Question 1

Which of the following statements is FALSE?

Accepted Answer

A)  When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping. 
B)  The average fixed cost curve is downward-sloping and approaches the horizontal axis. 
C)  The marginal cost curve intersects the average variable cost curve at the minimum of average variable cost. 
D)  When the marginal cost curve is above the average cost curve, the average cost curve is upward-sloping. 
A)  When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping. 
B)  The average fixed cost curve is downward-sloping and approaches the horizontal axis. 
C)  The marginal cost curve intersects the average variable cost curve at the minimum of average variable cost. 
D)  When the marginal cost curve is above the average cost curve, the average cost curve is upward-sloping.

Question 2

The U shape of the long-run average total cost curve is primarily due to:

Accepted Answer

A)  technological change. 
B)  economies and diseconomies of scale. 
C)  increasing and then diminishing returns. 
D)  diminishing returns. 
A)  technological change. 
B)  economies and diseconomies of scale. 
C)  increasing and then diminishing returns. 
D)  diminishing returns.

Question 3

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 48, and when she hires four workers, total product is 45. The marginal product of the third and fourth workers is:

Accepted Answer

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

Question 4

A factor of production whose quantity CANNOT be changed during the short run is a(n) _____ factor of production.

Accepted Answer

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

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 variable 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

Economies and diseconomies of scale are associated with the:

Accepted Answer

A)  long-run average total cost curve and the long run. 
B)  short-run average total cost curve and the short run. 
C)  marginal cost curve and both the long and short run. 
D)  average fixed cost curve and the short run. 
A)  long-run average total cost curve and the long run. 
B)  short-run average total cost curve and the short run. 
C)  marginal cost curve and both the long and short run. 
D)  average fixed cost curve and the short run.

Question 7

If the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

Accepted Answer

A)  $26 
B)  $78 
C)  $17 
D)  $61 
A)  $26 
B)  $78 
C)  $17 
D)  $61

Question 8

Use the following to answer questions:  
-(Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The fixed cost of producing 25 statues is:

Accepted Answer

A)  $10. 
B)  $20. 
C)  $25. 
D)  $35. 
A)  $10. 
B)  $20. 
C)  $25. 
D)  $35.

Question 9

In economics, the short run is:

Accepted Answer

A)  less than 1 week. 
B)  less than 1 month. 
C)  enough time to vary output but not plant capacity. 
D)  enough time to change all inputs to production. 
A)  less than 1 week. 
B)  less than 1 month. 
C)  enough time to vary output but not plant capacity. 
D)  enough time to change all inputs to production.

Question 10

A factor of production whose quantity can be changed during the SHORT run is a(n) _____ factor of production.

Accepted Answer

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

Question 11

Use the following to answer questions:  
-(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is _____ bushels.

Accepted Answer

A)  51 
B)  45 
C)  39 
D)  15 
A)  51 
B)  45 
C)  39 
D)  15

Question 12

At quantities less than the long-run minimum cost per unit of output, the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Accepted Answer

A)  tangent to the minimum 
B)  tangent to the maximum 
C)  to the right of the minimum 
D)  to the left of the minimum 
A)  tangent to the minimum 
B)  tangent to the maximum 
C)  to the right of the minimum 
D)  to the left of the minimum

Question 13

Use the following to answer questions:
Figure: The Average Total Cost Curve  
-(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing three pairs of boots is approximately:

Accepted Answer

A)  $24. 
B)  $72. 
C)  $75. 
D)  $216. 
A)  $24. 
B)  $72. 
C)  $75. 
D)  $216.

Question 14

Use the following to answer questions:
Figure: Short-Run Costs II  
-(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output, average total cost is approximately:

Accepted Answer

A)  $100. 
B)  $120. 
C)  $170. 
D)  $250. 
A)  $100. 
B)  $120. 
C)  $170. 
D)  $250.

Question 15

Use the following to answer questions:  
-(Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya's fixed:

Accepted Answer

A)  input is land. 
B)  input is labor. 
C)  inputs are land and labor. 
D)  inputs are neither land nor labor. 
A)  input is land. 
B)  input is labor. 
C)  inputs are land and labor. 
D)  inputs are neither land nor labor.

Question 16

If average total cost is declining, marginal cost cannot be increasing.

Accepted Answer

A) True 
 B)False

Question 17

The larger the output, the more output over which fixed cost is distributed. Called the _____ effect, this leads to a ______ average _____ cost.

Accepted Answer

A)  spreading; lower; fixed 
B)  spreading; higher; fixed 
C)  diminishing returns; lower; variable 
D)  diminishing returns; higher; variable 
A)  spreading; lower; fixed 
B)  spreading; higher; fixed 
C)  diminishing returns; lower; variable 
D)  diminishing returns; higher; variable

Question 18

When a firm adds capital, in the short run variable costs for any level of output will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase at first and then decrease. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase at first and then decrease.

Question 19

Janet's poodle grooming salon has a total cost curve expressed by the equation TC = 100 + 3Q2, where Q is the quantity of dogs groomed. Janet notices that as she grooms more dogs, her total cost curve:

Accepted Answer

A)  becomes steeper. 
B)  becomes flatter. 
C)  stays constant. 
D)  becomes steeper and then becomes horizontal. 
A)  becomes steeper. 
B)  becomes flatter. 
C)  stays constant. 
D)  becomes steeper and then becomes horizontal.

Question 20

The long run is a planning period:

Accepted Answer

A)  over which a firm can consider all inputs as variable. 
B)  of at least five years. 
C)  of more than six months. 
D)  of 6 months to 5 years. 
A)  over which a firm can consider all inputs as variable. 
B)  of at least five years. 
C)  of more than six months. 
D)  of 6 months to 5 years.

Which of the following statements is FALSE?

The U shape of the long-run average total cost curve is primarily due to:

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 48, and when she hires four workers, total product is 45. The marginal product of the third and fourth workers is:

A factor of production whose quantity CANNOT be changed during the short run is a(n) _____ factor of production.

Economies and diseconomies of scale are associated with the:

If the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

In economics, the short run is:

A factor of production whose quantity can be changed during the SHORT run is a(n) _____ factor of production.

Use the following to answer questions: -(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is _____ bushels.

At quantities less than the long-run minimum cost per unit of output, the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Use the following to answer questions: Figure: The Average Total Cost Curve -(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing three pairs of boots is approximately:

Use the following to answer questions: Figure: Short-Run Costs II -(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output, average total cost is approximately:

Use the following to answer questions: -(Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya's fixed:

If average total cost is declining, marginal cost cannot be increasing.

The larger the output, the more output over which fixed cost is distributed. Called the _ effect, this leads to a average ___ cost.

When a firm adds capital, in the short run variable costs for any level of output will:

Janet's poodle grooming salon has a total cost curve expressed by the equation TC = 100 + 3Q², where Q is the quantity of dogs groomed. Janet notices that as she grooms more dogs, her total cost curve:

The long run is a planning period:

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

Which of the following statements is FALSE?

The U shape of the long-run average total cost curve is primarily due to:

When Caroline's dress factory hires two workers, the total product is 50 dresses. When she hires three workers, total product is 48, and when she hires four workers, total product is 45. The marginal product of the third and fourth workers is:

A factor of production whose quantity CANNOT be changed during the short run is a(n) _____ factor of production.

Economies and diseconomies of scale are associated with the:

If the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

In economics, the short run is:

A factor of production whose quantity can be changed during the SHORT run is a(n) _____ factor of production.

Use the following to answer questions: -(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is _____ bushels.

At quantities less than the long-run minimum cost per unit of output, the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Use the following to answer questions: Figure: The Average Total Cost Curve -(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing three pairs of boots is approximately:

Use the following to answer questions: Figure: Short-Run Costs II -(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output, average total cost is approximately:

Use the following to answer questions: -(Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya's fixed:

If average total cost is declining, marginal cost cannot be increasing.

The larger the output, the more output over which fixed cost is distributed. Called the _____ effect, this leads to a ______ average _____ cost.

When a firm adds capital, in the short run variable costs for any level of output will:

Janet's poodle grooming salon has a total cost curve expressed by the equation TC = 100 + 3Q2, where Q is the quantity of dogs groomed. Janet notices that as she grooms more dogs, her total cost curve:

The long run is a planning period:

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

The larger the output, the more output over which fixed cost is distributed. Called the _ effect, this leads to a average ___ cost.

Janet's poodle grooming salon has a total cost curve expressed by the equation TC = 100 + 3Q², where Q is the quantity of dogs groomed. Janet notices that as she grooms more dogs, her total cost curve: