Question 1

A firm's long run cost is the cost of production when the firm

Accepted Answer

A)  calculates its cost at least one year into the future. 
B)  adds together all of its short run costs. 
C)  uses the economically efficient quantities for its plant and its labor. 
D)  can vary the amount of output it produces. 
A)  calculates its cost at least one year into the future. 
B)  adds together all of its short run costs. 
C)  uses the economically efficient quantities for its plant and its labor. 
D)  can vary the amount of output it produces.

Question 2

Output (pizzas per day)  
-Tony's Pizza's production function is shown in the table above. Tony currently operates Plant 2. He hires workers at a wage rate of $50 a day and his total fixed cost is $150.
a) Calculate Tony's Pizza's total variable cost and total cost for each output level.
b) Calculate the marginal costs.
c) Calculate the average fixed costs, average variable costs, and average total costs.
d) Suppose that total fixed cost increases to $200. Explain what changes occur in the costs.

Accepted Answer

@#IMG-DLM& a) The total variable cost and total co

Question 3

-When long-run average cost remains constant as output increases there are constant

Accepted Answer

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

Question 4

Diminishing marginal returns occurs when

Accepted Answer

A)  all inputs are increased and output decreases. 
B)  all inputs are increased and output increases by a smaller proportion. 
C)  a variable input is increased and output decreases. 
D)  a variable unit is increased and its marginal product falls. 
A)  all inputs are increased and output decreases. 
B)  all inputs are increased and output increases by a smaller proportion. 
C)  a variable input is increased and output decreases. 
D)  a variable unit is increased and its marginal product falls.

Question 5

The term "fixed cost" refers to the cost a firm incurs to produce a specific fixed quantity of output.

Accepted Answer

A) True 
 B)False

Question 6

-The above table shows the short-run total product schedule for the campus book store. What is the average product (AP) of the 4th employee?

Accepted Answer

A)  58 books sold 
B)  14.5 books sold 
C)  18 books sold 
D)  13.3 books sold 
A)  58 books sold 
B)  14.5 books sold 
C)  18 books sold 
D)  13.3 books sold

Question 7

"If the marginal product of labor curve slopes downward, then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

Accepted Answer

The statement is incorrect. The relation

Question 8

If average variable cost is decreasing as output increases, then marginal cost is definitely

Accepted Answer

A)  decreasing as output increases. 
B)  increasing as output increases. 
C)  less than average variable cost. 
D)  greater than average variable cost. 
A)  decreasing as output increases. 
B)  increasing as output increases. 
C)  less than average variable cost. 
D)  greater than average variable cost.

Question 9

The law of diminishing returns occurs because

Accepted Answer

A)  the marginal product of an additional worker is greater than the marginal product of the previous worker. 
B)  the marginal product of a variable input, such as labor, depends in part on the amount of fixed inputs, such as capital. 
C)  total production decreases as more of the variable inputs are used. 
D)  adding more and more workers leads to a decrease in the quantity of capital. 
A)  the marginal product of an additional worker is greater than the marginal product of the previous worker. 
B)  the marginal product of a variable input, such as labor, depends in part on the amount of fixed inputs, such as capital. 
C)  total production decreases as more of the variable inputs are used. 
D)  adding more and more workers leads to a decrease in the quantity of capital.

Question 10

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

Accepted Answer

A)  the marginal benefit of producing the 101st unit. 
B)  the marginal cost of producing the 101st unit. 
C)  both the marginal benefit and the marginal cost of producing the 101st unit. 
D)  neither the marginal benefit nor the marginal cost of producing the 101st unit. 
A)  the marginal benefit of producing the 101st unit. 
B)  the marginal cost of producing the 101st unit. 
C)  both the marginal benefit and the marginal cost of producing the 101st unit. 
D)  neither the marginal benefit nor the marginal cost of producing the 101st unit.

Question 11

-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. What is the total cost of producing 70 units?

Accepted Answer

A)  $1,700 
B)  $1,900 
C)  $2,100 
D)  $2,300 
A)  $1,700 
B)  $1,900 
C)  $2,100 
D)  $2,300

Question 12

When the marginal product of labor exceeds the average product of labor

Accepted Answer

A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale. 
A)  the average product of labor is increasing. 
B)  the average product of labor is decreasing. 
C)  the total product curve is negatively sloped. 
D)  the firm is experiencing decreasing returns to scale.

Question 13

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 2. If Silvio hires the 4th worker, the firm will experience ________ marginal returns.

Accepted Answer

A)  diminishing 
B)  increasing 
C)  constant 
D)  zero 
A)  diminishing 
B)  increasing 
C)  constant 
D)  zero

Question 14

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 20 units per day?

Accepted Answer

A)  plant A 
B)  plant B 
C)  plant C 
D)  plant D 
A)  plant A 
B)  plant B 
C)  plant C 
D)  plant D

Question 15

-In the above figure, between 20 and 25 units per hour, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  increasing total fixed costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  increasing total fixed costs.

Question 16

Total variable cost

Accepted Answer

A)  increases as output increases. 
B)  does not change as output changes. 
C)  decreases as output increases. 
D)  initially decreases and then increases as output increases. 
A)  increases as output increases. 
B)  does not change as output changes. 
C)  decreases as output increases. 
D)  initially decreases and then increases as output increases.

Question 17

What are economies of scale? What is the main source of economies of scale?

Accepted Answer

Economies of scale are when a firm incre

Question 18

The marginal product of labor is equal to the

Accepted Answer

A)  total product divided by the total number of workers hired. 
B)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
C)  slope of the marginal product of labor curve. 
D)  None of the above answers are correct. 
A)  total product divided by the total number of workers hired. 
B)  increase in the total product that results from hiring one more worker with all other inputs remaining the same. 
C)  slope of the marginal product of labor curve. 
D)  None of the above answers are correct.

Question 19

Which of the following shifts the AVC curve upward at Barney's Bagel Bakery?

Accepted Answer

A)  an increase in the hourly wage that Barney pays his workers 
B)  an increase in Barney's daily output from hiring more workers 
C)  an increase in the fixed amount of local property tax that Barney pays on the building he owns and uses 
D)  all of the above 
A)  an increase in the hourly wage that Barney pays his workers 
B)  an increase in Barney's daily output from hiring more workers 
C)  an increase in the fixed amount of local property tax that Barney pays on the building he owns and uses 
D)  all of the above

Question 20

-In the figure above, the marginal product of the second worker is

Accepted Answer

A)  10 units. 
B)  5 units. 
C)  2 units. 
D)  1 units. 
A)  10 units. 
B)  5 units. 
C)  2 units. 
D)  1 units.

A firm's long run cost is the cost of production when the firm

-When long-run average cost remains constant as output increases there are constant

Diminishing marginal returns occurs when

The term "fixed cost" refers to the cost a firm incurs to produce a specific fixed quantity of output.

-The above table shows the short-run total product schedule for the campus book store. What is the average product (AP) of the 4th employee?

"If the marginal product of labor curve slopes downward, then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

If average variable cost is decreasing as output increases, then marginal cost is definitely

The law of diminishing returns occurs because

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. What is the total cost of producing 70 units?

When the marginal product of labor exceeds the average product of labor

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 20 units per day?

-In the above figure, between 20 and 25 units per hour, the firm experiences

Total variable cost

What are economies of scale? What is the main source of economies of scale?

The marginal product of labor is equal to the

Which of the following shifts the AVC curve upward at Barney's Bagel Bakery?

-In the figure above, the marginal product of the second worker is

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

A firm's long run cost is the cost of production when the firm

-When long-run average cost remains constant as output increases there are constant

Diminishing marginal returns occurs when

The term "fixed cost" refers to the cost a firm incurs to produce a specific fixed quantity of output.

-The above table shows the short-run total product schedule for the campus book store. What is the average product (AP) of the 4th employee?

"If the marginal product of labor curve slopes downward, then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

If average variable cost is decreasing as output increases, then marginal cost is definitely

The law of diminishing returns occurs because

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. What is the total cost of producing 70 units?

When the marginal product of labor exceeds the average product of labor

-The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 20 units per day?

-In the above figure, between 20 and 25 units per hour, the firm experiences

Total variable cost

What are economies of scale? What is the main source of economies of scale?

The marginal product of labor is equal to the

Which of the following shifts the AVC curve upward at Barney's Bagel Bakery?

-In the figure above, the marginal product of the second worker is

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