Question 1

Marginal cost eventually increases because

Accepted Answer

A)  of the law of diminishing returns. 
B)  eventually each additional worker produces a successively smaller addition to output. 
C)  the marginal product of the variable input eventually falls. 
D)  All of the above answers are correct. 
A)  of the law of diminishing returns. 
B)  eventually each additional worker produces a successively smaller addition to output. 
C)  the marginal product of the variable input eventually falls. 
D)  All of the above answers are correct.

Question 2

Diminishing marginal returns to labor occur because

Accepted Answer

A)  after a while it is hard to find a good worker. 
B)  the capital resources used by the firm are fixed in the short run. 
C)  workers become more efficient over time. 
D)  larger companies are less efficient. 
A)  after a while it is hard to find a good worker. 
B)  the capital resources used by the firm are fixed in the short run. 
C)  workers become more efficient over time. 
D)  larger companies are less efficient.

Question 3

-The above figure represents the average total cost curves of a wheat farmer.
a) Which average total cost curve has the lowest average total cost of producing 30,000 bushels of wheat?
b) Over what range of output is the farmer experiencing economies of scale?
c) Over what range of output is the farmer experiencing diseconomies of scale?
d) Which average total cost curve has the lowest possible average cost of production?
e) Which average total cost curve represents the largest plant?

Accepted Answer

a) ATC₃ has the lowest average total cost

Question 4

Decent Donuts
  
-Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

Accepted Answer

A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above 
A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above

Question 5

Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. Most chocolate companies use already processed chocolate to craft their sweets. But Rogue buys raw cocoa beans, and roasts and grinds them until they're in a liquid state and then runs the chocolate through a big squat machine with rollers. Which statement is TRUE for Rogue?

Accepted Answer

A)  Raw cocoa beans are a variable factor of production and the machine is a fixed factor of production. 
B)  Both processed chocolate and raw cocoa beans are variable factors of production. 
C)  Processed chocolate is a variable factor of production and the machine is a fixed factor of production. 
D)  Processed chocolate and raw cocoa beans are variable factors of production and the machine is a fixed factor of production. 
A)  Raw cocoa beans are a variable factor of production and the machine is a fixed factor of production. 
B)  Both processed chocolate and raw cocoa beans are variable factors of production. 
C)  Processed chocolate is a variable factor of production and the machine is a fixed factor of production. 
D)  Processed chocolate and raw cocoa beans are variable factors of production and the machine is a fixed factor of production.

Question 6

The marginal cost (MC) curve intersects the

Accepted Answer

A)  ATC, AVC, and AFC curves at their minimum points. 
B)  ATC and AFC curves at their minimum points. 
C)  AVC and AFC curves at their minimum points. 
D)  ATC and AVC curves at their minimum points. 
A)  ATC, AVC, and AFC curves at their minimum points. 
B)  ATC and AFC curves at their minimum points. 
C)  AVC and AFC curves at their minimum points. 
D)  ATC and AVC curves at their minimum points.

Question 7

-In the above figure, the average product of labor at point c is

Accepted Answer

A)  10. 
B)  5. 
C)  2. 
D)  None of the above answers is correct. 
A)  10. 
B)  5. 
C)  2. 
D)  None of the above answers is correct.

Question 8

What do economists mean when they say that a firm's plant is fixed?

Accepted Answer

The phrase that a "firm's plant is fixed

Question 9

-In the above figure, the intersection of curves A and B is the point at which

Accepted Answer

A)  average total cost is minimized. 
B)  average variable cost is minimized. 
C)  average fixed cost is minimized. 
D)  total product is maximized. 
A)  average total cost is minimized. 
B)  average variable cost is minimized. 
C)  average fixed cost is minimized. 
D)  total product is maximized.

Question 10

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The average fixed cost of producing 25 baseball hats per hour is

Accepted Answer

A)  $1.60 
B)  $8.00. 
C)  $9.60. 
D)  More information is needed to answer the question. 
A)  $1.60 
B)  $8.00. 
C)  $9.60. 
D)  More information is needed to answer the question.

Question 11

Over the range of output for which the average product of labor curve is negatively sloped, the average variable cost curve is positively sloped.

Accepted Answer

A) True 
 B)False

Question 12

-The above table shows the total product schedule for the campus book store. When the book store is selling 60 books per hour it is certain that

Accepted Answer

A)  marginal costs are increasing, but average variable costs are still decreasing. 
B)  both marginal and average costs are decreasing. 
C)  both marginal and average costs are increasing. 
D)  hiring one more employee per hour will lead to fewer books being sold. 
A)  marginal costs are increasing, but average variable costs are still decreasing. 
B)  both marginal and average costs are decreasing. 
C)  both marginal and average costs are increasing. 
D)  hiring one more employee per hour will lead to fewer books being sold.

Question 13

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 1 and hires 3 workers. What is the firm's average fixed cost?

Accepted Answer

A)  $4.33 
B)  $8.40 
C)  $19.40 
D)  $11.00 
A)  $4.33 
B)  $8.40 
C)  $19.40 
D)  $11.00

Question 14

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

Accepted Answer

A)  constant returns to cost. 
B)  increasing returns to cost. 
C)  economies of scale. 
D)  diseconomies of scale. 
A)  constant returns to cost. 
B)  increasing returns to cost. 
C)  economies of scale. 
D)  diseconomies of scale.

Question 15

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

Accepted Answer

A)  $120 
B)  $140 
C)  $180 
D)  $60 
A)  $120 
B)  $140 
C)  $180 
D)  $60

Question 16

"Diminishing marginal returns" refer to a situation in which the

Accepted Answer

A)  marginal cost of the next worker hired is less than the marginal cost of the previous worker hired. 
B)  average cost of the next worker hired is less than the average cost of the previous worker hired. 
C)  marginal product of the next worker hired is less than the marginal product of the previous worker hired. 
D)  average product of the next worker hired is less than the average product of the previous worker hired. 
A)  marginal cost of the next worker hired is less than the marginal cost of the previous worker hired. 
B)  average cost of the next worker hired is less than the average cost of the previous worker hired. 
C)  marginal product of the next worker hired is less than the marginal product of the previous worker hired. 
D)  average product of the next worker hired is less than the average product of the previous worker hired.

Question 17

The firm's production function is the relationship between the ________ and ________.

Accepted Answer

A)  output produced; the quantities of all inputs 
B)  maximum output attainable; the quantity of variable inputs 
C)  possible range of maximum output; the quantity of variable inputs 
D)  maximum output attainable; the quantities of both labor and capital 
A)  output produced; the quantities of all inputs 
B)  maximum output attainable; the quantity of variable inputs 
C)  possible range of maximum output; the quantity of variable inputs 
D)  maximum output attainable; the quantities of both labor and capital

Question 18

If diseconomies of scale are present and the firm ________ all its inputs, its output ________.

Accepted Answer

A)  doubles; more than doubles 
B)  doubles; less than doubles 
C)  increases; increases by the same percentage 
D)  halves; doubles 
A)  doubles; more than doubles 
B)  doubles; less than doubles 
C)  increases; increases by the same percentage 
D)  halves; doubles

Question 19

-In the above figure, the average fixed cost curve is curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 20

Which of the following would be classified as a fixed cost for the proprietor who owns and operates the local Texaco station?

Accepted Answer

A)  the federal excise tax paid on each gallon of Texaco gasoline sold 
B)  the state income tax on the profit earned 
C)  the rent paid on the 10 year lease for the property on which the station is located 
D)  the Social Security tax the owner pays the federal government on the owner's income 
A)  the federal excise tax paid on each gallon of Texaco gasoline sold 
B)  the state income tax on the profit earned 
C)  the rent paid on the 10 year lease for the property on which the station is located 
D)  the Social Security tax the owner pays the federal government on the owner's income

Marginal cost eventually increases because

Diminishing marginal returns to labor occur because

Decent Donuts -Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

The marginal cost (MC) curve intersects the

-In the above figure, the average product of labor at point c is

What do economists mean when they say that a firm's plant is fixed?

-In the above figure, the intersection of curves A and B is the point at which

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The average fixed cost of producing 25 baseball hats per hour is

Over the range of output for which the average product of labor curve is negatively sloped, the average variable cost curve is positively sloped.

-The above table shows the total product schedule for the campus book store. When the book store is selling 60 books per hour it is certain that

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

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

"Diminishing marginal returns" refer to a situation in which the

The firm's production function is the relationship between the and .

If diseconomies of scale are present and the firm all its inputs, its output .

-In the above figure, the average fixed cost curve is curve

Which of the following would be classified as a fixed cost for the proprietor who owns and operates the local Texaco station?

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

Marginal cost eventually increases because

Diminishing marginal returns to labor occur because

Decent Donuts -Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

The marginal cost (MC) curve intersects the

-In the above figure, the average product of labor at point c is

What do economists mean when they say that a firm's plant is fixed?

-In the above figure, the intersection of curves A and B is the point at which

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The average fixed cost of producing 25 baseball hats per hour is

Over the range of output for which the average product of labor curve is negatively sloped, the average variable cost curve is positively sloped.

-The above table shows the total product schedule for the campus book store. When the book store is selling 60 books per hour it is certain that

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

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

"Diminishing marginal returns" refer to a situation in which the

The firm's production function is the relationship between the ________ and ________.

If diseconomies of scale are present and the firm ________ all its inputs, its output ________.

-In the above figure, the average fixed cost curve is curve

Which of the following would be classified as a fixed cost for the proprietor who owns and operates the local Texaco station?

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

The firm's production function is the relationship between the and .

If diseconomies of scale are present and the firm all its inputs, its output .