Question 1

You own a deli. Which of the following is most likely a fixed input at your deli?

Accepted Answer

A)  the dining room 
B)  the bread used to make sandwiches 
C)  the tomato sauce used to make soups 
D)  the employees 
A)  the dining room 
B)  the bread used to make sandwiches 
C)  the tomato sauce used to make soups 
D)  the employees

Question 2

In the long run, every input available to a manufacturer is a fixed input.

Accepted Answer

A) True 
 B)False

Question 3

A farm can produce 1,000 bushels of wheat per year with two workers or 1,300 bushels of wheat per year with four workers. The marginal product of the fourth worker is _____ bushels.

Accepted Answer

A)  100 
B)  300 
C)  1,300 
D)  150 
A)  100 
B)  300 
C)  1,300 
D)  150

Question 4

The marginal product of labor is all of the following EXCEPT:

Accepted Answer

A)  the change in output resulting from a one-unit change in labor. 
B)  the slope of the total product curve. 
C)  positive at some levels of input and possibly negative at others. 
D)  total product divided by total labor. 
A)  the change in output resulting from a one-unit change in labor. 
B)  the slope of the total product curve. 
C)  positive at some levels of input and possibly negative at others. 
D)  total product divided by total labor.

Question 5

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is _____ bushels.

Accepted Answer

A)  100 
B)  300 
C)  1,300 
D)  2,300 
A)  100 
B)  300 
C)  1,300 
D)  2,300

Question 6

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 total cost of producing 43 statues is:

Accepted Answer

A)  $10. 
B)  $20. 
C)  $40. 
D)  $50. 
A)  $10. 
B)  $20. 
C)  $40. 
D)  $50.

Question 7

You own a deli. Which of the following is a decision most likely to be made in the LONG run at your deli?

Accepted Answer

A)  You order more breadsticks. 
B)  You order more soft drinks for next week. 
C)  You renovate the second floor of your building to increase the size of the dining room. 
D)  You advertise for part-time workers. 
A)  You order more breadsticks. 
B)  You order more soft drinks for next week. 
C)  You renovate the second floor of your building to increase the size of the dining room. 
D)  You advertise for part-time workers.

Question 8

The term diminishing returns refers to:

Accepted Answer

A)  a falling interest rate that can be expected as one's investment in a single asset increases. 
B)  a reduction in profits caused by increasing output beyond the optimal point. 
C)  a decrease in total output due to the firm hiring uneducated workers. 
D)  a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant. 
A)  a falling interest rate that can be expected as one's investment in a single asset increases. 
B)  a reduction in profits caused by increasing output beyond the optimal point. 
C)  a decrease in total output due to the firm hiring uneducated workers. 
D)  a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

Question 9

The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the marginal product of labor for the custodial staff will:

Accepted Answer

A)  increase at an increasing rate. 
B)  increase at a decreasing rate. 
C)  decrease. 
D)  not change. 
A)  increase at an increasing rate. 
B)  increase at a decreasing rate. 
C)  decrease. 
D)  not change.

Question 10

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

Accepted Answer

A) True 
 B)False

Question 11

As a firm increases production in the short run, the marginal cost of output increases because the marginal product of the variable input decreases.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that when a coal-mining firm hires one, two, three, four, and five workers, the corresponding total outputs are 10, 15, 19, 22, and 24 tons, respectively. The marginal product of the third worker is _____ tons.

Accepted Answer

A)  3 
B)  4 
C)  15 
D)  19 
A)  3 
B)  4 
C)  15 
D)  19

Question 13

When a firm has to increase its output, average total costs will decrease in the short run and then increase in the long run after the firm has time to add physical capital.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions:  
-(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the fourth worker is _____ units.

Accepted Answer

A)  20 
B)  22.5 
C)  50 
D)  90 
A)  20 
B)  22.5 
C)  50 
D)  90

Question 15

Use the following to answer questions:
Figure: Long-Run Average Cost  
-(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from 0 to A.

Accepted Answer

A)  diseconomies of scale 
B)  constant returns to scale 
C)  economies of scale 
D)  negative costs of production 
A)  diseconomies of scale 
B)  constant returns to scale 
C)  economies of scale 
D)  negative costs of production

Question 16

Describe the shape of the AFC curve and explain why it takes this shape. Can AFC ever intersect the x-axis?

Accepted Answer

At low levels of output, the average fix

Question 17

Use the following to answer questions:
Figure: Long-Run and Short-Run Average Cost Curves  
-(Figure: Long-Run and Short-Run Average Cost Curves) Look at the figure Long-Run and Short-Run Average Cost Curves. If a firm is producing at point C on the ATC2 but anticipates increasing output to 225,000 units in the long run, the firm will build a _____ plant and have _____ of scale.

Accepted Answer

A)  smaller; economies 
B)  smaller; diseconomies 
C)  bigger; economies 
D)  bigger; diseconomies 
A)  smaller; economies 
B)  smaller; diseconomies 
C)  bigger; economies 
D)  bigger; diseconomies

Question 18

Diminishing returns are a reason:

Accepted Answer

A)  the marginal cost curve is downward-sloping. 
B)  fixed costs remain constant. 
C)  the marginal cost curve is upward-sloping. 
D)  the average fixed cost curve is downward-sloping. 
A)  the marginal cost curve is downward-sloping. 
B)  fixed costs remain constant. 
C)  the marginal cost curve is upward-sloping. 
D)  the average fixed cost curve is downward-sloping.

Question 19

Diminishing returns to an input occur:

Accepted Answer

A)  when all inputs are fixed. 
B)  when some inputs are fixed and some are variable. 
C)  when all inputs are variable. 
D)  only when there are no fixed inputs. 
A)  when all inputs are fixed. 
B)  when some inputs are fixed and some are variable. 
C)  when all inputs are variable. 
D)  only when there are no fixed inputs.

Question 20

Average variable cost is the ratio of:

Accepted Answer

A)  total cost to the marginal cost. 
B)  variable inputs to fixed inputs. 
C)  variable cost to the quantity of output. 
D)  fixed costs to variable cost. 
A)  total cost to the marginal cost. 
B)  variable inputs to fixed inputs. 
C)  variable cost to the quantity of output. 
D)  fixed costs to variable cost.

You own a deli. Which of the following is most likely a fixed input at your deli?

In the long run, every input available to a manufacturer is a fixed input.

A farm can produce 1,000 bushels of wheat per year with two workers or 1,300 bushels of wheat per year with four workers. The marginal product of the fourth worker is _____ bushels.

The marginal product of labor is all of the following EXCEPT:

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is _____ bushels.

You own a deli. Which of the following is a decision most likely to be made in the LONG run at your deli?

The term diminishing returns refers to:

The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the marginal product of labor for the custodial staff will:

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

As a firm increases production in the short run, the marginal cost of output increases because the marginal product of the variable input decreases.

Suppose that when a coal-mining firm hires one, two, three, four, and five workers, the corresponding total outputs are 10, 15, 19, 22, and 24 tons, respectively. The marginal product of the third worker is _____ tons.

When a firm has to increase its output, average total costs will decrease in the short run and then increase in the long run after the firm has time to add physical capital.

Use the following to answer questions: -(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the fourth worker is _____ units.

Use the following to answer questions: Figure: Long-Run Average Cost -(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from 0 to A.

Describe the shape of the AFC curve and explain why it takes this shape. Can AFC ever intersect the x-axis?

Diminishing returns are a reason:

Diminishing returns to an input occur:

Average variable cost is the ratio of:

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

You own a deli. Which of the following is most likely a fixed input at your deli?

In the long run, every input available to a manufacturer is a fixed input.

A farm can produce 1,000 bushels of wheat per year with two workers or 1,300 bushels of wheat per year with four workers. The marginal product of the fourth worker is _____ bushels.

The marginal product of labor is all of the following EXCEPT:

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is _____ bushels.

You own a deli. Which of the following is a decision most likely to be made in the LONG run at your deli?

The term diminishing returns refers to:

The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the marginal product of labor for the custodial staff will:

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

As a firm increases production in the short run, the marginal cost of output increases because the marginal product of the variable input decreases.

Suppose that when a coal-mining firm hires one, two, three, four, and five workers, the corresponding total outputs are 10, 15, 19, 22, and 24 tons, respectively. The marginal product of the third worker is _____ tons.

When a firm has to increase its output, average total costs will decrease in the short run and then increase in the long run after the firm has time to add physical capital.

Use the following to answer questions: -(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the fourth worker is _____ units.

Use the following to answer questions: Figure: Long-Run Average Cost -(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from 0 to A.

Describe the shape of the AFC curve and explain why it takes this shape. Can AFC ever intersect the x-axis?

Diminishing returns are a reason:

Diminishing returns to an input occur:

Average variable cost is the ratio of:

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