Question 1

Total product divided by the total quantity of labor employed equals the

Accepted Answer

A)  average product of labor. 
B)  marginal product of labor. 
C)  average total cost. 
D)  average variable cost. 
A)  average product of labor. 
B)  marginal product of labor. 
C)  average total cost. 
D)  average variable cost.

Question 2

A firm's average total cost is $80, its average variable cost is $75, and its output is 50 units. Its total fixed cost is

Accepted Answer

A)  less than $100. 
B)  between $100 and $200. 
C)  between $200 and $300. 
D)  more than $300. 
A)  less than $100. 
B)  between $100 and $200. 
C)  between $200 and $300. 
D)  more than $300.

Question 3

-The table above gives the cost of producing T-shirts. When 5 T-shirts are produced, the average fixed cost is ________ and the average variable cost is ________.

Accepted Answer

A)  $4; $10 
B)  $10; $6 
C)  $5; $3 
D)  $4; $6 
A)  $4; $10 
B)  $10; $6 
C)  $5; $3 
D)  $4; $6

Question 4

Cost schedule
  
-In the above table, the total fixed cost is

Accepted Answer

A)  $0. 
B)  $20. 
C)  $30. 
D)  $50. 
A)  $0. 
B)  $20. 
C)  $30. 
D)  $50.

Question 5

The LRAC curve generally is

Accepted Answer

A)  shaped as an upside-down U. 
B)  U-shaped. 
C)  upward sloping. 
D)  downward sloping. 
A)  shaped as an upside-down U. 
B)  U-shaped. 
C)  upward sloping. 
D)  downward sloping.

Question 6

Average total cost minus average variable cost ________ as output increases because ________ as output increases.

Accepted Answer

A)  decreases and then increases; marginal cost initially decreases and then increases 
B)  decreases; average fixed cost decreases 
C)  decreases; marginal returns diminish 
D)  decreases; economies of scale are present 
A)  decreases and then increases; marginal cost initially decreases and then increases 
B)  decreases; average fixed cost decreases 
C)  decreases; marginal returns diminish 
D)  decreases; economies of scale are present

Question 7

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day?

Accepted Answer

A)  3.7 cents per copy 
B)  5.0 cents per copy 
C)  8.5 cents per copy 
D)  More information is needed to determine the long-run average cost. 
A)  3.7 cents per copy 
B)  5.0 cents per copy 
C)  8.5 cents per copy 
D)  More information is needed to determine the long-run average cost.

Question 8

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total fixed cost of producing 64 bikes?

Accepted Answer

A)  $200 
B)  $300 
C)  $400 
D)  $500 
A)  $200 
B)  $300 
C)  $400 
D)  $500

Question 9

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

Accepted Answer

A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  12 pizzas per hour 
A)  2 pizzas per hour 
B)  3 pizzas per hour 
C)  4 pizzas per hour 
D)  12 pizzas per hour

Question 10

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 1?

Accepted Answer

A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25 
A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25

Question 11

Which of the following statements regarding the marginal product curve is FALSE?

Accepted Answer

A)  Increasing marginal returns occur only when the total product increases as the number of workers increases. 
B)  Increasing marginal returns is due to greater efficiency from specialization in the production process. 
C)  The law of diminishing returns applies in the short run. 
D)  Along the marginal product curve, increasing marginal returns occur first and then diminishing marginal returns. 
A)  Increasing marginal returns occur only when the total product increases as the number of workers increases. 
B)  Increasing marginal returns is due to greater efficiency from specialization in the production process. 
C)  The law of diminishing returns applies in the short run. 
D)  Along the marginal product curve, increasing marginal returns occur first and then diminishing marginal returns.

Question 12

Economies of scale refer to the range of output over which

Accepted Answer

A)  marginal cost exceeds average cost. 
B)  the long-run average cost falls as output increases. 
C)  the marginal product of labor diminishes. 
D)  the long-run average cost is less than the short-run average total cost. 
A)  marginal cost exceeds average cost. 
B)  the long-run average cost falls as output increases. 
C)  the marginal product of labor diminishes. 
D)  the long-run average cost is less than the short-run average total cost.

Question 13

Decent Donuts
  
-Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

Accepted Answer

A)  86 dozen donuts per day 
B)  22 dozen donuts per day 
C)  17.2 dozen donuts per day 
D)  64 dozen donuts per day 
A)  86 dozen donuts per day 
B)  22 dozen donuts per day 
C)  17.2 dozen donuts per day 
D)  64 dozen donuts per day

Question 14

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. Which of Precision Pattern Interiors' decisions is a long run decision?

Accepted Answer

A)  $1 million renovation of a building at the Hutchinson Air Base Industrial Tract and $400,000 in new equipment purchases 
B)  $1 million renovation of a building at the Hutchinson Air Base Industrial Tract 
C)  $400,000 in new equipment purchases 
D)  triple its Yoder work force 
A)  $1 million renovation of a building at the Hutchinson Air Base Industrial Tract and $400,000 in new equipment purchases 
B)  $1 million renovation of a building at the Hutchinson Air Base Industrial Tract 
C)  $400,000 in new equipment purchases 
D)  triple its Yoder work force

Question 15

-In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

Accepted Answer

A)  68 
B)  70 
C)  72 
D)  76 
A)  68 
B)  70 
C)  72 
D)  76

Question 16

For the past 15 years the American public has wanted to buy big trucks. The Big Three automakers delivered, investing billions in plants that build gas guzzlers. Now, when customers walk into showrooms, gas mileage is on their mind. Retooling the industry will take years. Mike Quincy says the industry is "like a huge aircraft carrier. It doesn't stop on a dime. It doesn't turn on a dime." What does Mike mean?

Accepted Answer

A)  The decision time frame to enter into the long run is very long in this industry. 
B)  The industry has increasing returns to scale. 
C)  Short run decisions are easily reversed. 
D)  The industry experiences diminishing marginal returns. 
A)  The decision time frame to enter into the long run is very long in this industry. 
B)  The industry has increasing returns to scale. 
C)  Short run decisions are easily reversed. 
D)  The industry experiences diminishing marginal returns.

Question 17

-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 total variable cost of producing 18 baseball hats per hour is

Accepted Answer

A)  $200.00. 
B)  $30.00. 
C)  $1.67. 
D)  More information is needed to answer the question. 
A)  $200.00. 
B)  $30.00. 
C)  $1.67. 
D)  More information is needed to answer the question.

Question 18

-The above table shows the short-run total product schedule for the campus book store. What is the marginal product (MP) of going from 5 to 6 employees at the book store?

Accepted Answer

A)  83 books sold 
B)  13.83 books sold 
C)  10 books sold 
D)  between 11 and 14 books sold 
A)  83 books sold 
B)  13.83 books sold 
C)  10 books sold 
D)  between 11 and 14 books sold

Question 19

-Ayanna grows herbs. Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker. This year she doubled her land to 500 square feet, doubled her workers to 2, and grew 4,500 pounds of herbs. She sells her rare, organic herbs for $50 a pound. She pays her workers $25,000 a year and rents her land for $100 per square foot for a year. These are her only costs.
a) What was Ayanna's total cost last year and this year?
b) What was Ayanna's average total cost last year and this year?
c) Did Ayanna experience economies or diseconomies of scale?

Accepted Answer

a) Ayanna's total cost last year was $50

Question 20

Points on 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.

Total product divided by the total quantity of labor employed equals the

A firm's average total cost is $80, its average variable cost is $75, and its output is 50 units. Its total fixed cost is

-The table above gives the cost of producing T-shirts. When 5 T-shirts are produced, the average fixed cost is and the average variable cost is .

Cost schedule -In the above table, the total fixed cost is

The LRAC curve generally is

Average total cost minus average variable cost as output increases because as output increases.

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC₁), Plant 2 (ATC₂), Plant 3 (ATC₃), and Plant 4 (ATC₄).What is Dustin's long-run average cost if the output is 3,000 copies per day?

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total fixed cost of producing 64 bikes?

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

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 1?

Which of the following statements regarding the marginal product curve is FALSE?

Economies of scale refer to the range of output over which

Decent Donuts -Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

-In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

-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 total variable cost of producing 18 baseball hats per hour is

-The above table shows the short-run total product schedule for the campus book store. What is the marginal product (MP) of going from 5 to 6 employees at the book store?

Points on a firm's total product curve are

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

Total product divided by the total quantity of labor employed equals the

A firm's average total cost is $80, its average variable cost is $75, and its output is 50 units. Its total fixed cost is

-The table above gives the cost of producing T-shirts. When 5 T-shirts are produced, the average fixed cost is ________ and the average variable cost is ________.

Cost schedule -In the above table, the total fixed cost is

The LRAC curve generally is

Average total cost minus average variable cost ________ as output increases because ________ as output increases.

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day?

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total fixed cost of producing 64 bikes?

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

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 1?

Which of the following statements regarding the marginal product curve is FALSE?

Economies of scale refer to the range of output over which

Decent Donuts -Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

-In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

-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 total variable cost of producing 18 baseball hats per hour is

-The above table shows the short-run total product schedule for the campus book store. What is the marginal product (MP) of going from 5 to 6 employees at the book store?

Points on a firm's total product curve are

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 table above gives the cost of producing T-shirts. When 5 T-shirts are produced, the average fixed cost is and the average variable cost is .

Average total cost minus average variable cost as output increases because as output increases.

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC₁), Plant 2 (ATC₂), Plant 3 (ATC₃), and Plant 4 (ATC₄).What is Dustin's long-run average cost if the output is 3,000 copies per day?

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 1?