Question 1

-In the above table, the marginal cost of the fourth unit is

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $6.00. 
D)  $24.00. 
A)  $1.00. 
B)  $2.00. 
C)  $6.00. 
D)  $24.00. A

Question 2

A firm has the following production relationship between labor and output, for a fixed capital stock.
  
-According to the above table, what is the marginal product of the 4th unit of labor?

Accepted Answer

A)  3 
B)  5 
C)  6 
D)  7 
A)  3 
B)  5 
C)  6 
D)  7 B

Question 3

A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firm's total costs are therefore

Accepted Answer

A)  $1,250. 
B)  $1,350. 
C)  $1,150. 
D)  $1,500. 
A)  $1,250. 
B)  $1,350. 
C)  $1,150. 
D)  $1,500. B

Question 4

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the average product of the first two workers?

Accepted Answer

A)  15 cookies 
B)  20 cookies 
C)  17.5 cookies 
D)  35 cookies 
A)  15 cookies 
B)  20 cookies 
C)  17.5 cookies 
D)  35 cookies

Question 5

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

Accepted Answer

A)  21 
B)  17 
C)  63 
D)  189 
A)  21 
B)  17 
C)  63 
D)  189

Question 6

Which of the following is a short-run decision for a firm?

Accepted Answer

A)  Downsizing the firm's manufacturing plant 
B)  Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C)  Firing workers 
D)  Investing in a new addition to the firm's manufacturing plant 
A)  Downsizing the firm's manufacturing plant 
B)  Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C)  Firing workers 
D)  Investing in a new addition to the firm's manufacturing plant

Question 7

When the average physical product is falling,

Accepted Answer

A)  average variable costs are rising. 
B)  average fixed costs are rising. 
C)  total costs are falling. 
D)  average variable costs are falling. 
A)  average variable costs are rising. 
B)  average fixed costs are rising. 
C)  total costs are falling. 
D)  average variable costs are falling.

Question 8

Which of the following is true?

Accepted Answer

A)  The MC curve intersects AFC at its minimum point. 
B)  If MC is below AVC, AVC must be increasing. 
C)  If MC is above ATC, ATC must be increasing. 
D)  None of the above. 
A)  The MC curve intersects AFC at its minimum point. 
B)  If MC is below AVC, AVC must be increasing. 
C)  If MC is above ATC, ATC must be increasing. 
D)  None of the above.

Question 9

In a map showing short-run cost functions, one curve begins at the origin and rises as output expands. It is called the

Accepted Answer

A)  the marginal cost curve. 
B)  the total fixed cost curve. 
C)  the total cost curve. 
D)  the total variable cost curve. 
A)  the marginal cost curve. 
B)  the total fixed cost curve. 
C)  the total cost curve. 
D)  the total variable cost curve.

Question 10

The distance between the TC and the TVC curve

Accepted Answer

A)  is constant. 
B)  decreases as output increases. 
C)  increases as output increases. 
D)  is the MC curve. 
A)  is constant. 
B)  decreases as output increases. 
C)  increases as output increases. 
D)  is the MC curve.

Question 11

If average variable costs are increasing while average total costs are decreasing, then

Accepted Answer

A)  marginal cost must lie between average variable and average total costs. 
B)  marginal cost must equal average variable cost. 
C)  marginal cost must equal average total cost. 
D)  fixed costs must be zero. 
A)  marginal cost must lie between average variable and average total costs. 
B)  marginal cost must equal average variable cost. 
C)  marginal cost must equal average total cost. 
D)  fixed costs must be zero.

Question 12

Average fixed costs will

Accepted Answer

A)  rise as output rises. 
B)  fall then rise as output rises. 
C)  rise then fall as output rises. 
D)  fall as output rises. 
A)  rise as output rises. 
B)  fall then rise as output rises. 
C)  rise then fall as output rises. 
D)  fall as output rises.

Question 13

Notice the costs of production for a firm in the table below. What are the total costs for outputs of 7 units and 8 units respectively?

Accepted Answer

A)  $20.12; $19.33 
B)  $17.25; $18.32 
C)  $19.33; $20.12 
D)  $9.33; $10.12 
A)  $20.12; $19.33 
B)  $17.25; $18.32 
C)  $19.33; $20.12 
D)  $9.33; $10.12

Question 14

If a firm can vary all of its factors of production, it is operating in

Accepted Answer

A)  the long run. 
B)  the immediate run. 
C)  equilibrium. 
D)  the short run. 
A)  the long run. 
B)  the immediate run. 
C)  equilibrium. 
D)  the short run.

Question 15

-Refer to the above table. At an output of 5 units, average total costs are

Accepted Answer

A)  $18. 
B)  $19. 
C)  $37. 
D)  $185. 
A)  $18. 
B)  $19. 
C)  $37. 
D)  $185.

Question 16

What is the relationship between the marginal cost curve and marginal product? Explain.

Accepted Answer

The short-run cost curve is a reflection

Question 17

-Using the above table, the TVC, the TC, and MC when output is 3 units are

Accepted Answer

A)  $45, $50, and $15, respectively. 
B)  $15, $20, and $15, respectively. 
C)  $45, $18, and $15, respectively. 
D)  $15, $45, and $15, respectively. 
A)  $45, $50, and $15, respectively. 
B)  $15, $20, and $15, respectively. 
C)  $45, $18, and $15, respectively. 
D)  $15, $45, and $15, respectively.

Question 18

In the table below, what are the marginal costs of the fourth unit of output?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $30,000 
D)  $40,000 
A)  $10,000 
B)  $20,000 
C)  $30,000 
D)  $40,000

Question 19

What happens at a firm's point of saturation?

Accepted Answer

A)  For the first time, hiring an additional worker decreases total product. 
B)  Workers cannot take on any additional tasks without working overtime hours. 
C)  The market for a firm's output has been saturated and sales fall to zero. 
D)  The firm's total costs exceed its revenues. 
A)  For the first time, hiring an additional worker decreases total product. 
B)  Workers cannot take on any additional tasks without working overtime hours. 
C)  The market for a firm's output has been saturated and sales fall to zero. 
D)  The firm's total costs exceed its revenues.

Question 20

The relationship Q = f(K, L) is an example of a

Accepted Answer

A)  cost function. 
B)  production function. 
C)  demand equation. 
D)  profit equation. 
A)  cost function. 
B)  production function. 
C)  demand equation. 
D)  profit equation.

Exam 22: The Firm: Cost and Output Determination

-In the above table, the marginal cost of the fourth unit is

A firm has the following production relationship between labor and output, for a fixed capital stock. -According to the above table, what is the marginal product of the 4th unit of labor?

A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firm's total costs are therefore

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the average product of the first two workers?

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

Which of the following is a short-run decision for a firm?

When the average physical product is falling,

Which of the following is true?

In a map showing short-run cost functions, one curve begins at the origin and rises as output expands. It is called the

The distance between the TC and the TVC curve

If average variable costs are increasing while average total costs are decreasing, then

Average fixed costs will

Notice the costs of production for a firm in the table below. What are the total costs for outputs of 7 units and 8 units respectively?

If a firm can vary all of its factors of production, it is operating in

-Refer to the above table. At an output of 5 units, average total costs are

What is the relationship between the marginal cost curve and marginal product? Explain.

-Using the above table, the TVC, the TC, and MC when output is 3 units are

In the table below, what are the marginal costs of the fourth unit of output?

What happens at a firm's point of saturation?

The relationship Q = f(K, L) is an example of a

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