Question 1

Production indifference curves generally have a positive slope.

Accepted Answer

A) True 
 B)False

Question 2

-Table 7-5 shows short-run total cost figures for a stereo manufacturer.The manufacturer's short-run fixed cost is

Accepted Answer

A) 0. 
B) $75. 
C) $200. 
D) $400. 
A) 0. 
B) $75. 
C) $200. 
D) $400.

Question 3

The firm's average cost curve is the result of cost minimization in the use of fixed inputs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is equivalent to the law of diminishing marginal returns?

Accepted Answer

A) A stitch in time saves nine. 
B) You can't make an omelet without breaking eggs. 
C) Too many cooks spoil the broth. 
D) If you can't stand the heat, get out of the kitchen. 
A) A stitch in time saves nine. 
B) You can't make an omelet without breaking eggs. 
C) Too many cooks spoil the broth. 
D) If you can't stand the heat, get out of the kitchen.

Question 5

Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent

Accepted Answer

A) only marginal cost will shift up. 
B) only marginal cost and average total cost will shift up. 
C) marginal cost, average variable cost, and average total cost will shift up. 
D) marginal cost, average total cost, average variable cost, and average fixed cost will shift up. 
A) only marginal cost will shift up. 
B) only marginal cost and average total cost will shift up. 
C) marginal cost, average variable cost, and average total cost will shift up. 
D) marginal cost, average total cost, average variable cost, and average fixed cost will shift up.

Question 6

Labor is available at a wage of $10.The last worker hired by Cal's Corn Farm added 20 ears of corn, which Cal has priced at four ears for $1.What advice would you give Cal?

Accepted Answer

Don't hire that last worker.Ma

Question 7

-Table 7-4 shows a production relationship.The cost of one day of labor is $65 and the product price is $1 per unit.How much will the labor input increase if the capital stock were increased from 3 to 4?

Accepted Answer

A) from 3 to 4 
B) from 4 to 5 
C) from 4 to 6 
D) stays the same 
A) from 3 to 4 
B) from 4 to 5 
C) from 4 to 6 
D) stays the same

Question 8

-In Table 7-1, the marginal physical product of labor after the addition of the fourth worker is

Accepted Answer

A) 8. 
B) 7. 
C) 10. 
D) 5. 
A) 8. 
B) 7. 
C) 10. 
D) 5.

Question 9

Marginal physical product measures the increase in total output that results from a one-unit increase in an input.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-15
  
-For a firm at equilibrium, at point A in Figure 7-15

Accepted Answer

A) the price of labor is high relative to the price of machines. 
B) the MPP of labor is greater than the MPP of machines. 
C) the MPP of labor is less than at point B. 
D) output is higher than at point B. 
A) the price of labor is high relative to the price of machines. 
B) the MPP of labor is greater than the MPP of machines. 
C) the MPP of labor is less than at point B. 
D) output is higher than at point B.

Question 11

When economies of scale exist,

Accepted Answer

A) production costs per unit increase as output expands. 
B) production costs per unit decline as output expands. 
C) total production costs decrease. 
D) total production costs increase. 
A) production costs per unit increase as output expands. 
B) production costs per unit decline as output expands. 
C) total production costs decrease. 
D) total production costs increase.

Question 12

The case of production with a single variable input is analogous to

Accepted Answer

A) changing the use of land, labor, and capital in production by a constant absolute amount. 
B) a controlled laboratory experiment in which the scientist permits one variable to change at a time. 
C) changing the use of land, labor, and capital in production by a constant percentage. 
D) specialization in one particular product by a company. 
A) changing the use of land, labor, and capital in production by a constant absolute amount. 
B) a controlled laboratory experiment in which the scientist permits one variable to change at a time. 
C) changing the use of land, labor, and capital in production by a constant percentage. 
D) specialization in one particular product by a company.

Question 13

What is the shape of average cost curve? Provide the reason for that particular shape.

Accepted Answer

Average cost curve is roughly 'U' shaped

Question 14

Which of the following is a fixed cost to farmer McDonald?

Accepted Answer

A) gasoline 
B) fertilizer 
C) insurance 
D) seed 
A) gasoline 
B) fertilizer 
C) insurance 
D) seed

Question 15

Economies of scale is another term for

Accepted Answer

A) increasing returns to scale. 
B) constant returns to scale. 
C) increasing marginal physical productivity. 
D) decreasing returns to scale. 
A) increasing returns to scale. 
B) constant returns to scale. 
C) increasing marginal physical productivity. 
D) decreasing returns to scale.

Question 16

In the short run the firm has no more than one fixed input.

Accepted Answer

A) True 
 B)False

Question 17

The total physical product of an input is the same thing as its

Accepted Answer

A) total revenue product. 
B) marginal physical product times output. 
C) output. 
D) total consumer's surplus. 
A) total revenue product. 
B) marginal physical product times output. 
C) output. 
D) total consumer's surplus.

Question 18

The typical average cost curve

Accepted Answer

A) continually declines as output increases. 
B) is horizontal. 
C) continually increases as output increases. 
D) first declines to a minimum and then increases as output increases. 
A) continually declines as output increases. 
B) is horizontal. 
C) continually increases as output increases. 
D) first declines to a minimum and then increases as output increases.

Question 19

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should

Accepted Answer

A) reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B) reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C) reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D) reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery. 
A) reduce the labor used and increase the machinery used if labor costs half as much as machinery. 
B) reduce the labor used and increase the machinery used if labor and machinery cost the same amount. 
C) reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. 
D) reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.

Question 20

Figure 7-7
  
-In Figure 7-7 at 100 units, AVC equals

Accepted Answer

A) 8. 
B) 800. 
C) 100. 
D) 1,000. 
A) 8. 
B) 800. 
C) 100. 
D) 1,000.

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

Production indifference curves generally have a positive slope.

-Table 7-5 shows short-run total cost figures for a stereo manufacturer.The manufacturer's short-run fixed cost is

The firm's average cost curve is the result of cost minimization in the use of fixed inputs.

Which of the following statements is equivalent to the law of diminishing marginal returns?

Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent

Labor is available at a wage of $10.The last worker hired by Cal's Corn Farm added 20 ears of corn, which Cal has priced at four ears for $1.What advice would you give Cal?

-Table 7-4 shows a production relationship.The cost of one day of labor is $65 and the product price is $1 per unit.How much will the labor input increase if the capital stock were increased from 3 to 4?

-In Table 7-1, the marginal physical product of labor after the addition of the fourth worker is

Marginal physical product measures the increase in total output that results from a one-unit increase in an input.

Figure 7-15 -For a firm at equilibrium, at point A in Figure 7-15

When economies of scale exist,

The case of production with a single variable input is analogous to

What is the shape of average cost curve? Provide the reason for that particular shape.

Which of the following is a fixed cost to farmer McDonald?

Economies of scale is another term for

In the short run the firm has no more than one fixed input.

The total physical product of an input is the same thing as its

The typical average cost curve

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should

Figure 7-7 -In Figure 7-7 at 100 units, AVC equals

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

Filters