum. 
C)  If marginal product exceeds average product, marginal product increases. 
D)  If average product equals marginal product, average product decreases.

Question 7

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4). Dustin's Plant 2 will be economically efficient if the firm produces _______ copies per day.

Accepted Answer

A)  2,000 
B)  4,800 
C)  6,000 
D)  5,300 
A)  2,000 
B)  4,800 
C)  6,000 
D)  5,300

Question 8

Total fixed cost is the sum of all

Accepted Answer

A)  costs associated with the production of goods. 
B)  costs of the firm's fixed factors of production. 
C)  costs that rise as output increases. 
D)  the marginal costs of the different factors of production. 
A)  costs associated with the production of goods. 
B)  costs of the firm's fixed factors of production. 
C)  costs that rise as output increases. 
D)  the marginal costs of the different factors of production.

Question 9

-In the figure above, when 20 units are produced the marginal cost is

Accepted Answer

A)  less than $8. 
B)  more than $8 and less than $16. 
C)  $8. 
D)  None of the above answers is correct. 
A)  less than $8. 
B)  more than $8 and less than $16. 
C)  $8. 
D)  None of the above answers is correct.

Question 10

Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food. What is Heidi's economic profit for the year?

Accepted Answer

A)  $50,000 
B)  $30,000 
C)  - $10,000 
D)  $80,000 
A)  $50,000 
B)  $30,000 
C)  - $10,000 
D)  $80,000

Question 11

Total variable cost is the sum of all

Accepted Answer

A)  costs associated with the production of goods. 
B)  costs that rise as output increases. 
C)  implicit costs. 
D)  costs of the firm's fixed factors of production. 
A)  costs associated with the production of goods. 
B)  costs that rise as output increases. 
C)  implicit costs. 
D)  costs of the firm's fixed factors of production.

Question 12

Which of the following is correct?

Accepted Answer

A)  A firm's long- run average cost curve is derived from a series of short- run average cost curves. 
B)  A firm's long- run total cost is the difference between its long- run fixed cost and long- run variable cost. 
C)  A firm's short- run average cost curve is derived from a series of long- run average cost curves. 
D)  Both answers A and C are correct. 
A)  A firm's long- run average cost curve is derived from a series of short- run average cost curves. 
B)  A firm's long- run total cost is the difference between its long- run fixed cost and long- run variable cost. 
C)  A firm's short- run average cost curve is derived from a series of long- run average cost curves. 
D)  Both answers A and C are correct.

Question 13

A firm experiences _______ when its _______ downward as output increases.

Accepted Answer

A)  economies of scale; long- run average cost curve slopes 
B)  diminishing marginal returns; long- run average cost curve slopes 
C)  diminishing marginal returns; average total cost curve shifts 
D)  diseconomies of scale; average total cost curve slopes 
A)  economies of scale; long- run average cost curve slopes 
B)  diminishing marginal returns; long- run average cost curve slopes 
C)  diminishing marginal returns; average total cost curve shifts 
D)  diseconomies of scale; average total cost curve slopes

Question 14

In the long run,

Accepted Answer

A)  all inputs can be varied. 
B)  output is fixed. 
C)  some inputs are variable and other inputs are fixed. 
D)  all inputs are fixed. 
A)  all inputs can be varied. 
B)  output is fixed. 
C)  some inputs are variable and other inputs are fixed. 
D)  all inputs are fixed.

Question 15

-In the figure above, when 40 units are produced the average fixed cost is

Accepted Answer

A)  $8. 
B)  $4. 
C)  $12. 
D)  $20. 
A)  $8. 
B)  $4. 
C)  $12. 
D)  $20.

Question 16

-In the above figure, the relationship between costs indicates that the distance between curves

Accepted Answer

A)  A and B is equal to the variable cost. 
B)  B and C is equal to the fixed cost. 
C)  B and C is equal to the average total cost. 
D)  A and B is equal to the fixed cost. 
A)  A and B is equal to the variable cost. 
B)  B and C is equal to the fixed cost. 
C)  B and C is equal to the average total cost. 
D)  A and B is equal to the fixed cost.

Question 17

-Cindy's Shirts' production function is shown in the above table. Cindy rents two sewing machines for $30 a day each and hires workers at a wage rate of $40 a day per worker. If Cindy produces 18 sweaters per day, what is her average total cost?

Accepted Answer

A)  $10.00 
B)  $13.33 
C)  $6.67 
D)  $11.00 
A)  $10.00 
B)  $13.33 
C)  $6.67 
D)  $11.00

Question 18

The steeper the slope of the total product curve, the

Accepted Answer

A)  higher is the level of the total cost curve. 
B)  larger is the marginal product of labour. 
C)  smaller is the marginal product of labour. 
D)  more efficient is the technology employed. 
A)  higher is the level of the total cost curve. 
B)  larger is the marginal product of labour. 
C)  smaller is the marginal product of labour. 
D)  more efficient is the technology employed.

Question 19

When long- run average cost increases as output increases there are

Accepted Answer

A)  constant returns to scale. 
B)  diseconomies of scale. 
C)  economies of scale. 
D)  None of the above. 
A)  constant returns to scale. 
B)  diseconomies of scale. 
C)  economies of scale. 
D)  None of the above.

Question 20

Farmer Seth has a perfectly flat long- run average total cost curve over the range of output from 1,000 tonnes of wheat to 10,000 tonnes of wheat. Hence, over this range of output, Farmer Seth definitely experiences

Accepted Answer

A)  constant economies of scale. 
B)  constant returns to scale. 
C)  constant marginal returns. 
D)  None of the above. 
A)  constant economies of scale. 
B)  constant returns to scale. 
C)  constant marginal returns. 
D)  None of the above.

-Based on the production data for Pat's Pizza Parlour in the above table, which worker has the largest marginal product?

Profit maximisation

Any method of producing a good or service is _. It _ the maximum profit a firm can make.

When the marginal product curve is downward- sloping, the average product curve

In general, increasing marginal returns occur

Which of the following statements is true?

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4). Dustin's Plant 2 will be economically efficient if the firm produces _______ copies per day.

Total fixed cost is the sum of all

-In the figure above, when 20 units are produced the marginal cost is

Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food. What is Heidi's economic profit for the year?

Total variable cost is the sum of all

Which of the following is correct?

A firm experiences _ when its _ downward as output increases.

In the long run,

-In the figure above, when 40 units are produced the average fixed cost is

-In the above figure, the relationship between costs indicates that the distance between curves

-Cindy's Shirts' production function is shown in the above table. Cindy rents two sewing machines for $30 a day each and hires workers at a wage rate of $40 a day per worker. If Cindy produces 18 sweaters per day, what is her average total cost?

The steeper the slope of the total product curve, the

When long- run average cost increases as output increases there are

Farmer Seth has a perfectly flat long- run average total cost curve over the range of output from 1,000 tonnes of wheat to 10,000 tonnes of wheat. Hence, over this range of output, Farmer Seth definitely experiences

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

-Based on the production data for Pat's Pizza Parlour in the above table, which worker has the largest marginal product?

Profit maximisation

Any method of producing a good or service is _______. It _______ the maximum profit a firm can make.

When the marginal product curve is downward- sloping, the average product curve

In general, increasing marginal returns occur

Which of the following statements is true?

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4). Dustin's Plant 2 will be economically efficient if the firm produces _______ copies per day.

Total fixed cost is the sum of all

-In the figure above, when 20 units are produced the marginal cost is

Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food. What is Heidi's economic profit for the year?

Total variable cost is the sum of all

Which of the following is correct?

A firm experiences _______ when its _______ downward as output increases.

In the long run,

-In the figure above, when 40 units are produced the average fixed cost is

-In the above figure, the relationship between costs indicates that the distance between curves

-Cindy's Shirts' production function is shown in the above table. Cindy rents two sewing machines for $30 a day each and hires workers at a wage rate of $40 a day per worker. If Cindy produces 18 sweaters per day, what is her average total cost?

The steeper the slope of the total product curve, the

When long- run average cost increases as output increases there are

Farmer Seth has a perfectly flat long- run average total cost curve over the range of output from 1,000 tonnes of wheat to 10,000 tonnes of wheat. Hence, over this range of output, Farmer Seth definitely experiences

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

Any method of producing a good or service is _. It _ the maximum profit a firm can make.

A firm experiences _ when its _ downward as output increases.