Question 1

Because it is a machine,a personal computer should be treated as a fixed input in the typical firm's short-run production function.

Accepted Answer

A) True 
 B)False  False

Question 2

The "long run" is defined as a period of time long enough for the quantities of all of the inputs to production to vary.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is true of the typical relationship between marginal product (MP)and average product (AP)?

Accepted Answer

A) If MP is greater than AP, then AP is falling. 
B) The AP curve intersects the MP curve at minimum MP. 
C) The MP curve intersects the AP curve at maximum AP. 
D) If MP is less than AP, then AP is increasing. 
A) If MP is greater than AP, then AP is falling. 
B) The AP curve intersects the MP curve at minimum MP. 
C) The MP curve intersects the AP curve at maximum AP. 
D) If MP is less than AP, then AP is increasing. C

Question 4

Assume a factory that currently employs 25 workers is considering adding another 5 workers to its payroll.Economists would classify this as:

Accepted Answer

A) a short-run decision. 
B) a long-run decision. 
C) neither a short-run nor a long-run decision. 
D) both a short-run and a long-run decision. 
A) a short-run decision. 
B) a long-run decision. 
C) neither a short-run nor a long-run decision. 
D) both a short-run and a long-run decision.

Question 5

Marginal product equals 0 when:

Accepted Answer

A) average product equals zero. 
B) total product equals average product. 
C) average product reached its minimum value. 
D) total product reaches its maximum value. 
A) average product equals zero. 
B) total product equals average product. 
C) average product reached its minimum value. 
D) total product reaches its maximum value.

Question 6

After the former CEO of the Coca-Cola Company began requiring employees to treat the rate of return on shareholder equity as an explicit cost,Coke's profits increased considerably.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following inputs is most likely to be "fixed" in the short run?

Accepted Answer

A) Labor. 
B) Capital. 
C) Energy. 
D) Raw Material. 
A) Labor. 
B) Capital. 
C) Energy. 
D) Raw Material.

Question 8

The amount of output a firm can produce with a given quantity of fixed and variable inputs is called:

Accepted Answer

A) total product. 
B) average variable product. 
C) marginal product. 
D) total fixed product. 
A) total product. 
B) average variable product. 
C) marginal product. 
D) total fixed product.

Question 9

Consider the production function for bottled water.All of the following would be considered variable inputs except:

Accepted Answer

A) the plastic bottles. 
B) the water the bottles are filled with. 
C) the machine used to fill each bottle. 
D) the electricity used to power the machine used to fill the bottles. 
A) the plastic bottles. 
B) the water the bottles are filled with. 
C) the machine used to fill each bottle. 
D) the electricity used to power the machine used to fill the bottles.

Question 10

-Refer to Scenario 3.The marginal cost of producing the sixth unit of output is:

Accepted Answer

A) $33.33 (approximate). 
B) $55. 
C) $200. 
D) $250. 
A) $33.33 (approximate). 
B) $55. 
C) $200. 
D) $250.

Question 11

-Refer to Scenario 3.Diminishing marginal returns are incurred when output is increased from:

Accepted Answer

A) 1 to 2 units of output. 
B) 2 to 3 units of output. 
C) 3 to 4 units of output. 
D) 4 to 5 units of output. 
A) 1 to 2 units of output. 
B) 2 to 3 units of output. 
C) 3 to 4 units of output. 
D) 4 to 5 units of output.

Question 12

Assume a firm is currently producing 100 units of output,total fixed costs are $10,000,and average variable costs are $8.Based on this information we can conclude,with certainty,that the firm's:

Accepted Answer

A) marginal costs are $8. 
B) total variable costs are $8000. 
C) average fixed costs are $2. 
D) total costs are $10,800. 
A) marginal costs are $8. 
B) total variable costs are $8000. 
C) average fixed costs are $2. 
D) total costs are $10,800.

Question 13

If a firm experiences constant returns to the variable input in the short run:

Accepted Answer

A) marginal product will be greater than average variable product, but the two will become more equal as output increases. 
B) marginal product will be less than average variable product, but the two will become more equal as output increases. 
C) marginal product will be greater than average variable product, and the difference between the two will become larger as output increases. 
D) marginal product and average variable product will be equal over the range of output in question. 
A) marginal product will be greater than average variable product, but the two will become more equal as output increases. 
B) marginal product will be less than average variable product, but the two will become more equal as output increases. 
C) marginal product will be greater than average variable product, and the difference between the two will become larger as output increases. 
D) marginal product and average variable product will be equal over the range of output in question.

Question 14

Marginal cost is defined as the change in ________ cost when output changes by one unit.In the short run,marginal cost can also be measured by the change in ________ cost when output changes by one unit.

Accepted Answer

A) total; fixed 
B) variable; fixed 
C) fixed; variable 
D) total; variable 
A) total; fixed 
B) variable; fixed 
C) fixed; variable 
D) total; variable

Question 15

A firm's decision to expand the size of its production facility would be considered a short-run decision so long as the expansion can be completed in less than a year.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 1: The following is a hypothetical short-run production function:
  
-Refer to Scenario 1.What is the average product of the first three hours of labor?

Accepted Answer

A) 60 
B) 80 
C) 100 
D) 240 
A) 60 
B) 80 
C) 100 
D) 240

Question 17

Economic theory provides insights into the range of possibilities for cost relationships.Studies such as those by Blinder et al.provide insights into where,within that range,many firms operate.Thus,there is no real conflict between theory and reality,as some people might try to claim.

Accepted Answer

A) True 
 B)False

Question 18

A firm's production function is the relationship between:

Accepted Answer

A) the inputs employed by the firm and the resulting costs of production. 
B) the factors of production and the resulting outputs of the production process. 
C) the demand for a firm's output and the quantity it is able to produce with available resources. 
D) the firm's production costs and the amount of revenue it receives from the sale of its output. 
A) the inputs employed by the firm and the resulting costs of production. 
B) the factors of production and the resulting outputs of the production process. 
C) the demand for a firm's output and the quantity it is able to produce with available resources. 
D) the firm's production costs and the amount of revenue it receives from the sale of its output.

Question 19

Which of the following is not a determinant of a firm's cost functions?

Accepted Answer

A) The production function. 
B) The price of labor. 
C) The productivity of the firm's capital stock. 
D) The price of the firm's output. 
A) The production function. 
B) The price of labor. 
C) The productivity of the firm's capital stock. 
D) The price of the firm's output.

Question 20

Which of the following statements is correct?

Accepted Answer

A) In the short run, if a firm chooses to produce no output (i.e., shut down)its total costs of production will equal its total fixed costs. 
B) If a firm decides to shut down, its short-run total costs will equal 0. 
C) As a firm increases output in the short run, the change in total costs is equal to the change in total variable costs. 
D) A firm minimizes its total costs of production when average variable cost is minimized. 
A) In the short run, if a firm chooses to produce no output (i.e., shut down)its total costs of production will equal its total fixed costs. 
B) If a firm decides to shut down, its short-run total costs will equal 0. 
C) As a firm increases output in the short run, the change in total costs is equal to the change in total variable costs. 
D) A firm minimizes its total costs of production when average variable cost is minimized.

Because it is a machine,a personal computer should be treated as a fixed input in the typical firm's short-run production function.

The "long run" is defined as a period of time long enough for the quantities of all of the inputs to production to vary.

Which of the following is true of the typical relationship between marginal product (MP)and average product (AP)?

Assume a factory that currently employs 25 workers is considering adding another 5 workers to its payroll.Economists would classify this as:

Marginal product equals 0 when:

After the former CEO of the Coca-Cola Company began requiring employees to treat the rate of return on shareholder equity as an explicit cost,Coke's profits increased considerably.

Which of the following inputs is most likely to be "fixed" in the short run?

The amount of output a firm can produce with a given quantity of fixed and variable inputs is called:

Consider the production function for bottled water.All of the following would be considered variable inputs except:

-Refer to Scenario 3.The marginal cost of producing the sixth unit of output is:

-Refer to Scenario 3.Diminishing marginal returns are incurred when output is increased from:

Assume a firm is currently producing 100 units of output,total fixed costs are $10,000,and average variable costs are $8.Based on this information we can conclude,with certainty,that the firm's:

If a firm experiences constant returns to the variable input in the short run:

Marginal cost is defined as the change in cost when output changes by one unit.In the short run,marginal cost can also be measured by the change in cost when output changes by one unit.

A firm's decision to expand the size of its production facility would be considered a short-run decision so long as the expansion can be completed in less than a year.

Scenario 1: The following is a hypothetical short-run production function: -Refer to Scenario 1.What is the average product of the first three hours of labor?

Economic theory provides insights into the range of possibilities for cost relationships.Studies such as those by Blinder et al.provide insights into where,within that range,many firms operate.Thus,there is no real conflict between theory and reality,as some people might try to claim.

A firm's production function is the relationship between:

Which of the following is not a determinant of a firm's cost functions?

Which of the following statements is correct?

Managers and Economics

Demand, supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, firms, and Governments on Real Goods and Services

The Role of Money in the Macro Economy

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters

Exam 5: Production and Cost Analysis in the Short Run

Because it is a machine,a personal computer should be treated as a fixed input in the typical firm's short-run production function.

The "long run" is defined as a period of time long enough for the quantities of all of the inputs to production to vary.

Which of the following is true of the typical relationship between marginal product (MP)and average product (AP)?

Assume a factory that currently employs 25 workers is considering adding another 5 workers to its payroll.Economists would classify this as:

Marginal product equals 0 when:

After the former CEO of the Coca-Cola Company began requiring employees to treat the rate of return on shareholder equity as an explicit cost,Coke's profits increased considerably.

Which of the following inputs is most likely to be "fixed" in the short run?

The amount of output a firm can produce with a given quantity of fixed and variable inputs is called:

Consider the production function for bottled water.All of the following would be considered variable inputs except:

-Refer to Scenario 3.The marginal cost of producing the sixth unit of output is:

-Refer to Scenario 3.Diminishing marginal returns are incurred when output is increased from:

Assume a firm is currently producing 100 units of output,total fixed costs are $10,000,and average variable costs are $8.Based on this information we can conclude,with certainty,that the firm's:

If a firm experiences constant returns to the variable input in the short run:

Marginal cost is defined as the change in ________ cost when output changes by one unit.In the short run,marginal cost can also be measured by the change in ________ cost when output changes by one unit.

A firm's decision to expand the size of its production facility would be considered a short-run decision so long as the expansion can be completed in less than a year.

Scenario 1: The following is a hypothetical short-run production function: -Refer to Scenario 1.What is the average product of the first three hours of labor?

Economic theory provides insights into the range of possibilities for cost relationships.Studies such as those by Blinder et al.provide insights into where,within that range,many firms operate.Thus,there is no real conflict between theory and reality,as some people might try to claim.

A firm's production function is the relationship between:

Which of the following is not a determinant of a firm's cost functions?

Which of the following statements is correct?

Managers and Economics

Demand, supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, firms, and Governments on Real Goods and Services

The Role of Money in the Macro Economy

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters

Marginal cost is defined as the change in cost when output changes by one unit.In the short run,marginal cost can also be measured by the change in cost when output changes by one unit.