Question 1

As soon as diminishing returns set in, a firm's

Accepted Answer

A) marginal product increases. 
B) average fixed cost decreases. 
C) marginal cost decreases. 
D) marginal cost increases. 
E) total cost decreases. 
A) marginal product increases. 
B) average fixed cost decreases. 
C) marginal cost decreases. 
D) marginal cost increases. 
E) total cost decreases.

Question 2

Use the figure below to answer the following questions.
   
Figure 11.3.2
-Refer to Figure 11.3.2, which illustrates short-run average and marginal cost curves.Which one of the following statements is false?

Accepted Answer

A) Average fixed cost decreases with output. 
B) The vertical gap between curves B and C is equal to average variable cost. 
C) Line B comes closer to line C as output increases because of a decrease in average fixed cost. 
D) Curve D is the marginal cost curve. 
E) The vertical gap between curves B and C is equal to average fixed cost. 
A) Average fixed cost decreases with output. 
B) The vertical gap between curves B and C is equal to average variable cost. 
C) Line B comes closer to line C as output increases because of a decrease in average fixed cost. 
D) Curve D is the marginal cost curve. 
E) The vertical gap between curves B and C is equal to average fixed cost.

Question 3

Choose the correct statement.

Accepted Answer

A) The long run is a period of time in which the quantity of at least one input is fixed. 
B) The short run is a period of time in which the firm has sufficient time to change all its inputs. 
C) The long run is a time frame that lasts for 10 years. 
D) In the short run, the firm's plant is fixed. 
E) A firm always has plenty of time to make decisions about changing its inputs no matter if it is in a short run or long run position. 
A) The long run is a period of time in which the quantity of at least one input is fixed. 
B) The short run is a period of time in which the firm has sufficient time to change all its inputs. 
C) The long run is a time frame that lasts for 10 years. 
D) In the short run, the firm's plant is fixed. 
E) A firm always has plenty of time to make decisions about changing its inputs no matter if it is in a short run or long run position.

Question 4

If MC is rising then ATC must be

Accepted Answer

A) rising. 
B) falling. 
C) above MC. 
D) below MC. 
E) none of the above 
A) rising. 
B) falling. 
C) above MC. 
D) below MC. 
E) none of the above

Question 5

An increase in the cost of labour shifts the

Accepted Answer

A) total, average, and marginal product curves upward and total, average, and marginal cost curves upward. 
B) total, average, and marginal product curves upward and total, average, and marginal cost curves downward. 
C) total, average, and marginal product curves downward and total, average, and marginal cost curves upward. 
D) total, average, and marginal product curves downward and total, average, and marginal cost curves downward. 
E) none of the above 
A) total, average, and marginal product curves upward and total, average, and marginal cost curves upward. 
B) total, average, and marginal product curves upward and total, average, and marginal cost curves downward. 
C) total, average, and marginal product curves downward and total, average, and marginal cost curves upward. 
D) total, average, and marginal product curves downward and total, average, and marginal cost curves downward. 
E) none of the above

Question 6

A firm experiences ________ when its ________ as output increases.

Accepted Answer

A) economies of scale; long-run average cost curve slopes downward 
B) diseconomies of scale; average total cost curve slopes downward 
C) economies of scale; long-run average cost curve shifts upward 
D) diminishing marginal returns; average total cost curve shifts upward 
E) constant returns to scale; long-run average cost curve shifts upward 
A) economies of scale; long-run average cost curve slopes downward 
B) diseconomies of scale; average total cost curve slopes downward 
C) economies of scale; long-run average cost curve shifts upward 
D) diminishing marginal returns; average total cost curve shifts upward 
E) constant returns to scale; long-run average cost curve shifts upward

Question 7

The vertical distance between the TC and TVC curves

Accepted Answer

A) decreases as output increases. 
B) increases as output increases. 
C) is equal to AFC. 
D) is equal to TFC. 
E) is equal to MC. 
A) decreases as output increases. 
B) increases as output increases. 
C) is equal to AFC. 
D) is equal to TFC. 
E) is equal to MC.

Question 8

Use the figure below to answer the following questions.
   
Figure 11.2.1
-Refer to Figure 11.2.1 which illustrates Tania's total product curve.Average product of labour reaches its maximum for the ________ worker.

Accepted Answer

A) first 
B) second 
C) third 
D) fourth 
E) fifth 
A) first 
B) second 
C) third 
D) fourth 
E) fifth

Question 9

If capital is a variable input in a production process, the law of diminishing marginal returns implies that

Accepted Answer

A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant. 
A) total product is minimized. 
B) capital's marginal product is positive and less than one. 
C) total product is maximized. 
D) marginal product of capital eventually decreases. 
E) marginal product of capital is constant.

Question 10

One reason for diseconomies of scale is that as output becomes larger and larger,

Accepted Answer

A) costs per unit decrease. 
B) management systems become more efficient. 
C) the number of workers increases. 
D) management systems can become more complex and inefficient. 
E) workers become more efficient. 
A) costs per unit decrease. 
B) management systems become more efficient. 
C) the number of workers increases. 
D) management systems can become more complex and inefficient. 
E) workers become more efficient.

Question 11

At that amount of output where diminishing marginal returns first sets in,

Accepted Answer

A) average product begins to decrease. 
B) total product begins to decrease. 
C) marginal cost begins to decrease. 
D) marginal product begins to decrease. 
E) average product is at its maximum. 
A) average product begins to decrease. 
B) total product begins to decrease. 
C) marginal cost begins to decrease. 
D) marginal product begins to decrease. 
E) average product is at its maximum.

Question 12

Diminishing marginal returns refers to a situation where the ________ of an additional worker is less than the ________ of the previous worker.

Accepted Answer

A) marginal cost; marginal cost 
B) average cost; average cost 
C) marginal product; marginal product 
D) average product; average product 
E) marginal product; average product 
A) marginal cost; marginal cost 
B) average cost; average cost 
C) marginal product; marginal product 
D) average product; average product 
E) marginal product; average product

Question 13

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 14

Choose the correct statement.

Accepted Answer

A) When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing. 
B) When total product is increasing average product of labour and marginal product of labour are both increasing. 
C) When marginal product of labour is greater than or equal to average product of labour, average product of labour is increasing. 
D) When marginal product of labour is increasing, average product of labour is greater than marginal product of labour. 
E) When total product is increasing, average product of labour is decreasing and marginal product of labour is increasing. 
A) When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing. 
B) When total product is increasing average product of labour and marginal product of labour are both increasing. 
C) When marginal product of labour is greater than or equal to average product of labour, average product of labour is increasing. 
D) When marginal product of labour is increasing, average product of labour is greater than marginal product of labour. 
E) When total product is increasing, average product of labour is decreasing and marginal product of labour is increasing.

Question 15

The law of diminishing marginal returns states:

Accepted Answer

A) As the size of a plant increases, marginal product eventually decreases. 
B) As the size of a firm's plant increases, average cost eventually decreases. 
C) As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes. 
D) As a firm uses more of a variable factor of production, its average cost eventually decreases. 
E) As a firm uses more of a variable factor or production, total product eventually decreases. 
A) As the size of a plant increases, marginal product eventually decreases. 
B) As the size of a firm's plant increases, average cost eventually decreases. 
C) As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes. 
D) As a firm uses more of a variable factor of production, its average cost eventually decreases. 
E) As a firm uses more of a variable factor or production, total product eventually decreases.

Question 16

The average variable cost curve will shift upward if

Accepted Answer

A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases. 
A) there is an increase in fixed cost. 
B) there is a technological advance. 
C) the price of the variable input decreases. 
D) the price of the variable input increases. 
E) the price of output increases.

Question 17

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 18

Use the table below to answer the following questions.
Table 11.3.2
  
-Refer to Table 11.3.2, which gives Tania's total cost schedule.When output increases from 8 to 12 teapots, the marginal cost of one of the 4 teapots is

Accepted Answer

A) $20. 
B) $5. 
C) $1. 
D) $6.67. 
E) $2. 
A) $20. 
B) $5. 
C) $1. 
D) $6.67. 
E) $2.

Question 19

If energy (E)is the only input used to produce output (Q), what is the formula for marginal product of energy?

Accepted Answer

A) Q ∗ E 
B) Q/E 
C) ΔQ/ΔE 
D) ΔE/ΔQ 
E) E/Q 
A) Q ∗ E 
B) Q/E 
C) ΔQ/ΔE 
D) ΔE/ΔQ 
E) E/Q

Question 20

Use the information below to answer the following questions.
Fact 11.1.1
January 31, 2008: Starbucks will open 75 more stores abroad than originally predicted, for a total of 975.
February 25, 2008: For three hours on Tuesday, Starbucks will shut down every single one of its 7,100 stores so that baristas can receive a refresher course.
June 2, 2008: Starbucks replaces baristas with vending machines.
July 18, 2008: Starbucks is closing 616 stores by the end of March.
-Refer to Fact 11.1.1.The decisions made on ________ are long-run decisions because they ________.

Accepted Answer

A) June 2; are changes to labour which affect people for the long term 
B) January 31 and July 18; change Starbucks' plant 
C) February 25, June 2, and July 18; all deal with stores located in the United States 
D) January 31 and February 25; are the earliest decisions 
E) none of the above 
A) June 2; are changes to labour which affect people for the long term 
B) January 31 and July 18; change Starbucks' plant 
C) February 25, June 2, and July 18; all deal with stores located in the United States 
D) January 31 and February 25; are the earliest decisions 
E) none of the above

As soon as diminishing returns set in, a firm's

Use the figure below to answer the following questions. Figure 11.3.2 -Refer to Figure 11.3.2, which illustrates short-run average and marginal cost curves.Which one of the following statements is false?

Choose the correct statement.

If MC is rising then ATC must be

An increase in the cost of labour shifts the

A firm experiences when its as output increases.

The vertical distance between the TC and TVC curves

Use the figure below to answer the following questions. Figure 11.2.1 -Refer to Figure 11.2.1 which illustrates Tania's total product curve.Average product of labour reaches its maximum for the ________ worker.

If capital is a variable input in a production process, the law of diminishing marginal returns implies that

One reason for diseconomies of scale is that as output becomes larger and larger,

At that amount of output where diminishing marginal returns first sets in,

Diminishing marginal returns refers to a situation where the of an additional worker is less than the of the previous worker.

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

Choose the correct statement.

The law of diminishing marginal returns states:

The average variable cost curve will shift upward if

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

Use the table below to answer the following questions. Table 11.3.2 -Refer to Table 11.3.2, which gives Tania's total cost schedule.When output increases from 8 to 12 teapots, the marginal cost of one of the 4 teapots is

If energy (E)is the only input used to produce output (Q), what is the formula for marginal product of energy?

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

Exam 11: Output and Costs

As soon as diminishing returns set in, a firm's

Use the figure below to answer the following questions. Figure 11.3.2 -Refer to Figure 11.3.2, which illustrates short-run average and marginal cost curves.Which one of the following statements is false?

Choose the correct statement.

If MC is rising then ATC must be

An increase in the cost of labour shifts the

A firm experiences ________ when its ________ as output increases.

The vertical distance between the TC and TVC curves

Use the figure below to answer the following questions. Figure 11.2.1 -Refer to Figure 11.2.1 which illustrates Tania's total product curve.Average product of labour reaches its maximum for the ________ worker.

If capital is a variable input in a production process, the law of diminishing marginal returns implies that

One reason for diseconomies of scale is that as output becomes larger and larger,

At that amount of output where diminishing marginal returns first sets in,

Diminishing marginal returns refers to a situation where the ________ of an additional worker is less than the ________ of the previous worker.

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

Choose the correct statement.

The law of diminishing marginal returns states:

The average variable cost curve will shift upward if

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

Use the table below to answer the following questions. Table 11.3.2 -Refer to Table 11.3.2, which gives Tania's total cost schedule.When output increases from 8 to 12 teapots, the marginal cost of one of the 4 teapots is

If energy (E)is the only input used to produce output (Q), what is the formula for marginal product of energy?

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

A firm experiences when its as output increases.

Diminishing marginal returns refers to a situation where the of an additional worker is less than the of the previous worker.