Question 1

Average variable cost is at a minimum at the same output at which

Accepted Answer

A) average product is at a maximum. 
B) average product is at a minimum. 
C) marginal product is at a maximum. 
D) marginal product is at a minimum. 
E) marginal cost is at a minimum. 
A) average product is at a maximum. 
B) average product is at a minimum. 
C) marginal product is at a maximum. 
D) marginal product is at a minimum. 
E) marginal cost is at a minimum.

Question 2

Marginal cost equals

Accepted Answer

A) TC/Q. 
B) Q/TVC. 
C) (TC - TV
C) /Q. 
D) TC/ΔQ. 
E) ΔTC/ΔQ. 
A) TC/Q. 
B) Q/TVC. 
C) (TC - TV
C) /Q. 
D) TC/ΔQ. 
E) ΔTC/ΔQ.

Question 3

Use the table below to answer the following question.
Table 11.2.4
  
-Refer to Table 11.2.4. The table gives the total product schedule of workers who harvest corn. Diminishing marginal returns begin when the ________ is hired.

Accepted Answer

A) 1st labourer 
B) 2nd labourer 
C) 3rd labourer 
D) 4th labourer 
E) There are no diminishing marginal returns since total product always rises. 
A) 1st labourer 
B) 2nd labourer 
C) 3rd labourer 
D) 4th labourer 
E) There are no diminishing marginal returns since total product always rises.

Question 4

Plant refers to those factors of production

Accepted Answer

A) that are too expensive for the firm to purchase. 
B) that must be held in storage for at least one year. 
C) that are fixed in the short run. 
D) that have a decreasing marginal product as more of the factor is used. 
E) which can be purchased only in fixed quantity lots. 
A) that are too expensive for the firm to purchase. 
B) that must be held in storage for at least one year. 
C) that are fixed in the short run. 
D) that have a decreasing marginal product as more of the factor is used. 
E) which can be purchased only in fixed quantity lots.

Question 5

If an increase in output from 5 to 10 teapots increases total cost from $100 to $200, the marginal cost of one of those 5 teapots is

Accepted Answer

A) $10. 
B) $20. 
C) $22. 
D) $25. 
E) dependent upon the amount of extra labour used. 
A) $10. 
B) $20. 
C) $22. 
D) $25. 
E) dependent upon the amount of extra labour used.

Question 6

Use the figure below to answer the following question.
   
Figure 11.4.3
-Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve. An increase in production from Q₁ to Q₂ sweaters per day produces

Accepted Answer

A) the minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale. 
A) the minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant total costs. 
E) constant returns to scale.

Question 7

Use the table below to answer the following questions.
Table 11.2.3
  
-Refer to Table 11.2.3. The maximum value of marginal product occurs where output equals ________, while the maximum value of average product occurs where output equals ________.

Accepted Answer

A) 5; 6 
B) 6; 5 
C) 7; 14 
D) 9; 14 
E) 14; 11 
A) 5; 6 
B) 6; 5 
C) 7; 14 
D) 9; 14 
E) 14; 11

Question 8

Use the figure below to answer the following questions.
   
Figure 11.4.4
-Refer to Figure 11.4.4, which illustrates the long-run average total cost curve. Which one of the following statements is false?

Accepted Answer

A) Economies of scale exist between 0 and Q₀ units of output. 
B) Diseconomies of scale exist between 0 and Q₁ units of output. 
C) Constant returns to scale exist between Q₁ and Q₂ units of output. 
D) Diseconomies of scale exist at quantities greater than Q₂ units of output. 
E) Constant returns to scale exist between Q₀ and Q₁ units of output. 
A) Economies of scale exist between 0 and Q₀ units of output. 
B) Diseconomies of scale exist between 0 and Q₁ units of output. 
C) Constant returns to scale exist between Q₁ and Q₂ units of output. 
D) Diseconomies of scale exist at quantities greater than Q₂ units of output. 
E) Constant returns to scale exist between Q₀ and Q₁ units of output.

Question 9

A production function is the relationship between the maximum output attainable and the

Accepted Answer

A) price of output. 
B) change in technology. 
C) demand for output. 
D) quantities of inputs used. 
E) amount of labour used. 
A) price of output. 
B) change in technology. 
C) demand for output. 
D) quantities of inputs used. 
E) amount of labour used.

Question 10

Use the figure below to answer the following question.
   
Figure 11.3.1
-Refer to Figure 11.3.1. Which one of the following statements is false?

Accepted Answer

A) The total fixed cost curve A. 
B) Total variable cost and total cost both increase with output. 
C) The vertical gap between curves B and C is equal to total variable cost. 
D) Marginal cost is equal to the slope of curve C. 
E) Total fixed cost is constant. 
A) The total fixed cost curve A. 
B) Total variable cost and total cost both increase with output. 
C) The vertical gap between curves B and C is equal to total variable cost. 
D) Marginal cost is equal to the slope of curve C. 
E) Total fixed cost is constant.

Question 11

A rise in the price of a fixed input shifts a firm's

Accepted Answer

A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward. 
A) average variable cost curve upward. 
B) average total cost curve upward. 
C) average total cost curve downward. 
D) marginal cost curve upward. 
E) marginal cost curve downward.

Question 12

Use the information below to answer the following questions.
Fact 11.3.1 A Pepsi, A Business Decision
PepsiCo has done a deal with 300 small Mexican farmers close to their two factories to buy corn at a guaranteed price. PepsiCo saves transportation costs and the use of local farms assures it access to the type of corn best suited to its products and processes. "That gives us great leverage because corn prices don't fluctuate so much, but transportation costs do," said Pedro Padierna, president of PepsiCo in Mexico.
Source: The New York Times, February 21, 2011
-Refer to Fact 11.3.1. Fluctuations in the price of corn and in transportation costs shift all of the following except the

Accepted Answer

A) average variable cost, marginal cost, and average total cost curves. 
B) average fixed cost and total fixed cost curves. 
C) total cost curve. 
D) total variable cost curve. 
E) average fixed cost, marginal cost, and total fixed cost curves. 
A) average variable cost, marginal cost, and average total cost curves. 
B) average fixed cost and total fixed cost curves. 
C) total cost curve. 
D) total variable cost curve. 
E) average fixed cost, marginal cost, and total fixed cost curves.

Question 13

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's total variable cost?

Accepted Answer

A) $400 
B) $8 
C) $2 
D) $2,400 
E) $1,600 
A) $400 
B) $8 
C) $2 
D) $2,400 
E) $1,600

Question 14

Which one of the following is false?

Accepted Answer

A) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points. 
B) When marginal cost is greater than average variable cost, average variable cost is increasing. 
C) When marginal cost is greater than average total cost, average total cost is increasing. 
D) The average total cost curve is U-shaped. 
E) The average fixed cost curve is downward sloping. 
A) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points. 
B) When marginal cost is greater than average variable cost, average variable cost is increasing. 
C) When marginal cost is greater than average total cost, average total cost is increasing. 
D) The average total cost curve is U-shaped. 
E) The average fixed cost curve is downward sloping.

Question 15

Economies of scale refer to the range of output over which

Accepted Answer

A) long-run average cost rises as output increases. 
B) marginal cost exceeds average cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour decreases. 
E) marginal product equals average product. 
A) long-run average cost rises as output increases. 
B) marginal cost exceeds average cost. 
C) long-run average cost falls as output increases. 
D) the marginal product of labour decreases. 
E) marginal product equals average product.

Question 16

Use the table below to answer the following questions.
Table 11.2.2
  
-Refer to Table 11.2.2 which gives Tania's total product schedule. The average product when the firm employs four workers is

Accepted Answer

A) 2 teapots per worker. 
B) 8 teapots per worker. 
C) 12 teapots per worker. 
D) 15 teapots per worker. 
E) 3.75 teapots per worker. 
A) 2 teapots per worker. 
B) 8 teapots per worker. 
C) 12 teapots per worker. 
D) 15 teapots per worker. 
E) 3.75 teapots per worker.

Question 17

Marginal cost is the amount that

Accepted Answer

A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced. 
A) total cost increases when one more labourer is hired. 
B) fixed cost increases when one more labourer is hired. 
C) variable cost increases when one more labourer is hired. 
D) total cost increases when one more unit of output is produced. 
E) fixed cost increases when one more unit of output is produced.

Question 18

Economies of scale are present when

Accepted Answer

A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases. 
A) the LRAC curve slopes downward. 
B) average total cost remains constant as input increases. 
C) average total cost rises as output increases. 
D) the LRAC curve is horizontal. 
E) total fixed cost increases.

Question 19

Which of the following quotes best illustrates the idea of average product?

Accepted Answer

A) "If I have 10 workers on my assembly line, I can produce 13 tables a day." 
B) "If I add an 11th worker, I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night, table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line, I can make 120 percent more tables." 
A) "If I have 10 workers on my assembly line, I can produce 13 tables a day." 
B) "If I add an 11th worker, I can produce 1 extra table a day." 
C) "Each worker produces 2 tables a day." 
D) "I find if I add an extra shift at night, table production only rises by 80 percent because I need more maintenance time on the assembly line." 
E) "If I double workers and double the assembly line, I can make 120 percent more tables."

Question 20

If the average variable cost of producing 10 units is $18 and the average variable cost of producing 11 units is $20, we know that, between 10 and 11 units of output,

Accepted Answer

A) marginal cost is increasing. 
B) average total cost is increasing. 
C) average fixed cost is increasing. 
D) total cost is either increasing or decreasing. 
E) none of the above 
A) marginal cost is increasing. 
B) average total cost is increasing. 
C) average fixed cost is increasing. 
D) total cost is either increasing or decreasing. 
E) none of the above

Exam 11: Output and Costs

Average variable cost is at a minimum at the same output at which

Marginal cost equals

Use the table below to answer the following question. Table 11.2.4 -Refer to Table 11.2.4. The table gives the total product schedule of workers who harvest corn. Diminishing marginal returns begin when the ________ is hired.

Plant refers to those factors of production

If an increase in output from 5 to 10 teapots increases total cost from $100 to $200, the marginal cost of one of those 5 teapots is

Use the figure below to answer the following question. Figure 11.4.3 -Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve. An increase in production from Q₁ to Q₂ sweaters per day produces

Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3. The maximum value of marginal product occurs where output equals ________, while the maximum value of average product occurs where output equals ________.

Use the figure below to answer the following questions. Figure 11.4.4 -Refer to Figure 11.4.4, which illustrates the long-run average total cost curve. Which one of the following statements is false?

A production function is the relationship between the maximum output attainable and the

Use the figure below to answer the following question. Figure 11.3.1 -Refer to Figure 11.3.1. Which one of the following statements is false?

A rise in the price of a fixed input shifts a firm's

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's total variable cost?

Which one of the following is false?

Economies of scale refer to the range of output over which

Use the table below to answer the following questions. Table 11.2.2 -Refer to Table 11.2.2 which gives Tania's total product schedule. The average product when the firm employs four workers is

Marginal cost is the amount that

Economies of scale are present when

Which of the following quotes best illustrates the idea of average product?

If the average variable cost of producing 10 units is $18 and the average variable cost of producing 11 units is $20, we know that, between 10 and 11 units of output,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

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Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3. The maximum value of marginal product occurs where output equals , while the maximum value of average product occurs where output equals .