Question 1

-In the above figure, the long-run average cost curve exhibits constant returns to scale

Accepted Answer

A)  between 5 and 10 units per hour. 
B)  between 10 and 20 units per hour. 
C)  between 20 and 25 units per hour. 
D)  along the entire curve. 
A)  between 5 and 10 units per hour. 
B)  between 10 and 20 units per hour. 
C)  between 20 and 25 units per hour. 
D)  along the entire curve.

Question 2

A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. Its average total cost is

Accepted Answer

A)  less than $58. 
B)  between $58 and $62. 
C)  between $62 and $64. 
D)  more than $64. 
A)  less than $58. 
B)  between $58 and $62. 
C)  between $62 and $64. 
D)  more than $64.

Question 3

A firm is operating in its range of economies of scale and is on both its LRAC curve and its short-run ATC curve. At that level of output, the slope of its LRAC curve is

Accepted Answer

A)  zero and the slope of its ATC curve is zero. 
B)  zero and the slope of its ATC curve is negative. 
C)  negative and the slope of its ATC curve is zero. 
D)  negative and the slope of its ATC curve is negative. 
A)  zero and the slope of its ATC curve is zero. 
B)  zero and the slope of its ATC curve is negative. 
C)  negative and the slope of its ATC curve is zero. 
D)  negative and the slope of its ATC curve is negative.

Question 4

When long-run average costs decrease as output increases, there are

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  constant marginal costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  constant marginal costs.

Question 5

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

Accepted Answer

A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25 
A)  0-20 
B)  0-25 
C)  20-25 
D)  greater than 25

Question 6

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

Accepted Answer

A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output. 
A)  is plant A. 
B)  is plant B. 
C)  is plant C. 
D)  depends on the desired level of output.

Question 7

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day?

Accepted Answer

A)  3.7 cents per copy 
B)  5.0 cents per copy 
C)  8.5 cents per copy 
D)  More information is needed to determine the long-run average cost. 
A)  3.7 cents per copy 
B)  5.0 cents per copy 
C)  8.5 cents per copy 
D)  More information is needed to determine the long-run average cost.

Question 8

Decent Donuts  
-Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

Accepted Answer

A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above 
A)  four workers 
B)  seven workers 
C)  both of the above 
D)  neither of the above

Question 9

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)  $2,400 
B)  $2,000 
C)  $1,600 
D)  $800 
A)  $2,400 
B)  $2,000 
C)  $1,600 
D)  $800

Question 10

A firm's total cost (TC) equals the sum of its fixed cost plus its

Accepted Answer

A)  marginal cost. 
B)  variable cost. 
C)  variable cost plus its marginal cost. 
D)  sunk cost plus its variable cost plus its marginal cost. 
A)  marginal cost. 
B)  variable cost. 
C)  variable cost plus its marginal cost. 
D)  sunk cost plus its variable cost plus its marginal cost.

Question 11

-The first table above has the total product schedule for an imaginary good called a widget. Each unit of labor costs $25 and the total cost of capital is $100.
a) Use this information to complete the remaining two tables. In the tables, TFC is the total fixed cost, TVC is the total variable cost, TC is the total cost, AFC is the average fixed cost, AVC is the average variable cost, ATC is the average total cost, and MC is the marginal cost.
     b) Suppose that labor becomes twice as expensive (so that one unit of labor now costs $50) but nothing else changes. Complete the above tables with the new cost schedules. If you plotted the cost curves, how would the increased wage rate affect the cost curves?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& a) The completed tables are above. All

Question 12

Which of the following shifts the ATC curve upward at the XYZ Co.?

Accepted Answer

A)  an increase in the hourly wage that XYZ pays its workers 
B)  a decrease in the hourly wage that XYZ pays its workers 
C)  an increase in the fixed amount of liability insurance premiums that XYZ pays for its business 
D)  Both answers A and C are correct. 
A)  an increase in the hourly wage that XYZ pays its workers 
B)  a decrease in the hourly wage that XYZ pays its workers 
C)  an increase in the fixed amount of liability insurance premiums that XYZ pays for its business 
D)  Both answers A and C are correct.

Question 13

Which cost always increases as output increases?

Accepted Answer

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

-In the above figure, the long-run average cost curve exhibits constant returns to scale

A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. Its average total cost is

A firm is operating in its range of economies of scale and is on both its LRAC curve and its short-run ATC curve. At that level of output, the slope of its LRAC curve is

When long-run average costs decrease as output increases, there are

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC₁), Plant 2 (ATC₂), Plant 3 (ATC₃), and Plant 4 (ATC₄).What is Dustin's long-run average cost if the output is 3,000 copies per day?

Decent Donuts -Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

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?

A firm's total cost (TC) equals the sum of its fixed cost plus its

Which of the following shifts the ATC curve upward at the XYZ Co.?

Which cost always increases as output increases?

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 11: Output and Costs

-In the above figure, the long-run average cost curve exhibits constant returns to scale

A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. Its average total cost is

A firm is operating in its range of economies of scale and is on both its LRAC curve and its short-run ATC curve. At that level of output, the slope of its LRAC curve is

When long-run average costs decrease as output increases, there are

-The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

-The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).What is Dustin's long-run average cost if the output is 3,000 copies per day?

Decent Donuts -Using the table above, for which of the following levels of employment does the marginal product of labor exceed the average product of labor at Decent Donuts?

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?

A firm's total cost (TC) equals the sum of its fixed cost plus its

Which of the following shifts the ATC curve upward at the XYZ Co.?

Which cost always increases as output increases?

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

-Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC₁), Plant 2 (ATC₂), Plant 3 (ATC₃), and Plant 4 (ATC₄).What is Dustin's long-run average cost if the output is 3,000 copies per day?