Question 1

If a firm is using optimal input proportions, it is minimizing its costs.

Accepted Answer

A) True 
 B)False

Question 2

Figure 7-8  
-Of the graphs in Figure 7-8, which represents total cost?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 3

Marginal revenue product is increasing as

Accepted Answer

A) the marginal physical product is increasing, other things equal. 
B) the amount of time is increasing, other things equal. 
C) the revenue from sales decreases, other things equal. 
D) the revenue from one more unit produced falls, other things equal. 
A) the marginal physical product is increasing, other things equal. 
B) the amount of time is increasing, other things equal. 
C) the revenue from sales decreases, other things equal. 
D) the revenue from one more unit produced falls, other things equal.

Question 4

When marginal revenue product of an input is less than its price, the producers should use less of the input.

Accepted Answer

A) True 
 B)False

Question 5

Table 7-1   ​
​
​
-In which zone does the total physical product reach it maximum value?

Accepted Answer

A) Increasing marginal return 
B) Negative marginal return 
C) Diminishing marginal return 
D) Decreasing total physical product 
A) Increasing marginal return 
B) Negative marginal return 
C) Diminishing marginal return 
D) Decreasing total physical product

Question 6

The long run is a period long enough so that one of the firm's commitments ends.

Accepted Answer

A) True 
 B)False

Question 7

At a given level of wheat output, one more unit of labor would produce 10 extra bushels, and one more unit of seed would produce 30 extra bushels.A unit of labor costs $6, and a unit of seed costs $12.The farmer should

Accepted Answer

A) produce less wheat. 
B) buy only seed. 
C) buy more seed and less labor. 
D) buy less seed and more labor. 
A) produce less wheat. 
B) buy only seed. 
C) buy more seed and less labor. 
D) buy less seed and more labor.

Question 8

Marginal revenue product is essentially the additional revenue generating from selling one additional unit of output.

Accepted Answer

A) True 
 B)False

Question 9

Total fixed cost falls as output expands.

Accepted Answer

A) True 
 B)False

Question 10

If the marginal revenue product of an input is greater than its price, the

Accepted Answer

A) firm should decrease its use of the input to bring the two values into equality. 
B) firm should raise the price of the product. 
C) firm should increase the use of the input to bring the two values into equality. 
D) firm should search for another input to use in its production. 
A) firm should decrease its use of the input to bring the two values into equality. 
B) firm should raise the price of the product. 
C) firm should increase the use of the input to bring the two values into equality. 
D) firm should search for another input to use in its production.

Question 11

The optimal level of resource use comes when

Accepted Answer

A) MRP exceeds input price. 
B) MRP is less than input price. 
C) MRP equals input price. 
D) use of the resource exhausts the producer's funds. 
A) MRP exceeds input price. 
B) MRP is less than input price. 
C) MRP equals input price. 
D) use of the resource exhausts the producer's funds.

Question 12

Table 7-5  
-If a firm has a U-shaped long-run average cost curve,

Accepted Answer

A) its fixed cost rises as output rises. 
B) it must have increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production. 
C) it must have increasing returns to each input at low levels of production and decreasing returns to each input at high levels of production. 
D) the firm can maximize its output by operating at the point of minimum long-run average cost. 
A) its fixed cost rises as output rises. 
B) it must have increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production. 
C) it must have increasing returns to each input at low levels of production and decreasing returns to each input at high levels of production. 
D) the firm can maximize its output by operating at the point of minimum long-run average cost.

Question 13

The total physical product of an input is the same thing as its

Accepted Answer

A) total revenue product. 
B) marginal physical product times output. 
C) output. 
D) total consumer's surplus. 
A) total revenue product. 
B) marginal physical product times output. 
C) output. 
D) total consumer's surplus.

Question 14

Production technology determines the relationship of total cost to outputs.

Accepted Answer

A) True 
 B)False

Question 15

The "law" of diminishing returns is what happens to marginal returns as all inputs are varied.

Accepted Answer

A) True 
 B)False

Question 16

Table 7-5  
-Table 7-5 shows short-run total cost figures for a stereo manufacturer.At what output level does short-run average variable cost reach a minimum?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 17

The least costly combination of inputs is influenced by the relative prices of inputs.

Accepted Answer

A) True 
 B)False

Question 18

A.B.Denson Company had been employing 6 workers and 8 tons of raw materials, using 2,000 square feet of plant space.The firm increased its work force to 12 workers utilizing 16 tons of raw materials in a plant space increased to 4,000 square feet.Total number of units of output increased from 78 to 160.What kind of returns to scale is the firm experiencing? Defend your answer.

Accepted Answer

Increasing returns t

Question 19

If the price of one input changes, generally the firm will change its use of both inputs.

Accepted Answer

A) True 
 B)False

Question 20

The average total cost curve of a firm is U shaped but the average variable cost is not.

Accepted Answer

A) True 
 B)False

Exam 7: Production, Inputs, and Cost: Building Blocks for Supply Analysis

If a firm is using optimal input proportions, it is minimizing its costs.

Figure 7-8 -Of the graphs in Figure 7-8, which represents total cost?

Marginal revenue product is increasing as

When marginal revenue product of an input is less than its price, the producers should use less of the input.

Table 7-1 ​ ​ ​ -In which zone does the total physical product reach it maximum value?

The long run is a period long enough so that one of the firm's commitments ends.

At a given level of wheat output, one more unit of labor would produce 10 extra bushels, and one more unit of seed would produce 30 extra bushels.A unit of labor costs $6, and a unit of seed costs $12.The farmer should

Marginal revenue product is essentially the additional revenue generating from selling one additional unit of output.

Total fixed cost falls as output expands.

If the marginal revenue product of an input is greater than its price, the

The optimal level of resource use comes when

Table 7-5 -If a firm has a U-shaped long-run average cost curve,

The total physical product of an input is the same thing as its

Production technology determines the relationship of total cost to outputs.

The "law" of diminishing returns is what happens to marginal returns as all inputs are varied.

Table 7-5 -Table 7-5 shows short-run total cost figures for a stereo manufacturer.At what output level does short-run average variable cost reach a minimum?

The least costly combination of inputs is influenced by the relative prices of inputs.

If the price of one input changes, generally the firm will change its use of both inputs.

The average total cost curve of a firm is U shaped but the average variable cost is not.

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Table 7-1 -In which zone does the total physical product reach it maximum value?