Question 1

The law of diminishing returns states that as

Accepted Answer

A)  the size of a plant increases, the firm's fixed cost decreases. 
B)  the size of a plant increases, the firm's fixed cost increases. 
C)  a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes. 
D)  a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually. 
A)  the size of a plant increases, the firm's fixed cost decreases. 
B)  the size of a plant increases, the firm's fixed cost increases. 
C)  a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes. 
D)  a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually.

Question 2

Which of the following would be classified as a variable cost for the local Texaco station?

Accepted Answer

A)  interest payments to a local bank for a 5-year loan 
B)  the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week 
C)  the premiums paid for liability insurance, which are constant throughout the life of the contract 
D)  the opportunity cost of money used to finance the installation of some new pumps 
A)  interest payments to a local bank for a 5-year loan 
B)  the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week 
C)  the premiums paid for liability insurance, which are constant throughout the life of the contract 
D)  the opportunity cost of money used to finance the installation of some new pumps

Question 3

Which average cost curves are U-shaped?

Accepted Answer

Both the average total cost an

Question 4

Jefferson's Cleaners
  
-Using the data in the above table, which worker hired at Jefferson's Cleaners is the first to show diminishing marginal returns?

Accepted Answer

A)  the second 
B)  the third 
C)  the fourth 
D)  the fifth 
A)  the second 
B)  the third 
C)  the fourth 
D)  the fifth

Question 5

A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?

Accepted Answer

There are several errors. The

Question 6

Which of the following factors is fixed in the long run?

Accepted Answer

A)  capital 
B)  land 
C)  entrepreneurship 
D)  none of the above because all factors are variable in the long run 
A)  capital 
B)  land 
C)  entrepreneurship 
D)  none of the above because all factors are variable in the long run

Question 7

Which of the following would be classified as a fixed cost for the local supermarket?

Accepted Answer

A)  The cost of the boxes of cereal sold in the store. 
B)  The salary and any overtime paid the store's manager. 
C)  The rent from the six-year lease for the building the store uses. 
D)  The Social Security tax the store pays the federal government on the workers' income. 
A)  The cost of the boxes of cereal sold in the store. 
B)  The salary and any overtime paid the store's manager. 
C)  The rent from the six-year lease for the building the store uses. 
D)  The Social Security tax the store pays the federal government on the workers' income.

Question 8

-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 20 sweaters per day, what is her average fixed cost of production?

Accepted Answer

A)  $3.00 
B)  $3.33 
C)  $8.00 
D)  $11.00 
A)  $3.00 
B)  $3.33 
C)  $8.00 
D)  $11.00

Question 9

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased. How does this wage hike affect the Rent-A-Limo Company's average fixed cost, average variable cost, average total cost, and marginal cost?

Accepted Answer

The drivers' wages are a variable cost b

Question 10

Which of the following curves is NOT U-shaped?

Accepted Answer

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

Question 11

Points below a firm's total product curve are

Accepted Answer

A)  both attainable and technologically efficient. 
B)  neither attainable nor technologically efficient. 
C)  attainable but not technologically efficient. 
D)  technologically efficient but not attainable. 
A)  both attainable and technologically efficient. 
B)  neither attainable nor technologically efficient. 
C)  attainable but not technologically efficient. 
D)  technologically efficient but not attainable.

Question 12

Jefferson's Cleaners
  
-Based on the data in the above table, at what level of output does the marginal cost start to rise at Jefferson's Cleaners?

Accepted Answer

A)  45 suits per day 
B)  47 suits per day 
C)  74 suits per day 
D)  85 suits per day 
A)  45 suits per day 
B)  47 suits per day 
C)  74 suits per day 
D)  85 suits per day

Question 13

Marginal product is

Accepted Answer

A)  the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. 
B)  total amount of output produced. 
C)  total amount of output produced divided by the quantity of labor employed. 
D)  total amount of output produced divided by price of the output. 
A)  the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. 
B)  total amount of output produced. 
C)  total amount of output produced divided by the quantity of labor employed. 
D)  total amount of output produced divided by price of the output.

Question 14

-In the figure above, when 20 units are produced the marginal cost is

Accepted Answer

A)  less than $8. 
B)  $8. 
C)  more than $8 and less than $16. 
D)  None of the above answers is correct. 
A)  less than $8. 
B)  $8. 
C)  more than $8 and less than $16. 
D)  None of the above answers is correct.

Question 15

Cost schedule
  
-In the above table, the average fixed cost of producing 15 units of output is

Accepted Answer

A)  $0.50. 
B)  $2.00. 
C)  $6.66. 
D)  $8.66. 
A)  $0.50. 
B)  $2.00. 
C)  $6.66. 
D)  $8.66.

Question 16

When the marginal product of labor exceeds the average product of labor

Accepted Answer

A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale. 
A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale.

Question 17

At that amount of output where diminishing marginal returns first sets in

Accepted Answer

A)  total product will begin to decline. 
B)  average product will begin to decline. 
C)  marginal product will begin to decline. 
D)  all of the above 
A)  total product will begin to decline. 
B)  average product will begin to decline. 
C)  marginal product will begin to decline. 
D)  all of the above

Question 18

Total Product, Marginal Product, Average Product
  
-In the above table, the marginal product is greatest when the

Accepted Answer

A)  first worker is hired. 
B)  second worker is hired. 
C)  third worker is hired. 
D)  fourth worker is hired. 
A)  first worker is hired. 
B)  second worker is hired. 
C)  third worker is hired. 
D)  fourth worker is hired.

Question 19

As output increases, AVC approaches ATC because of

Accepted Answer

A)  diseconomies of scale. 
B)  diminishing marginal returns. 
C)  decreasing average fixed cost. 
D)  increasing marginal cost. 
A)  diseconomies of scale. 
B)  diminishing marginal returns. 
C)  decreasing average fixed cost. 
D)  increasing marginal cost.

Question 20

In the long run, total fixed cost equals zero.

Accepted Answer

A) True 
 B)False

The law of diminishing returns states that as

Which of the following would be classified as a variable cost for the local Texaco station?

Which average cost curves are U-shaped?

Jefferson's Cleaners -Using the data in the above table, which worker hired at Jefferson's Cleaners is the first to show diminishing marginal returns?

A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?

Which of the following factors is fixed in the long run?

Which of the following would be classified as a fixed cost for the local supermarket?

-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 20 sweaters per day, what is her average fixed cost of production?

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased. How does this wage hike affect the Rent-A-Limo Company's average fixed cost, average variable cost, average total cost, and marginal cost?

Which of the following curves is NOT U-shaped?

Points below a firm's total product curve are

Jefferson's Cleaners -Based on the data in the above table, at what level of output does the marginal cost start to rise at Jefferson's Cleaners?

Marginal product is

-In the figure above, when 20 units are produced the marginal cost is

Cost schedule -In the above table, the average fixed cost of producing 15 units of output is

When the marginal product of labor exceeds the average product of labor

At that amount of output where diminishing marginal returns first sets in

Total Product, Marginal Product, Average Product -In the above table, the marginal product is greatest when the

As output increases, AVC approaches ATC because of

In the long run, total fixed cost equals zero.

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

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Exam 11: Output and Costs

The law of diminishing returns states that as

Which of the following would be classified as a variable cost for the local Texaco station?

Which average cost curves are U-shaped?

Jefferson's Cleaners -Using the data in the above table, which worker hired at Jefferson's Cleaners is the first to show diminishing marginal returns?

A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?

Which of the following factors is fixed in the long run?

Which of the following would be classified as a fixed cost for the local supermarket?

-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 20 sweaters per day, what is her average fixed cost of production?

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased. How does this wage hike affect the Rent-A-Limo Company's average fixed cost, average variable cost, average total cost, and marginal cost?

Which of the following curves is NOT U-shaped?

Points below a firm's total product curve are

Jefferson's Cleaners -Based on the data in the above table, at what level of output does the marginal cost start to rise at Jefferson's Cleaners?

Marginal product is

-In the figure above, when 20 units are produced the marginal cost is

Cost schedule -In the above table, the average fixed cost of producing 15 units of output is

When the marginal product of labor exceeds the average product of labor

At that amount of output where diminishing marginal returns first sets in

Total Product, Marginal Product, Average Product -In the above table, the marginal product is greatest when the

As output increases, AVC approaches ATC because of

In the long run, total fixed cost equals zero.

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