Question 1

Average 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 2

John Amaker owns orange groves and hires pickers for a two-week period as shown in Table 7-3.Table 7-3
  
-In Table 7-3, diminishing returns set in with picker

Accepted Answer

A) 3. 
B) 4. 
C) 5. 
D) 6. 
E) 9. 
A) 3. 
B) 4. 
C) 5. 
D) 6. 
E) 9.

Question 3

Figure 7-10
  
-In Figure 7-10, the curve labeled C is

Accepted Answer

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

Question 4

"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve."

Accepted Answer

A) True 
 B)False

Question 5

Which of the following indicates an input is being overused relative to the optimal level?

Accepted Answer

A) MRP = P of input. 
B) MRP > P of input. 
C) MRP  P of output. 
A) MRP = P of input. 
B) MRP > P of input. 
C) MRP  P of output.

Question 6

A production indifference curve describes the input combinations that will produce a given output.

Accepted Answer

A) True 
 B)False

Question 7

Variable costs increase when output rises.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following formulas defines average cost?

Accepted Answer

A) AC = TC/Q 
B) AC = MRP = MFC 
C) AC = MPP/Q 
D) AC = TC − Q 
A) AC = TC/Q 
B) AC = MRP = MFC 
C) AC = MPP/Q 
D) AC = TC − Q

Question 9

Economies of scale lead to declining long-run average cost curves.

Accepted Answer

A) True 
 B)False

Question 10

Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.

Accepted Answer

A) True 
 B)False

Question 11

If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs

Accepted Answer

A) output will be below optimal. 
B) the MRP of the input will be below its price. 
C) costs will not be minimal. 
D) relative input prices need to change. 
A) output will be below optimal. 
B) the MRP of the input will be below its price. 
C) costs will not be minimal. 
D) relative input prices need to change.

Question 12

A change in one input price will cause the slope of the budget line to change.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the correct statement of the marginal rule for optimal input proportions?
The input proportion is optimal when

Accepted Answer

A) PA = PB. 
B) MPPA = MPPB. 
C) PA × MPPA = PB × MPPB. 
D) PA/PB = MPPA/MPPB. 
A) PA = PB. 
B) MPPA = MPPB. 
C) PA × MPPA = PB × MPPB. 
D) PA/PB = MPPA/MPPB.

Question 14

Marginal physical product can tell a producer

Accepted Answer

A) at what point to stop adding inputs to the production process. 
B) how much profit will be made at each level of production. 
C) how much the last input added to the total amount of revenue. 
D) how much the last input added to the total amount of production. 
A) at what point to stop adding inputs to the production process. 
B) how much profit will be made at each level of production. 
C) how much the last input added to the total amount of revenue. 
D) how much the last input added to the total amount of production.

Question 15

Give a short concise definition for the following terms and explain their relationship to the study of economics.
a.marginal physical product
b.marginal revenue product
c.law of diminishing returnsdeconomies of scale

Accepted Answer

a.Marginal physical product is the incre

Question 16

The marginal revenue product of an hour of labor used in steel production is equal to

Accepted Answer

A) its marginal physical product times the hourly wage rate. 
B) its marginal physical product times the price of steel. 
C) the hourly wage rate. 
D) its marginal physical product divided by the price of steel. 
A) its marginal physical product times the hourly wage rate. 
B) its marginal physical product times the price of steel. 
C) the hourly wage rate. 
D) its marginal physical product divided by the price of steel.

Question 17

Figure 7-10
  
-In Figure 7-10, the curve B is

Accepted Answer

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

Question 18

Some costs cannot be varied no matter how long the period in question.These are called

Accepted Answer

A) overheads. 
B) total costs. 
C) fixed costs. 
D) variable costs. 
A) overheads. 
B) total costs. 
C) fixed costs. 
D) variable costs.

Question 19

Average cost curves have the same shape as

Accepted Answer

A) total cost curves. 
B) marginal cost curves. 
C) total fixed cost curves. 
D) average fixed cost curves. 
A) total cost curves. 
B) marginal cost curves. 
C) total fixed cost curves. 
D) average fixed cost curves.

Question 20

A firm will tend to select the least costly input combination to produce its output.

Accepted Answer

A) True 
 B)False

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

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

John Amaker owns orange groves and hires pickers for a two-week period as shown in Table 7-3.Table 7-3 -In Table 7-3, diminishing returns set in with picker

Figure 7-10 -In Figure 7-10, the curve labeled C is

"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve."

Which of the following indicates an input is being overused relative to the optimal level?

A production indifference curve describes the input combinations that will produce a given output.

Variable costs increase when output rises.

Which of the following formulas defines average cost?

Economies of scale lead to declining long-run average cost curves.

Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.

If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs

A change in one input price will cause the slope of the budget line to change.

Which of the following is the correct statement of the marginal rule for optimal input proportions? The input proportion is optimal when

Marginal physical product can tell a producer

Give a short concise definition for the following terms and explain their relationship to the study of economics. a.marginal physical product b.marginal revenue product c.law of diminishing returnsdeconomies of scale

The marginal revenue product of an hour of labor used in steel production is equal to

Figure 7-10 -In Figure 7-10, the curve B is

Some costs cannot be varied no matter how long the period in question.These are called

Average cost curves have the same shape as

A firm will tend to select the least costly input combination to produce its output.

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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