Question 1

A production function that is characterized by economies of scale will not be subject to the operation of diminishing returns.

Accepted Answer

A) True 
 B)False

Question 2

The long-run average cost curve is tangent to a series of short-run average total cost curves.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions:
Figure: Change in the Total Product  
-(Figure: Change in the Total Product) Look at the figure Change in the Total Product. Which of the following choices is a likely cause of the shift in production function from TP1 to TP2?

Accepted Answer

A)  Workers in the firm are less productive on average. 
B)  The firm employed more of a variable input in the short run. 
C)  Available technology has decreased. 
D)  The firm employed more of a fixed input in the long run. 
A)  Workers in the firm are less productive on average. 
B)  The firm employed more of a variable input in the short run. 
C)  Available technology has decreased. 
D)  The firm employed more of a fixed input in the long run.

Question 4

As defined in the text, the long run is a planning period:

Accepted Answer

A)  in which a firm can adjust all resources. 
B)  that is at least five years long. 
C)  during which the firm must increase sales to stay in business. 
D)  in which variable resources become fixed. 
A)  in which a firm can adjust all resources. 
B)  that is at least five years long. 
C)  during which the firm must increase sales to stay in business. 
D)  in which variable resources become fixed.

Question 5

Use the following to answer questions:  
-(Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The fixed cost of producing 25 bushels of soybeans is:

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $250. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $250.

Question 6

Use the following to answer questions:  
-(Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 60 bushels of soybeans is:

Accepted Answer

A)  $5. 
B)  $100. 
C)  $150. 
D)  $300. 
A)  $5. 
B)  $100. 
C)  $150. 
D)  $300.

Question 7

Use the following to answer questions:  
-(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. How many mixers should Pat buy to get the lowest average total cost if she plans to make 200 cakes?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  Can't be determined without more information 
A)  one 
B)  two 
C)  three 
D)  Can't be determined without more information

Question 8

Use the following to answer questions:  
-(Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The total cost of producing 25 bushels of soybeans is:

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $250. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $250.

Question 9

Use the following to answer questions:  
-(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the third worker is _____ bagels.

Accepted Answer

A)  9,000 
B)  10,000 
C)  12,000 
D)  15,000 
A)  9,000 
B)  10,000 
C)  12,000 
D)  15,000

Question 10

The _____ cost curve continually declines as more output is produced in the short run.

Accepted Answer

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

Question 11

Use the following to answer questions:  
-(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average total cost of 2 cakes?

Accepted Answer

A)  $35.00 
B)  $25.00 
C)  $17.50 
D)  $12.50 
A)  $35.00 
B)  $25.00 
C)  $17.50 
D)  $12.50

Question 12

Marginal cost is the change in:

Accepted Answer

A)  total product resulting from a one-unit change in a variable input. 
B)  total cost resulting from a one-unit change in quantity of a variable input. 
C)  total cost divided by the change in output. 
D)  average cost resulting from a one-unit change in quantity of output. 
A)  total product resulting from a one-unit change in a variable input. 
B)  total cost resulting from a one-unit change in quantity of a variable input. 
C)  total cost divided by the change in output. 
D)  average cost resulting from a one-unit change in quantity of output.

Question 13

Use the following to answer questions:  
-(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers, her average fixed cost _____ in the range of output between 100 and 400 cakes.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated 
A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated

Question 14

Use the following to answer questions:
Figure: Short-Run Costs  
-(Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is _____ cost.

Accepted Answer

A)  marginal 
B)  fixed 
C)  average fixed 
D)  average variable 
A)  marginal 
B)  fixed 
C)  average fixed 
D)  average variable

Question 15

Use the following to answer questions:  
-(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases two mixers, her average fixed cost _____ in the range of output between 100 and 400 cakes.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated 
A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated

Question 16

When long-run average total cost is constant as output increases, the firm has constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer questions:  
-(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The average total cost of producing 6 bagels is:

Accepted Answer

A)  $0.10. 
B)  $0.15. 
C)  $0.20. 
D)  $0.80. 
A)  $0.10. 
B)  $0.15. 
C)  $0.20. 
D)  $0.80.

Question 18

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 60, and when she hires four workers, total product is 65. The slope of the marginal product curve when two to four workers are hired is:

Accepted Answer

A)  upward. 
B)  horizontal. 
C)  vertical. 
D)  downward. 
A)  upward. 
B)  horizontal. 
C)  vertical. 
D)  downward.

Question 19

A firm's marginal cost is:

Accepted Answer

A)  the ratio of the change in fixed cost to the change in the quantity of output. 
B)  the slope of the total cost curve. 
C)  the slope of the average variable cost curve. 
D)  the ratio of the change in total output to the change in the quantity of labor. 
A)  the ratio of the change in fixed cost to the change in the quantity of output. 
B)  the slope of the total cost curve. 
C)  the slope of the average variable cost curve. 
D)  the ratio of the change in total output to the change in the quantity of labor.

Question 20

Use the following to answer question:
Figure: The Unknown Curve  
-(Figure: The Unknown Curve) Look at the figure The Unknown Curve. You are a cabinetmaker. You employ several workers to produce kitchen and bathroom cabinets. Your summer intern has drawn a graph showing a relationship between the number of cabinetmakers you employ and the number of cabinets produced. Unfortunately, your intern has failed to identify this curve. It is likely to be the _____ curve:

Accepted Answer

A)  total cost 
B)  total product 
C)  marginal product 
D)  total variable cost 
A)  total cost 
B)  total product 
C)  marginal product 
D)  total variable cost

A production function that is characterized by economies of scale will not be subject to the operation of diminishing returns.

The long-run average cost curve is tangent to a series of short-run average total cost curves.

Use the following to answer questions: Figure: Change in the Total Product -(Figure: Change in the Total Product) Look at the figure Change in the Total Product. Which of the following choices is a likely cause of the shift in production function from TP₁ to TP₂?

As defined in the text, the long run is a planning period:

Use the following to answer questions: -(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the third worker is _____ bagels.

The _____ cost curve continually declines as more output is produced in the short run.

Use the following to answer questions: -(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average total cost of 2 cakes?

Marginal cost is the change in:

Use the following to answer questions: Figure: Short-Run Costs -(Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is _____ cost.

When long-run average total cost is constant as output increases, the firm has constant returns to scale.

Use the following to answer questions: -(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The average total cost of producing 6 bagels is:

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 60, and when she hires four workers, total product is 65. The slope of the marginal product curve when two to four workers are hired is:

A firm's marginal cost is:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 11: Behind the Supply Curve: Inputs and Costs

A production function that is characterized by economies of scale will not be subject to the operation of diminishing returns.

The long-run average cost curve is tangent to a series of short-run average total cost curves.

Use the following to answer questions: Figure: Change in the Total Product -(Figure: Change in the Total Product) Look at the figure Change in the Total Product. Which of the following choices is a likely cause of the shift in production function from TP1 to TP2?

As defined in the text, the long run is a planning period:

Use the following to answer questions: -(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the third worker is _____ bagels.

The _____ cost curve continually declines as more output is produced in the short run.

Use the following to answer questions: -(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average total cost of 2 cakes?

Marginal cost is the change in:

Use the following to answer questions: Figure: Short-Run Costs -(Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is _____ cost.

When long-run average total cost is constant as output increases, the firm has constant returns to scale.

Use the following to answer questions: -(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The average total cost of producing 6 bagels is:

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 60, and when she hires four workers, total product is 65. The slope of the marginal product curve when two to four workers are hired is:

A firm's marginal cost is:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Use the following to answer questions: Figure: Change in the Total Product -(Figure: Change in the Total Product) Look at the figure Change in the Total Product. Which of the following choices is a likely cause of the shift in production function from TP₁ to TP₂?