Question 1

Describe the difference between technology and positive technological change.

Accepted Answer

A firm's technology refers to the processes it uses to turn its land, labor, capital and entrepreneurial inputs into outputs of goods and services.When a firm experiences positive technological change it is able to produce more output using the same inputs or the same output using fewer inputs.Technological change can result from rearranging the layout of a store or manufacturing plant, the installation of faster or more durable equipment or other factors.

Question 2

Economies of scale occur when

Accepted Answer

A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases. 
A) a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B) the marginal product of labor is greater than the average product of labor. 
C) short-run marginal cost falls. 
D) the demand for a firm's output increases. A

Question 3

Table 11-1
   
Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.
-Refer to Table 11-1.What is the marginal product of the 4th worker?

Accepted Answer

A) 137 pounds 
B) 50 pounds 
C) 12.5 pounds 
D) 5 pounds 
A) 137 pounds 
B) 50 pounds 
C) 12.5 pounds 
D) 5 pounds D

Question 4

Figure 11-11
   
Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc.
-Refer to Figure 11-11.For output rates greater than 20,000 picture frames per month,

Accepted Answer

A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production. 
A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production.

Question 5

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Accepted Answer

A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) greater than the marginal product of labor. 
A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) greater than the marginal product of labor.

Question 6

In economics, technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are implicit costs for a typical firm?

Accepted Answer

A) opportunity costs of capital owned and used by the firm 
B) the cost of labor hired by the firm 
C) utilities cost 
D) a business licensing fee 
A) opportunity costs of capital owned and used by the firm 
B) the cost of labor hired by the firm 
C) utilities cost 
D) a business licensing fee

Question 8

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Accepted Answer

A) True 
 B)False

Question 9

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees, each of whom is paid $4,000 per month.Because his business has been successful, next month he will increase employee wages to $5,000.If the revenue from his business remains at its current level, Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

Accepted Answer

A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The addition Stan is considering to make to his office would be an implicit cost. 
A) The payments Stan makes to his employees are variable costs and explicit costs. 
B) The monthly payment Stan makes for his bank loan is an implicit cost. 
C) The monthly payment Stan makes for his bank loan is a fixed cost. 
D) The addition Stan is considering to make to his office would be an implicit cost.

Question 10

Figure 11-1
  
-Refer to Figure 11-1.The marginal product of the 3rd worker is

Accepted Answer

A) 57. 
B) 19. 
C) 15. 
D) 11. 
A) 57. 
B) 19. 
C) 15. 
D) 11.

Question 11

As output increases, average fixed cost gets smaller and smaller.

Accepted Answer

A) True 
 B)False

Question 12

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

Accepted Answer

A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor 
A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor

Question 13

Table 11-8
   
Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data.
-Refer to Table 11-8.What is the minimum efficient scale of production?

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units

Question 14

Figure 11-13
  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

Accepted Answer

A) the movement from AF to BF 
B) the movement from BF to AF 
C) the movement from BF to BD 
D) the movement from BF to CE 
A) the movement from AF to BF 
B) the movement from BF to AF 
C) the movement from BF to BD 
D) the movement from BF to CE

Question 15

Figure 11-14
   
Figure 11-14 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China.
-Refer to Figure 11-14.Consider the following statements:
A.For each country, the marginal product per dollar spent on labor equals to the marginal product per dollar spent on capital.
B.The price of labor is relatively higher in the United States than in China and the price of capital is relatively lower in the United States than in China.
C.The price of labor and the price of capital are relatively higher in the United States than in China.
Based on the figure, which of the statements above is true?

Accepted Answer

A) All of the statements are true. 
B) statements a and c only 
C) statements a and b only 
D) statements b and c only 
A) All of the statements are true. 
B) statements a and c only 
C) statements a and b only 
D) statements b and c only

Question 16

Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication.Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year.The salaries and benefits of people in these job categories will be included in

Accepted Answer

A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost. 
A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost.

Question 17

The formula for total fixed cost is

Accepted Answer

A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC. 
A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC.

Question 18

Figure 11-11
   
Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc.
-Refer to Figure 11-11.The minimum efficient scale of output is reached at what rate of output?

Accepted Answer

A) 10,000 workers 
B) 5,000 picture frames 
C) 20,000 picture frames 
D) 10,000 picture frames 
A) 10,000 workers 
B) 5,000 picture frames 
C) 20,000 picture frames 
D) 10,000 picture frames

Question 19

Figure 11-5
  
-Refer to Figure 11-5.Curve G approaches curve F because

Accepted Answer

A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced. 
A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced.

Question 20

Table 11-2
   
Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April.
-Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

Accepted Answer

A) 270 bushels 
B) 54 bushels 
C) 40 bushels 
D) 8 bushels 
A) 270 bushels 
B) 54 bushels 
C) 40 bushels 
D) 8 bushels

Describe the difference between technology and positive technological change.

Economies of scale occur when

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the marginal product of the 4th worker?

Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 11-11.For output rates greater than 20,000 picture frames per month,

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

In economics, technology only refers to the development of new products.

Which of the following are implicit costs for a typical firm?

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

As output increases, average fixed cost gets smaller and smaller.

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.What is the minimum efficient scale of production?

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

The formula for total fixed cost is

Figure 11-5 -Refer to Figure 11-5.Curve G approaches curve F because

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 11: Technology, Production, and Costs

Describe the difference between technology and positive technological change.

Economies of scale occur when

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the marginal product of the 4th worker?

Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 11-11.For output rates greater than 20,000 picture frames per month,

An avocado orchard employs five full-time workers.Currently, the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

In economics, technology only refers to the development of new products.

Which of the following are implicit costs for a typical firm?

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

As output increases, average fixed cost gets smaller and smaller.

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Refer to Table 11-8.What is the minimum efficient scale of production?

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

The formula for total fixed cost is

Figure 11-5 -Refer to Figure 11-5.Curve G approaches curve F because

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 11-2.What is the average product of labor when the orchard employs 5 workers?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters