Question 1

The "law" of diminishing returns is also referred to as

Accepted Answer

A) the "law" of diminishing returns to scale. 
B) the "law" of variable input proportions. 
C) diminishing average physical product. 
D) the "law" of decreasing cost. 
A) the "law" of diminishing returns to scale. 
B) the "law" of variable input proportions. 
C) diminishing average physical product. 
D) the "law" of decreasing cost.

Question 2

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 3

Renee runs an accounting firm that does tax returns, which she operates out of a building that she owns downtown.   She hires all of the accountants and buys the equipment and supplies for the business. The costs used to calculate the total cost curve include

Accepted Answer

A) the salaries of the accountants, the equipment and supply costs, and the opportunity cost of the building that houses the firm. 
B) only the salaries of the accountants and the equipment and supply costs, since she owns the building. 
C) just the costs of the accountant's salaries. 
D) the costs of the accountant's salaries plus the opportunity costs of the building. 
A) the salaries of the accountants, the equipment and supply costs, and the opportunity cost of the building that houses the firm. 
B) only the salaries of the accountants and the equipment and supply costs, since she owns the building. 
C) just the costs of the accountant's salaries. 
D) the costs of the accountant's salaries plus the opportunity costs of the building.

Question 4

Average physical product measures the output per unit of input.

Accepted Answer

A) True 
 B)False

Question 5

A firm that is seeking to minimize costs to produce a certain output

Accepted Answer

A) has a fixed budget 
B) has a large budget 
C) wants to use the smallest possible budget possible 
D) wants to use the same budget as that used last year 
A) has a fixed budget 
B) has a large budget 
C) wants to use the smallest possible budget possible 
D) wants to use the same budget as that used last year

Question 6

Marginal physical product can tell a producer

Accepted Answer

A) at what point to stop adding inputs to the production process. 
B) how much profit will be made at each level of production. 
C) how much the last input added to the total amount of revenue. 
D) how much the last input added to the total amount of production. 
A) at what point to stop adding inputs to the production process. 
B) how much profit will be made at each level of production. 
C) how much the last input added to the total amount of revenue. 
D) how much the last input added to the total amount of production.

Question 7

Figure 7-9  
 
Of the graphs in Figure 7-9, which represents total fixed cost?

Accepted Answer

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

Question 8

Determining the optimal choice of input combinations generally does not involve

Accepted Answer

A) substitution of one input for another. 
B) fixing the level of technology in the long run. 
C) minimizing cost, given the prices of inputs. 
D) assessing the productivity of various inputs. 
A) substitution of one input for another. 
B) fixing the level of technology in the long run. 
C) minimizing cost, given the prices of inputs. 
D) assessing the productivity of various inputs.

Question 9

Input proportions are usually fixed by technological conditions alone.

Accepted Answer

A) True 
 B)False

Question 10

Input choices in the present are often affected by past decisions.

Accepted Answer

A) True 
 B)False

Question 11

Economies of scale are also called increasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-7  
 
In Figure 7-7 at 100 units, AFC equals

Accepted Answer

A) 10. 
B) 100. 
C) 180. 
D) 1,000. 
A) 10. 
B) 100. 
C) 180. 
D) 1,000.

Question 13

Total physical product is the quantity of a firm's output based upon a given input usage.

Accepted Answer

A) True 
 B)False

Question 14

Graph typical total, average, and marginal cost curves and explain how their shapes are influenced by the law of diminishing returns. Graph TC on a separate graph, AC and MC on a second graph.

Accepted Answer

TC rises slowly at first and then more q

Question 15

Figure 7-3 ​
 
Government provides many goods and services to the public because they are not provided by free markets. Some economists believe bureaucrats who manage the programs have no interest in maximizing net benefits (profits)but instead maximize the size of a program constrained only by the need to have total benefits exceed total costs. Figure 7-3 shows total benefits and cost curves for a program. What point is the efficient point, and what point will the bureaucrat choose?

Accepted Answer

A) A and B, respectively 
B) B and D, respectively 
C) D and C, respectively 
D) D and A, respectively 
A) A and B, respectively 
B) B and D, respectively 
C) D and C, respectively 
D) D and A, respectively

Question 16

If the price of one input changes, the firm will change its use of that input only.

Accepted Answer

A) True 
 B)False

Question 17

A firm's production process shows constant returns to scale. It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of

Accepted Answer

A) $10,000. 
B) $5,000. 
C) $2,000. 
D) $0.50. 
A) $10,000. 
B) $5,000. 
C) $2,000. 
D) $0.50.

Question 18

The average total cost curve is U shaped in the short run but this is not true for the average total cost curve for the long run.

Accepted Answer

A) True 
 B)False

Question 19

Table 7-2   Table 7-2 contains information on widget production. The marginal physical product of the sixth pound of plastic is ____.

Accepted Answer

A) (19\7)− (17\6) 
B) 1\3 
C) 2 
D) 3 
A) (19\7)− (17\6) 
B) 1\3 
C) 2 
D) 3

Question 20

Figure 7-5  
 
Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
A) (a) 
B) (b) 
C) (c) 
D) (d)

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

The "law" of diminishing returns is also referred to as

Marginal revenue product is increasing as

Renee runs an accounting firm that does tax returns, which she operates out of a building that she owns downtown. She hires all of the accountants and buys the equipment and supplies for the business. The costs used to calculate the total cost curve include

Average physical product measures the output per unit of input.

A firm that is seeking to minimize costs to produce a certain output

Marginal physical product can tell a producer

Figure 7-9 Of the graphs in Figure 7-9, which represents total fixed cost?

Determining the optimal choice of input combinations generally does not involve

Input proportions are usually fixed by technological conditions alone.

Input choices in the present are often affected by past decisions.

Economies of scale are also called increasing returns to scale.

Figure 7-7 In Figure 7-7 at 100 units, AFC equals

Total physical product is the quantity of a firm's output based upon a given input usage.

Graph typical total, average, and marginal cost curves and explain how their shapes are influenced by the law of diminishing returns. Graph TC on a separate graph, AC and MC on a second graph.

If the price of one input changes, the firm will change its use of that input only.

A firm's production process shows constant returns to scale. It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of

The average total cost curve is U shaped in the short run but this is not true for the average total cost curve for the long run.

Table 7-2 Table 7-2 contains information on widget production. The marginal physical product of the sixth pound of plastic is ____.

Figure 7-5 Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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