Question 1

When a firm experiences economies of scale, its ________ cost curve slopes ________ as output increases.

Accepted Answer

A)  long-run average; downward 
B)  short-run average total; downward 
C)  short-run marginal cost; downward 
D)  long-run average; upward 
A)  long-run average; downward 
B)  short-run average total; downward 
C)  short-run marginal cost; downward 
D)  long-run average; upward

Question 2

-The table above shows the short-run product schedule for Virginia's Tee-Shirts. The worker for whom the law of diminishing returns initially occurs is the ________ worker.

Accepted Answer

A)  5th 
B)  4th 
C)  3rd 
D)  2nd 
A)  5th 
B)  4th 
C)  3rd 
D)  2nd

Question 3

Pizza Hut
  
-Using the data in the above table, what is the marginal product of the second worker?

Accepted Answer

A)  4.5 pizzas per hour 
B)  4 pizzas per hour 
C)  5 pizzas per hour 
D)  The marginal product is undefined. 
A)  4.5 pizzas per hour 
B)  4 pizzas per hour 
C)  5 pizzas per hour 
D)  The marginal product is undefined.

Question 4

The long-run average cost curve is the relationship between the highest attainable average total cost and output when both the plant size and labor are varied.

Accepted Answer

A) True 
 B)False

Question 5

-The table above shows Randy's Shirts' short-run production function. Randy hires workers at a wage rate of $50 a day and his total fixed cost is $100.
a) What is the marginal product of the 3rd worker?
b) What is Randy's average fixed cost if 48 shirts are produced?
c) What is Randy's average variable cost if 56 shirts are produced?
d) What is Randy's marginal cost of producing the 52nd sweater?
e) What is Randy's average total cost if 48 sweaters are produced?

Accepted Answer

a) When the 3rd worker is hired, output

Question 6

Which of the following statements is TRUE?

Accepted Answer

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

Question 7

-In the figure above, ________ is a technologically efficient point.

Accepted Answer

A)  d 
B)  f 
C)  g 
D)  None of the selections is correct. 
A)  d 
B)  f 
C)  g 
D)  None of the selections is correct.

Question 8

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

Question 9

-In the above figure, as output increases, the distance between curves B and C decreases because

Accepted Answer

A)  total cost decreases as output increases. 
B)  average fixed cost decreases as output increases. 
C)  there are diminishing returns to average total cost. 
D)  there are increasing marginal costs as output increases. 
A)  total cost decreases as output increases. 
B)  average fixed cost decreases as output increases. 
C)  there are diminishing returns to average total cost. 
D)  there are increasing marginal costs as output increases.

Question 10

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

Accepted Answer

A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output. 
A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output.

Question 11

-The above figure shows the costs at Barney's Bagel Bakery. Up to which level of output will increasing marginal returns in production be experienced at Barney's Bagel Bakery?

Accepted Answer

A)  up to 500 bagels 
B)  up to 2000 bagels 
C)  up to 3000 bagels 
D)  up to 3500 bagels 
A)  up to 500 bagels 
B)  up to 2000 bagels 
C)  up to 3000 bagels 
D)  up to 3500 bagels

Question 12

What is the difference between the short run and the long run?

Accepted Answer

The short run is a time period so short

Question 13

-In the above figure, the marginal product of labor is zero at point

Accepted Answer

A)  a. 
B)  c. 
C)  e. 
D)  f. 
A)  a. 
B)  c. 
C)  e. 
D)  f.

Question 14

A technological change that increases productivity ________ marginal product and ________ marginal cost.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 15

-The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

Accepted Answer

A)  25 baseball hats. 
B)  21 baseball hats. 
C)  7 baseball hats. 
D)  6.25 baseball hats. 
A)  25 baseball hats. 
B)  21 baseball hats. 
C)  7 baseball hats. 
D)  6.25 baseball hats.

Question 16

In 2008, Precision Pattern Interiors, which makes high-end aircraft interiors, began a $1 million renovation of a building at the Hutchinson Air Base Industrial Tract south of Yoder, Kansas. The company also planned to add some $400,000 in new equipment and triple its Yoder work force. Why would the long run decisions be riskier than the short run decisions?

Accepted Answer

A)  because the firm has to live with the long run decisions for a long time 
B)  because it is easier to sell the equipment than it is to lay off employees 
C)  because the firm has to raise prices to purchase equipment 
D)  because employees will be upset 
A)  because the firm has to live with the long run decisions for a long time 
B)  because it is easier to sell the equipment than it is to lay off employees 
C)  because the firm has to raise prices to purchase equipment 
D)  because employees will be upset

Question 17

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs solely comes from increased prices for MRI and X-ray machines, then for the health care industry

Accepted Answer

A)  fixed costs are increasing. 
B)  long run average total cost is decreasing. 
C)  productivity is increasing. 
D)  variable costs are increasing. 
A)  fixed costs are increasing. 
B)  long run average total cost is decreasing. 
C)  productivity is increasing. 
D)  variable costs are increasing.

Question 18

The range of output over which a firm's average variable cost is decreasing is the same as the range over which its

Accepted Answer

A)  marginal cost is increasing. 
B)  average fixed cost is decreasing. 
C)  average product is increasing. 
D)  average product is decreasing. 
A)  marginal cost is increasing. 
B)  average fixed cost is decreasing. 
C)  average product is increasing. 
D)  average product is decreasing.

Question 19

The long-run average cost curve is the

Accepted Answer

A)  change in total product divided by the change in capital when the quantity of labor is constant. 
B)  change in output resulting from a one-unit increase in the quantity of capital. 
C)  relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. 
D)  relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed. 
A)  change in total product divided by the change in capital when the quantity of labor is constant. 
B)  change in output resulting from a one-unit increase in the quantity of capital. 
C)  relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. 
D)  relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed.

Question 20

The output at which average variable cost is a minimum is ________ than the output at which ________ is a minimum.

Accepted Answer

A)  the same as; average total cost 
B)  the same as; marginal cost 
C)  less than; average total cost 
D)  less than; marginal cost 
A)  the same as; average total cost 
B)  the same as; marginal cost 
C)  less than; average total cost 
D)  less than; marginal cost

When a firm experiences economies of scale, its cost curve slopes as output increases.

-The table above shows the short-run product schedule for Virginia's Tee-Shirts. The worker for whom the law of diminishing returns initially occurs is the ________ worker.

Pizza Hut -Using the data in the above table, what is the marginal product of the second worker?

The long-run average cost curve is the relationship between the highest attainable average total cost and output when both the plant size and labor are varied.

Which of the following statements is TRUE?

-In the figure above, ________ is a technologically efficient point.

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

-In the above figure, as output increases, the distance between curves B and C decreases because

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

-The above figure shows the costs at Barney's Bagel Bakery. Up to which level of output will increasing marginal returns in production be experienced at Barney's Bagel Bakery?

What is the difference between the short run and the long run?

-In the above figure, the marginal product of labor is zero at point

A technological change that increases productivity marginal product and marginal cost.

-The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs solely comes from increased prices for MRI and X-ray machines, then for the health care industry

The range of output over which a firm's average variable cost is decreasing is the same as the range over which its

The long-run average cost curve is the

The output at which average variable cost is a minimum is than the output at which is a minimum.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 11: Output and Costs

When a firm experiences economies of scale, its ________ cost curve slopes ________ as output increases.

-The table above shows the short-run product schedule for Virginia's Tee-Shirts. The worker for whom the law of diminishing returns initially occurs is the ________ worker.

Pizza Hut -Using the data in the above table, what is the marginal product of the second worker?

The long-run average cost curve is the relationship between the highest attainable average total cost and output when both the plant size and labor are varied.

Which of the following statements is TRUE?

-In the figure above, ________ is a technologically efficient point.

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

-In the above figure, as output increases, the distance between curves B and C decreases because

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

-The above figure shows the costs at Barney's Bagel Bakery. Up to which level of output will increasing marginal returns in production be experienced at Barney's Bagel Bakery?

What is the difference between the short run and the long run?

-In the above figure, the marginal product of labor is zero at point

A technological change that increases productivity ________ marginal product and ________ marginal cost.

-The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs solely comes from increased prices for MRI and X-ray machines, then for the health care industry

The range of output over which a firm's average variable cost is decreasing is the same as the range over which its

The long-run average cost curve is the

The output at which average variable cost is a minimum is ________ than the output at which ________ is a minimum.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

When a firm experiences economies of scale, its cost curve slopes as output increases.

A technological change that increases productivity marginal product and marginal cost.

The output at which average variable cost is a minimum is than the output at which is a minimum.