Question 1

A decrease in labor productivity will increase marginal cost.

Accepted Answer

A) True 
 B)False  True

Question 2

-In Exhibit H-3 the marginal cost of the five hundredth unit of output is

Accepted Answer

A)  $6 
B)  $7 
C)  $8 
D)  $9 
E)  $11 
A)  $6 
B)  $7 
C)  $8 
D)  $9 
E)  $11 C

Question 3

Which of the following cost curves always declines continuously as output increases?

Accepted Answer

A)  ATC 
B)  AVC 
C)  AFC 
D)  MC 
E)  TC 
A)  ATC 
B)  AVC 
C)  AFC 
D)  MC 
E)  TC C

Question 4

The social and economic environment plays a secondary role when compared to the importance of land, labor, capital, and entrepreneurship.

Accepted Answer

A) True 
 B)False

Question 5

Three landscapers, Allen, Betty, and Christina, are visiting the lawn and garden supply store. Allen is choosing between a mower with a 40-inch blade and a mower with a 28-inch blade. Betty is picking up her mower, which was in for scheduled maintenance. Christina is putting up a For Sale sign advertising her equipment and list of customers.Who is operating in the short run?

Accepted Answer

A)  Allen and Betty 
B)  Betty and Christina 
C)  Allen only 
D)  Betty only 
E)  Christina only 
A)  Allen and Betty 
B)  Betty and Christina 
C)  Allen only 
D)  Betty only 
E)  Christina only

Question 6

By downsizing, a firm attempts to operate on a smaller scale of operation.

Accepted Answer

A) True 
 B)False

Question 7

Can a firm's average cost be rising if it is greater than the firm's marginal cost? Explain.

Accepted Answer

No. Average cost is determined

Question 8

If the average total cost and marginal cost are equal at a value of $30 and a quantity of 20,000, then the total cost increases with the production of one more unit.

Accepted Answer

A) True 
 B)False

Question 9

Changes in labor productivity, changes in the quality of labor, and changes in the price of labor are three factors that explain why labor costs eventually

Accepted Answer

A)  increase at a decreasing rate 
B)  increase at an increasing rate 
C)  decrease at an increasing rate 
D)  decrease at a decreasing rate 
E)  become constant 
A)  increase at a decreasing rate 
B)  increase at an increasing rate 
C)  decrease at an increasing rate 
D)  decrease at a decreasing rate 
E)  become constant

Question 10

-By filling in the blanks in Exhibit H-5 (on the following page), the AFC of 4 pizzas is shown to be equal to

Accepted Answer

A)  $10.00 
B)  $9.50 
C)  $19.50 
D)  $40.00 
E)  $78.00 
A)  $10.00 
B)  $9.50 
C)  $19.50 
D)  $40.00 
E)  $78.00

Question 11

Margo and Stephanie are starting separate T-shirt companies. Both will pay the same prices for shirts and stencils, but Margo chooses a more expensive silk screening machine that is capable of producing multiple shirts at once. Stephanie chooses an inexpensivemachine that only makes one shirt at a time. Each machine can be operated by one person. What can we infer about their two operations?

Accepted Answer

A)  Customers will prefer Stephanie's shirts to Margo's. 
B)  Stephanie's shirts will cost less than Margo's. 
C)  If Margo and Stephanie each only make one shirt, Stephanie's ATC will be higher than Margo's ATC. 
D)  The minimum of Stephanie's ATC will be lower than the minimum of Margo's ATC. 
E)  At some level of output the average total cost for Margo will be lower than the average total cost for Stephanie. 
A)  Customers will prefer Stephanie's shirts to Margo's. 
B)  Stephanie's shirts will cost less than Margo's. 
C)  If Margo and Stephanie each only make one shirt, Stephanie's ATC will be higher than Margo's ATC. 
D)  The minimum of Stephanie's ATC will be lower than the minimum of Margo's ATC. 
E)  At some level of output the average total cost for Margo will be lower than the average total cost for Stephanie.

Question 12

-In Exhibit H-3 the

Accepted Answer

A)  total fixed cost curve is positively sloped 
B)  average fixed cost reaches a minimum at 400 units 
C)  total variable cost curve is U-shaped 
D)  average total cost equals marginal cost at 300 units 
E)  marginal cost equals average variable cost between 300 and 400 units 
A)  total fixed cost curve is positively sloped 
B)  average fixed cost reaches a minimum at 400 units 
C)  total variable cost curve is U-shaped 
D)  average total cost equals marginal cost at 300 units 
E)  marginal cost equals average variable cost between 300 and 400 units

Question 13

Suppose Woody's Cabinetmaking calculates the following information for each cabinet produced in a given month: P = $300; Q = 100; AFC = $10; AVC = $140. Woody's total profit for that month is

Accepted Answer

A)  $140 
B)  $150 
C)  $15,000 
D)  $30,000 
E)  impossible to determine 
A)  $140 
B)  $150 
C)  $15,000 
D)  $30,000 
E)  impossible to determine

Question 14

If a firm's output equals 10, product price equals $5.00, TFC = $8.00, and TVC = $60.00,then AVC would equal

Accepted Answer

A)  $.80 
B)  $1.00 
C)  $6.00 
D)  $60.00 
E)  $8.00 
A)  $.80 
B)  $1.00 
C)  $6.00 
D)  $60.00 
E)  $8.00

Question 15

Suppose there is a firm that has no fixed costs. At the point where marginal cost equals average variable cost,

Accepted Answer

A)  fixed cost is rising 
B)  marginal cost is rising 
C)  average total cost is rising 
D)  average variable cost is falling 
E)  there is no total cost 
A)  fixed cost is rising 
B)  marginal cost is rising 
C)  average total cost is rising 
D)  average variable cost is falling 
E)  there is no total cost

Question 16

Which of the following curves reflects the situation in which a firm has complete flexibility in the choices of resources?

Accepted Answer

A)  TFC 
B)  SRATC 
C)  LRATC 
D)  AVC 
E)  AFC 
A)  TFC 
B)  SRATC 
C)  LRATC 
D)  AVC 
E)  AFC

Question 17

-In Exhibit H-8, the total cost of producing 6,000 units of output is

Accepted Answer

A)  $1,000 
B)  $3,000 
C)  $5,000 
D)  $6,000 
E)  $8,000 
A)  $1,000 
B)  $3,000 
C)  $5,000 
D)  $6,000 
E)  $8,000

Question 18

Total cost divided by quantity of output is

Accepted Answer

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

Question 19

-Exhibit H-1 shows the change in the quantity of pizzas produced as the firm adds more workers to production. The total production of pizzas when four workers are employed is

Accepted Answer

A)  4 
B)  15 
C)  18 
D)  3 
E)  1 
A)  4 
B)  15 
C)  18 
D)  3 
E)  1

Question 20

Suppose a fishing boat reaches its most productive use of each person's talent with 15 crew members. More than 15 workers would cause overcrowding. If there are only 10 crew members currently on the boat, adding one more crew member will

Accepted Answer

A)  require the owner to add another boat 
B)  increase the level of labor productivity 
C)  have no effect on labor productivity 
D)  reduce the need for other variable inputs such as fuel 
E)  reduce the total variable cost of operating the fishing boat 
A)  require the owner to add another boat 
B)  increase the level of labor productivity 
C)  have no effect on labor productivity 
D)  reduce the need for other variable inputs such as fuel 
E)  reduce the total variable cost of operating the fishing boat

A decrease in labor productivity will increase marginal cost.

-In Exhibit H-3 the marginal cost of the five hundredth unit of output is

Which of the following cost curves always declines continuously as output increases?

The social and economic environment plays a secondary role when compared to the importance of land, labor, capital, and entrepreneurship.

By downsizing, a firm attempts to operate on a smaller scale of operation.

Can a firm's average cost be rising if it is greater than the firm's marginal cost? Explain.

If the average total cost and marginal cost are equal at a value of $30 and a quantity of 20,000, then the total cost increases with the production of one more unit.

Changes in labor productivity, changes in the quality of labor, and changes in the price of labor are three factors that explain why labor costs eventually

-By filling in the blanks in Exhibit H-5 (on the following page), the AFC of 4 pizzas is shown to be equal to

-In Exhibit H-3 the

Suppose Woody's Cabinetmaking calculates the following information for each cabinet produced in a given month: P = $300; Q = 100; AFC = $10; AVC = $140. Woody's total profit for that month is

If a firm's output equals 10, product price equals $5.00, TFC = $8.00, and TVC = $60.00,then AVC would equal

Suppose there is a firm that has no fixed costs. At the point where marginal cost equals average variable cost,

Which of the following curves reflects the situation in which a firm has complete flexibility in the choices of resources?

-In Exhibit H-8, the total cost of producing 6,000 units of output is

Total cost divided by quantity of output is

-Exhibit H-1 shows the change in the quantity of pizzas produced as the firm adds more workers to production. The total production of pizzas when four workers are employed is

Suppose a fishing boat reaches its most productive use of each person's talent with 15 crew members. More than 15 workers would cause overcrowding. If there are only 10 crew members currently on the boat, adding one more crew member will

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 8: Costs of Production

A decrease in labor productivity will increase marginal cost.

-In Exhibit H-3 the marginal cost of the five hundredth unit of output is

Which of the following cost curves always declines continuously as output increases?

The social and economic environment plays a secondary role when compared to the importance of land, labor, capital, and entrepreneurship.

By downsizing, a firm attempts to operate on a smaller scale of operation.

Can a firm's average cost be rising if it is greater than the firm's marginal cost? Explain.

If the average total cost and marginal cost are equal at a value of $30 and a quantity of 20,000, then the total cost increases with the production of one more unit.

Changes in labor productivity, changes in the quality of labor, and changes in the price of labor are three factors that explain why labor costs eventually

-By filling in the blanks in Exhibit H-5 (on the following page), the AFC of 4 pizzas is shown to be equal to

-In Exhibit H-3 the

Suppose Woody's Cabinetmaking calculates the following information for each cabinet produced in a given month: P = $300; Q = 100; AFC = $10; AVC = $140. Woody's total profit for that month is

If a firm's output equals 10, product price equals $5.00, TFC = $8.00, and TVC = $60.00,then AVC would equal

Suppose there is a firm that has no fixed costs. At the point where marginal cost equals average variable cost,

Which of the following curves reflects the situation in which a firm has complete flexibility in the choices of resources?

-In Exhibit H-8, the total cost of producing 6,000 units of output is

Total cost divided by quantity of output is

-Exhibit H-1 shows the change in the quantity of pizzas produced as the firm adds more workers to production. The total production of pizzas when four workers are employed is

Suppose a fishing boat reaches its most productive use of each person's talent with 15 crew members. More than 15 workers would cause overcrowding. If there are only 10 crew members currently on the boat, adding one more crew member will

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters