Question 1

-In Figure 7-4,marginal product of labor is positive for levels of employment

Accepted Answer

A) between 0 and 80 workers 
B) equal to 35 workers 
C) between 35 and 80 workers 
D) greater than 80 workers 
E) none of the above 
A) between 0 and 80 workers 
B) equal to 35 workers 
C) between 35 and 80 workers 
D) greater than 80 workers 
E) none of the above A

Question 2

-Figure 7-8 shows three different cost curves,labeled A,B,and C for a firm.What does curve C most likely represent?

Accepted Answer

A) average total cost 
B) marginal cost 
C) total cost 
D) average fixed cost 
E) total fixed cost 
A) average total cost 
B) marginal cost 
C) total cost 
D) average fixed cost 
E) total fixed cost D

Question 3

A firm's explicit costs are

Accepted Answer

A) the opportunity costs of the owners 
B) its depreciation costs 
C) the money paid for use of inputs 
D) the foregone rents on owner occupied office space 
E) irrelevant to the determination of economic profit 
A) the opportunity costs of the owners 
B) its depreciation costs 
C) the money paid for use of inputs 
D) the foregone rents on owner occupied office space 
E) irrelevant to the determination of economic profit C

Question 4

A firm's minimum efficient scale is defined as

Accepted Answer

A) the output level at which LRATC first reaches its minimum level 
B) any output level at which LRATC is minimized 
C) the highest output level at which LRATC takes on its minimum value 
D) the output level at which the firm charges its highest price 
E) the lowest output level at which the firm can charge a positive price 
A) the output level at which LRATC first reaches its minimum level 
B) any output level at which LRATC is minimized 
C) the highest output level at which LRATC takes on its minimum value 
D) the output level at which the firm charges its highest price 
E) the lowest output level at which the firm can charge a positive price

Question 5

Average fixed cost is

Accepted Answer

A) the sum of variable and fixed costs 
B) total cost minus variable cost 
C) variable cost plus marginal cost 
D) total fixed cost per unit of output 
E) constant as output changes 
A) the sum of variable and fixed costs 
B) total cost minus variable cost 
C) variable cost plus marginal cost 
D) total fixed cost per unit of output 
E) constant as output changes

Question 6

A firm's profit is

Accepted Answer

A) greater if it is a corporation rather than if it is a sole proprietorship 
B) higher if it raises its price than if it does not 
C) lower if it lowers its price than if it does not 
D) never taxed by the government 
E) its revenue minus its costs 
A) greater if it is a corporation rather than if it is a sole proprietorship 
B) higher if it raises its price than if it does not 
C) lower if it lowers its price than if it does not 
D) never taxed by the government 
E) its revenue minus its costs

Question 7

-For the total product curve shown in Figure 7-3,diminishing marginal returns to labor

Accepted Answer

A) do not occur over this range 
B) begin with the third unit of labor 
C) exist for every unit of labor 
D) begin with the fourth unit of labor 
E) begin with the first unit of labor 
A) do not occur over this range 
B) begin with the third unit of labor 
C) exist for every unit of labor 
D) begin with the fourth unit of labor 
E) begin with the first unit of labor

Question 8

Suppose that (1)LRATC is minimized at $60 when 30,000 units are being produced,(2)the quantity demanded at a price of $60 is 150,000 units,and (3)there are currently 10 firms producing in the market.Then,

Accepted Answer

A) we should expect competition to result in a decrease in the number of firms 
B) we should expect a natural monopoly to emerge 
C) we should expect some existing firms to divide up into smaller firms. 
D) the LRATC curve will shift upward in the long run 
E) the LRATC curve will shift downward in the long run. 
A) we should expect competition to result in a decrease in the number of firms 
B) we should expect a natural monopoly to emerge 
C) we should expect some existing firms to divide up into smaller firms. 
D) the LRATC curve will shift upward in the long run 
E) the LRATC curve will shift downward in the long run.

Question 9

-Figure 7-6 shows the total cost for six different levels of output for a particular firm.What is the average total cost (ATC)of producing four units of output?

Accepted Answer

A) $2,600 
B) $200 
C) $650 
D) $50 
E) $10,400 
A) $2,600 
B) $200 
C) $650 
D) $50 
E) $10,400

Question 10

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the marginal product of labor between 20 and 30 units of labor?

Accepted Answer

A) 340 units 
B) 220 units 
C) 11 units 
D) 110 units 
E) 34 units 
A) 340 units 
B) 220 units 
C) 11 units 
D) 110 units 
E) 34 units

Question 11

The law of diminishing marginal returns says that as more of a variable input is combined with a fixed input,total output will increase;however,the increases in the firm's output will become ever smaller.

Accepted Answer

A) True 
 B)False

Question 12

The spreading of fixed costs over more output explains why the long-run average cost falls as output rises.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an implicit cost?

Accepted Answer

A) salaries paid to owners who work for their own firm 
B) interest on money borrowed to finance equipment purchases 
C) cash payments for raw materials 
D) wages paid to hourly employees 
E) foregone interest on money taken from bank accounts to buy equipment 
A) salaries paid to owners who work for their own firm 
B) interest on money borrowed to finance equipment purchases 
C) cash payments for raw materials 
D) wages paid to hourly employees 
E) foregone interest on money taken from bank accounts to buy equipment

Question 14

Samantha has been working for a law firm and earning an annual salary of $90,000.She decides to open her own practice.Her annual expenses will include $15,000 for office rent,$3,000 for equipment rental,$1,000 for supplies,$1,200 for utilities,and a $35,000 salary for a secretary/bookkeeper.Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $1,000.Assuming that there are no additional expenses,Samantha's total annual cost of production will equal

Accepted Answer

A) $55,200 
B) $221,400 
C) $91,000 
D) $146,200 
E) $145,200 
A) $55,200 
B) $221,400 
C) $91,000 
D) $146,200 
E) $145,200

Question 15

In the short run,

Accepted Answer

A) utilization of any input can be varied 
B) production takes less than one year 
C) all resources are limited in supply 
D) utilization of some inputs is assumed constant 
E) equilibrium cannot occur 
A) utilization of any input can be varied 
B) production takes less than one year 
C) all resources are limited in supply 
D) utilization of some inputs is assumed constant 
E) equilibrium cannot occur

Question 16

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the average product of labor when 20 units of labor are employed?

Accepted Answer

A) 230 units 
B) 11.5 units 
C) 130 units 
D) 6.5 units 
E) 110 units 
A) 230 units 
B) 11.5 units 
C) 130 units 
D) 6.5 units 
E) 110 units

Question 17

Marginal product is the change in output divided by the change in the amount of an input used.

Accepted Answer

A) True 
 B)False

Question 18

As a firm increases its output in the short run,average fixed cost

Accepted Answer

A) rises steadily 
B) falls and then rises 
C) falls steadily 
D) rises and then falls 
E) remains unchanged 
A) rises steadily 
B) falls and then rises 
C) falls steadily 
D) rises and then falls 
E) remains unchanged

Question 19

The law of diminishing marginal returns says that

Accepted Answer

A) total product will eventually remain constant as more of an input is added to production 
B) total revenue decreases as output increases,holding technology fixed 
C) marginal product eventually falls as more of an input is employed 
D) the quantity demanded of a good decreases as its price rises 
E) utility falls as more of a good is consumed 
A) total product will eventually remain constant as more of an input is added to production 
B) total revenue decreases as output increases,holding technology fixed 
C) marginal product eventually falls as more of an input is employed 
D) the quantity demanded of a good decreases as its price rises 
E) utility falls as more of a good is consumed

Question 20

The minimum points of the average variable cost and average total cost curves occur where

Accepted Answer

A) the marginal cost curve lies below the average variable cost and average total cost curves 
B) the marginal cost curve intersects those curves 
C) wages are the lowest 
D) the slope of total cost is the smallest 
E) the elasticity of demand is unitary 
A) the marginal cost curve lies below the average variable cost and average total cost curves 
B) the marginal cost curve intersects those curves 
C) wages are the lowest 
D) the slope of total cost is the smallest 
E) the elasticity of demand is unitary

-In Figure 7-4,marginal product of labor is positive for levels of employment

-Figure 7-8 shows three different cost curves,labeled A,B,and C for a firm.What does curve C most likely represent?

A firm's explicit costs are

A firm's minimum efficient scale is defined as

Average fixed cost is

A firm's profit is

-For the total product curve shown in Figure 7-3,diminishing marginal returns to labor

Suppose that (1)LRATC is minimized at $60 when 30,000 units are being produced,(2)the quantity demanded at a price of $60 is 150,000 units,and (3)there are currently 10 firms producing in the market.Then,

-Figure 7-6 shows the total cost for six different levels of output for a particular firm.What is the average total cost (ATC)of producing four units of output?

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the marginal product of labor between 20 and 30 units of labor?

The law of diminishing marginal returns says that as more of a variable input is combined with a fixed input,total output will increase;however,the increases in the firm's output will become ever smaller.

The spreading of fixed costs over more output explains why the long-run average cost falls as output rises.

Which of the following is an implicit cost?

In the short run,

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the average product of labor when 20 units of labor are employed?

Marginal product is the change in output divided by the change in the amount of an input used.

As a firm increases its output in the short run,average fixed cost

The law of diminishing marginal returns says that

The minimum points of the average variable cost and average total cost curves occur where

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 7: Production and Cost

-In Figure 7-4,marginal product of labor is positive for levels of employment

-Figure 7-8 shows three different cost curves,labeled A,B,and C for a firm.What does curve C most likely represent?

A firm's explicit costs are

A firm's minimum efficient scale is defined as

Average fixed cost is

A firm's profit is

-For the total product curve shown in Figure 7-3,diminishing marginal returns to labor

Suppose that (1)LRATC is minimized at $60 when 30,000 units are being produced,(2)the quantity demanded at a price of $60 is 150,000 units,and (3)there are currently 10 firms producing in the market.Then,

-Figure 7-6 shows the total cost for six different levels of output for a particular firm.What is the average total cost (ATC)of producing four units of output?

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the marginal product of labor between 20 and 30 units of labor?

The law of diminishing marginal returns says that as more of a variable input is combined with a fixed input,total output will increase;however,the increases in the firm's output will become ever smaller.

The spreading of fixed costs over more output explains why the long-run average cost falls as output rises.

Which of the following is an implicit cost?

In the short run,

-Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and technology constant.What is the average product of labor when 20 units of labor are employed?

Marginal product is the change in output divided by the change in the amount of an input used.

As a firm increases its output in the short run,average fixed cost

The law of diminishing marginal returns says that

The minimum points of the average variable cost and average total cost curves occur where

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters