Question 1

Which one of the following statements is true?

Accepted Answer

A) The highest value of average product occurs where average product is greater than marginal product. 
B) When the average product curve is rising, marginal product is less than average product. 
C) When the average product curve is falling, marginal product is greater than average product. 
D) The maximum total product occurs at minimum marginal product. 
E) The highest value of average product occurs where average product equals marginal product. 
A) The highest value of average product occurs where average product is greater than marginal product. 
B) When the average product curve is rising, marginal product is less than average product. 
C) When the average product curve is falling, marginal product is greater than average product. 
D) The maximum total product occurs at minimum marginal product. 
E) The highest value of average product occurs where average product equals marginal product.

Question 2

When the marginal product of labour is greater than the average product of labour,

Accepted Answer

A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the firm is experiencing constant returns. 
A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the firm is experiencing constant returns.

Question 3

Which of the following quotes best illustrates the idea of total 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 4

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.Given an increase in output from Q₁ to Q₂,

Accepted Answer

A) economies of scale exist. 
B) diseconomies of scale exist. 
C) constant returns to scale exist. 
D) average total cost is increasing. 
E) average total cost is decreasing. 
A) economies of scale exist. 
B) diseconomies of scale exist. 
C) constant returns to scale exist. 
D) average total cost is increasing. 
E) average total cost is decreasing.

Question 5

Which of the following are correct? According to the law of diminishing returns, (1)marginal product eventually rises.
(2)marginal product eventually falls.
(3)marginal cost eventually rises.
(4)marginal cost eventually falls.

Accepted Answer

A) (1)and (3) 
B) (1)and (4) 
C) (2)and (3) 
D) (2)and (4) 
E) (4) 
A) (1)and (3) 
B) (1)and (4) 
C) (2)and (3) 
D) (2)and (4) 
E) (4)

Question 6

Marginal cost is equal to

Accepted Answer

A) total cost divided by output. 
B) the increase in total cost divided by the increase in output. 
C) the increase in total cost divided by the increase in labour input, given the amount of capital. 
D) total variable cost minus total fixed cost. 
E) the increase in total cost divided by the increase in variable cost. 
A) total cost divided by output. 
B) the increase in total cost divided by the increase in output. 
C) the increase in total cost divided by the increase in labour input, given the amount of capital. 
D) total variable cost minus total fixed cost. 
E) the increase in total cost divided by the increase in variable cost.

Question 7

Use the table below to answer the following questions.
Table 11.3.1
  
-Refer to Table 11.3.1, which gives Tania's total cost schedule.The average total cost of producing 16 teapots per day is

Accepted Answer

A) $2. 
B) $5. 
C) $3.33. 
D) $7.50. 
E) $5.51. 
A) $2. 
B) $5. 
C) $3.33. 
D) $7.50. 
E) $5.51.

Question 8

When the marginal product of labour is less than the average product of labour,

Accepted Answer

A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the average product of labour is at its maximum. 
A) the average product of labour is increasing. 
B) the marginal product of labour is increasing. 
C) the total product curve is negatively sloped. 
D) the firm is experiencing diminishing marginal returns. 
E) the average product of labour is at its maximum.

Question 9

The total output produced with any quantity of labour is equal to the sum of the

Accepted Answer

A) average products of each of the workers hired. 
B) marginal costs of each of the workers hired. 
C) marginal products of each of the workers hired. 
D) average costs of each of the workers hired. 
E) fixed products of each of the workers hired. 
A) average products of each of the workers hired. 
B) marginal costs of each of the workers hired. 
C) marginal products of each of the workers hired. 
D) average costs of each of the workers hired. 
E) fixed products of each of the workers hired.

Question 10

After constructing a new factory, the cost of building the factor is a

Accepted Answer

A) past cost. 
B) variable cost. 
C) significant cost. 
D) taxable cost. 
E) sunk cost. 
A) past cost. 
B) variable cost. 
C) significant cost. 
D) taxable cost. 
E) sunk cost.

Question 11

Which one of the following statements is false?

Accepted Answer

A) Total variable cost plus total fixed cost equals total cost. 
B) Marginal cost equals the change in total cost divided by the change in output. 
C) Average total cost is calculated by dividing total cost by the level of output. 
D) The average cost curve is U-shaped. 
E) The total cost curve is U-shaped. 
A) Total variable cost plus total fixed cost equals total cost. 
B) Marginal cost equals the change in total cost divided by the change in output. 
C) Average total cost is calculated by dividing total cost by the level of output. 
D) The average cost curve is U-shaped. 
E) The total cost curve is U-shaped.

Question 12

Use the table below to answer the following questions.
Table 11.3.1
  
-Refer to Table 11.3.1, which gives Tania's total cost schedule.When output increases from 4 to 9 teapots, the marginal cost of one of the 5 teapots is

Accepted Answer

A) $4.25. 
B) $4. 
C) $25. 
D) $6.25. 
E) $5. 
A) $4.25. 
B) $4. 
C) $25. 
D) $6.25. 
E) $5.

Question 13

A technological advance will shift (1)TP, AP, and MP curves up.
(2)TP, AP, and MP down.
(3)TC, ATC, and MC curves up.
(4)TC, ATC, and MC curves down.

Accepted Answer

A) (1)and (3) 
B) (1)and (4) 
C) (2)and (3) 
D) (2)and (4) 
E) none of the above 
A) (1)and (3) 
B) (1)and (4) 
C) (2)and (3) 
D) (2)and (4) 
E) none of the above

Question 14

Use the information below to answer the following question.
Fact 11.1.2 A Bakery on the Rise
Some 500 customers a day line up to buy Avalon's breads, scones, muffins, and coffee. Staffing and management are worries. Avalon now employs 35 and plans to hire 15 more. Its payroll will climb by 30 percent to 40 percent. The new CEO has executed an ambitious agenda that includes the move to a larger space, which will increase the rent from $3,500 to $10,000 a month.
Source: Fortune, April 14, 2008
-Refer to Fact 11.1.2.Avalon's decision to ________ is a short-run decision.Avalon's decision to ________ is a long-run decision.

Accepted Answer

A) serve 500 customers a day; hire 15 more people 
B) move to a larger space; hire 15 more people 
C) hire 15 more people; serve 500 customers a day 
D) hire 15 more people; move to a larger space 
E) pay more for rent; have a larger payroll 
A) serve 500 customers a day; hire 15 more people 
B) move to a larger space; hire 15 more people 
C) hire 15 more people; serve 500 customers a day 
D) hire 15 more people; move to a larger space 
E) pay more for rent; have a larger payroll

Question 15

Suppose the marginal product of energy equals the average product of energy.This implies that

Accepted Answer

A) marginal product is negative. 
B) average product is at its maximum value. 
C) marginal product is at its maximum value. 
D) the marginal product curve is upward sloping. 
E) average product is at its minimum value. 
A) marginal product is negative. 
B) average product is at its maximum value. 
C) marginal product is at its maximum value. 
D) the marginal product curve is upward sloping. 
E) average product is at its minimum value.

Question 16

Marginal cost equals

Accepted Answer

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

Question 17

Which of the following quotes best illustrates the idea of fixed cost?

Accepted Answer

A) "As we increase output, per-unit costs fall." 
B) "My primary source of overhead cost is the cost of running the head office." 
C) "If I need to, I can negotiate more overtime with my work force to meet unexpected orders." 
D) "If I double the number of workers and trucks, I get only 80 percent more packages delivered." 
E) None of the above 
A) "As we increase output, per-unit costs fall." 
B) "My primary source of overhead cost is the cost of running the head office." 
C) "If I need to, I can negotiate more overtime with my work force to meet unexpected orders." 
D) "If I double the number of workers and trucks, I get only 80 percent more packages delivered." 
E) None of the above

Question 18

If the marginal product of the fifth worker is 34, then the total product of five workers

Accepted Answer

A) is 35. 
B) is 24. 
C) is 170. 
D) is 6.8. 
E) cannot be calculated with the information given. 
A) is 35. 
B) is 24. 
C) is 170. 
D) is 6.8. 
E) cannot be calculated with the information given.

Question 19

Use the figure below to answer the following questions.
   
Figure 11.4.2
-Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes.Which plant has the lowest average total cost for an output rate of 5 sweaters a day?

Accepted Answer

A) Plant A 
B) Plant B 
C) Plant C 
D) Plant D 
E) none of the above 
A) Plant A 
B) Plant B 
C) Plant C 
D) Plant D 
E) none of the above

Question 20

If diseconomies of scale are present,

Accepted Answer

A) average total cost is decreasing. 
B) the long-run average cost curve has a negative slope. 
C) economies of scale are also present. 
D) the long-run average cost curve has a positive slope. 
E) the average total cost shifts downward. 
A) average total cost is decreasing. 
B) the long-run average cost curve has a negative slope. 
C) economies of scale are also present. 
D) the long-run average cost curve has a positive slope. 
E) the average total cost shifts downward.

Which one of the following statements is true?

When the marginal product of labour is greater than the average product of labour,

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

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.Given an increase in output from Q₁ to Q₂,

Which of the following are correct? According to the law of diminishing returns, (1)marginal product eventually rises. (2)marginal product eventually falls. (3)marginal cost eventually rises. (4)marginal cost eventually falls.

Marginal cost is equal to

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule.The average total cost of producing 16 teapots per day is

When the marginal product of labour is less than the average product of labour,

The total output produced with any quantity of labour is equal to the sum of the

After constructing a new factory, the cost of building the factor is a

Which one of the following statements is false?

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule.When output increases from 4 to 9 teapots, the marginal cost of one of the 5 teapots is

A technological advance will shift (1)TP, AP, and MP curves up. (2)TP, AP, and MP down. (3)TC, ATC, and MC curves up. (4)TC, ATC, and MC curves down.

Suppose the marginal product of energy equals the average product of energy.This implies that

Marginal cost equals

Which of the following quotes best illustrates the idea of fixed cost?

If the marginal product of the fifth worker is 34, then the total product of five workers

Use the figure below to answer the following questions. Figure 11.4.2 -Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes.Which plant has the lowest average total cost for an output rate of 5 sweaters a day?

If diseconomies of scale are present,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government 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

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Exam 11: Output and Costs

Which one of the following statements is true?

When the marginal product of labour is greater than the average product of labour,

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

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.Given an increase in output from Q₁ to Q₂,

Which of the following are correct? According to the law of diminishing returns, (1)marginal product eventually rises. (2)marginal product eventually falls. (3)marginal cost eventually rises. (4)marginal cost eventually falls.

Marginal cost is equal to

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule.The average total cost of producing 16 teapots per day is

When the marginal product of labour is less than the average product of labour,

The total output produced with any quantity of labour is equal to the sum of the

After constructing a new factory, the cost of building the factor is a

Which one of the following statements is false?

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule.When output increases from 4 to 9 teapots, the marginal cost of one of the 5 teapots is

A technological advance will shift (1)TP, AP, and MP curves up. (2)TP, AP, and MP down. (3)TC, ATC, and MC curves up. (4)TC, ATC, and MC curves down.

Suppose the marginal product of energy equals the average product of energy.This implies that

Marginal cost equals

Which of the following quotes best illustrates the idea of fixed cost?

If the marginal product of the fifth worker is 34, then the total product of five workers

Use the figure below to answer the following questions. Figure 11.4.2 -Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes.Which plant has the lowest average total cost for an output rate of 5 sweaters a day?

If diseconomies of scale are present,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government 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

Filters