Question 1

The average fixed cost curve increases as output increases.

Accepted Answer

A) True 
 B)False

Question 2

The "law" of diminishing returns

Accepted Answer

A) is deduced from the basic biochemical relationship of agricultural theory. 
B) was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. 
C) is based on regular observations of input-output relationships over the last two centuries. 
D) is borrowed from physical laws related to conversion of matter and energy. 
A) is deduced from the basic biochemical relationship of agricultural theory. 
B) was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. 
C) is based on regular observations of input-output relationships over the last two centuries. 
D) is borrowed from physical laws related to conversion of matter and energy.

Question 3

Explain why the average cost curve for the long run differs from that for the short run.​

Accepted Answer

The average cost curve for the long run

Question 4

Figure 7-2
  
-In Figure 7-2, average cost at 500 units of output equals

Accepted Answer

A) 4,000. 
B) 200. 
C) 8. 
D) 6. 
A) 4,000. 
B) 200. 
C) 8. 
D) 6.

Question 5

Figure 7-14
  
-Of the long-run AC curves in Figure 7-14, which displays increasing returns to scale for all levels of output?

Accepted Answer

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

Question 6

-Table 7-6 shows a baker's daily production relationship for bread.Diminishing returns to labor begin when the baker goes from

Accepted Answer

A) one hour of labor to two hours of labor. 
B) three hours of labor to four hours of labor. 
C) six hours of labor to seven hours of labor. 
D) seven hours of labor to eight hours of labor. 
A) one hour of labor to two hours of labor. 
B) three hours of labor to four hours of labor. 
C) six hours of labor to seven hours of labor. 
D) seven hours of labor to eight hours of labor.

Question 7

Cost minimization is the process of making optimal use of all of the inputs whose quantities are

Accepted Answer

A) set in the short run. 
B) set in the intermediate run. 
C) set in the long run. 
D) variable in the short and long run. 
A) set in the short run. 
B) set in the intermediate run. 
C) set in the long run. 
D) variable in the short and long run.

Question 8

The following table depicts the production relationship between units of labor and output of pepper on Pietrov's Pepper Farm.Graphically show the three zones of production corresponding to increasing, decreasing, and negative marginal product, noting the point of diminishing returns.

Accepted Answer

Zone 1 shows rising marginal physical pr

Question 9

The law of diminishing marginal returns is the same as increasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a fixed cost?

Accepted Answer

A) electricity 
B) worker bonuses 
C) mortgage on the building 
D) steel to produce refrigerators 
A) electricity 
B) worker bonuses 
C) mortgage on the building 
D) steel to produce refrigerators

Question 11

If significant economies of scale are present, large firms will be much more efficient producers than small firms.

Accepted Answer

A) True 
 B)False

Question 12

When marginal revenue product of an input is less than its price, the producers should use less of the input.

Accepted Answer

A) True 
 B)False

Question 13

A factory produces 1,000 radios a year, AVC = $10 and TFC = $5,000.The factory's TC

Accepted Answer

A) equals $15. 
B) equals $5,005. 
C) equals $15,000. 
D) cannot be determined from the information given. 
A) equals $15. 
B) equals $5,005. 
C) equals $15,000. 
D) cannot be determined from the information given.

Question 14

If economies of scale exist for a particular production relationship, long-run average costs will

Accepted Answer

A) rise. 
B) fall. 
C) first rise and then fall. 
D) be unaffected since there is no direct relationship between the two. 
A) rise. 
B) fall. 
C) first rise and then fall. 
D) be unaffected since there is no direct relationship between the two.

Question 15

"Optimal input curve analysis is useless.Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination." Agree or disagree?

Accepted Answer

Disagree.Optimal input analysis is a gui

Question 16

-Table 7-2 contains information on widget production.The marginal physical product of the sixth pound of plastic is ____.

Accepted Answer

A) (19/7) ? (17/6) 
B) 1/3 
C) 2 
D) 3 
A) (19/7) ? (17/6) 
B) 1/3 
C) 2 
D) 3

Question 17

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

Accepted Answer

A) 1,000. 
B) 1,800. 
C) 800. 
D) 80. 
A) 1,000. 
B) 1,800. 
C) 800. 
D) 80.

Question 18

If the firm's marginal physical product is 8, and its handicrafts sell for $70, at a labor cost of $150, the firm is operating

Accepted Answer

A) short of an optimal input point. 
B) at the optimum input point. 
C) beyond the optimum input point. 
D) There isn't enough information to determine if the input point is optimal. 
A) short of an optimal input point. 
B) at the optimum input point. 
C) beyond the optimum input point. 
D) There isn't enough information to determine if the input point is optimal.

Question 19

Everything else equal, the AC curve will shift when

Accepted Answer

A) the price of the product rises. 
B) technical change raises the MPP of one input. 
C) output is increased. 
D) increasing returns to scale are present. 
A) the price of the product rises. 
B) technical change raises the MPP of one input. 
C) output is increased. 
D) increasing returns to scale are present.

Question 20

Higher production indifference curves correspond to larger amounts of one input in relation to a second input.

Accepted Answer

A) True 
 B)False

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

The average fixed cost curve increases as output increases.

The "law" of diminishing returns

Explain why the average cost curve for the long run differs from that for the short run.​

Figure 7-2 -In Figure 7-2, average cost at 500 units of output equals

Figure 7-14 -Of the long-run AC curves in Figure 7-14, which displays increasing returns to scale for all levels of output?

-Table 7-6 shows a baker's daily production relationship for bread.Diminishing returns to labor begin when the baker goes from

Cost minimization is the process of making optimal use of all of the inputs whose quantities are

The following table depicts the production relationship between units of labor and output of pepper on Pietrov's Pepper Farm.Graphically show the three zones of production corresponding to increasing, decreasing, and negative marginal product, noting the point of diminishing returns.

The law of diminishing marginal returns is the same as increasing returns to scale.

Which of the following is a fixed cost?

If significant economies of scale are present, large firms will be much more efficient producers than small firms.

When marginal revenue product of an input is less than its price, the producers should use less of the input.

A factory produces 1,000 radios a year, AVC = $10 and TFC = $5,000.The factory's TC

If economies of scale exist for a particular production relationship, long-run average costs will

"Optimal input curve analysis is useless.Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination." Agree or disagree?

-Table 7-2 contains information on widget production.The marginal physical product of the sixth pound of plastic is ____.

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

If the firm's marginal physical product is 8, and its handicrafts sell for $70, at a labor cost of $150, the firm is operating

Everything else equal, the AC curve will shift when

Higher production indifference curves correspond to larger amounts of one input in relation to a second input.

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

Explain why the average cost curve for the long run differs from that for the short run.