Question 1

The expansion path of product indifference curves shows the cost-minimizing combination of inputs.

Accepted Answer

A) True 
 B)False

Question 2

-In Table 7-1, the marginal physical product begins to diminish with the addition of the

Accepted Answer

A) second worker. 
B) third worker. 
C) fourth worker. 
D) Marginal returns never diminish in Table 7-1. 
A) second worker. 
B) third worker. 
C) fourth worker. 
D) Marginal returns never diminish in Table 7-1.

Question 3

Marginal revenue product is essentially the additional revenue generating from selling one additional unit of output.

Accepted Answer

A) True 
 B)False

Question 4

In which zone does the total physical product reach it maximum value?

Accepted Answer

A) Increasing marginal return 
B) Negative marginal return 
C) Diminishing marginal return 
D) Decreasing total physical product 
A) Increasing marginal return 
B) Negative marginal return 
C) Diminishing marginal return 
D) Decreasing total physical product

Question 5

Production indifference curves show the combination of inputs that produce a given output.

Accepted Answer

A) True 
 B)False

Question 6

Figure 7-8
  
-Of the graphs in Figure 7-8, which represents fixed cost?

Accepted Answer

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

Question 7

In the short run, a firm has fixed costs but never any variable costs.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

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

Question 10

Figure 7-13
  
-Figure 7-13 shows the average total cost curves of four firms that produce milk.Some of the dairies are more productive.AR = P is the long-run price of milk.How many of these dairies will remain in the industry in the long run?

Accepted Answer

A) all of them 
B) only 2 
C) only 3 
D) cannot determine with information given 
A) all of them 
B) only 2 
C) only 3 
D) cannot determine with information given

Question 11

A change in input prices will change the location of the budget line.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will not lead to increase in the marginal revenue product?

Accepted Answer

A) MPP increases without any changes in the price. 
B) Price of the product increases without any changes in MPP. 
C) MPP and price of the product increases. 
D) MPP remains the same and price of the product falls. 
A) MPP increases without any changes in the price. 
B) Price of the product increases without any changes in MPP. 
C) MPP and price of the product increases. 
D) MPP remains the same and price of the product falls.

Question 13

Figure 7-2
  
-In Figure 7-2 at an output of 500, marginal cost equals

Accepted Answer

A) 10. 
B) 20. 
C) 30. 
D) 40. 
A) 10. 
B) 20. 
C) 30. 
D) 40.

Question 14

If in some production range average cost is rising, the firm is experiencing

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing costs per unit of output. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing costs per unit of output.

Question 15

Fixed cost increases when output rises.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is correct?

Accepted Answer

A) AC = AFC/Q 
B) AC = AFC + AVC 
C) AC = MFC + MVC 
D) TFC + TMC = MFC + MVC 
A) AC = AFC/Q 
B) AC = AFC + AVC 
C) AC = MFC + MVC 
D) TFC + TMC = MFC + MVC

Question 17

The "law" of diminishing returns asserts that marginal returns will ultimately diminish when the quantity of one input is increased.

Accepted Answer

A) True 
 B)False

Question 18

In the typical AC curve, the downward-sloping part is attributable to

Accepted Answer

A) spreading fixed costs over larger outputs and increasing returns to the variable inputs. 
B) declining administrative costs as output increases. 
C) falling fixed costs. 
D) rising total product. 
A) spreading fixed costs over larger outputs and increasing returns to the variable inputs. 
B) declining administrative costs as output increases. 
C) falling fixed costs. 
D) rising total product.

Question 19

Which of the following is a variable cost for an airline?

Accepted Answer

A) insurance 
B) property taxes 
C) jet fuel 
D) rent of airport space 
A) insurance 
B) property taxes 
C) jet fuel 
D) rent of airport space

Question 20

Figure 7-6
  
-Which of the lines in Figure 7-6 represents a typical average fixed cost curve?

Accepted Answer

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

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

The expansion path of product indifference curves shows the cost-minimizing combination of inputs.

-In Table 7-1, the marginal physical product begins to diminish with the addition of the

Marginal revenue product is essentially the additional revenue generating from selling one additional unit of output.

In which zone does the total physical product reach it maximum value?

Production indifference curves show the combination of inputs that produce a given output.

Figure 7-8 -Of the graphs in Figure 7-8, which represents fixed cost?

In the short run, a firm has fixed costs but never any variable costs.

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

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

Figure 7-13 -Figure 7-13 shows the average total cost curves of four firms that produce milk.Some of the dairies are more productive.AR = P is the long-run price of milk.How many of these dairies will remain in the industry in the long run?

A change in input prices will change the location of the budget line.

Which of the following will not lead to increase in the marginal revenue product?

Figure 7-2 -In Figure 7-2 at an output of 500, marginal cost equals

If in some production range average cost is rising, the firm is experiencing

Fixed cost increases when output rises.

Which of the following is correct?

The "law" of diminishing returns asserts that marginal returns will ultimately diminish when the quantity of one input is increased.

In the typical AC curve, the downward-sloping part is attributable to

Which of the following is a variable cost for an airline?

Figure 7-6 -Which of the lines in Figure 7-6 represents a typical 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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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