Question 1

Marginal physical product of labor equals

Accepted Answer

A)  the wage. 
B)  the wage divided by marginal cost. 
C)  marginal cost divided by the wage. 
D)  marginal cost times the wage. 
A)  the wage. 
B)  the wage divided by marginal cost. 
C)  marginal cost divided by the wage. 
D)  marginal cost times the wage.

Question 2

When the minimum efficient scale occurs at a high level of industry output

Accepted Answer

A)  the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B)  there will only be a few firms in the industry. 
C)  the government will have to take over the production of the good since it will be unprofitable for firms. 
D)  there will be a lot of firms in this industry. 
A)  the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B)  there will only be a few firms in the industry. 
C)  the government will have to take over the production of the good since it will be unprofitable for firms. 
D)  there will be a lot of firms in this industry.

Question 3

If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker was

Accepted Answer

A)  -1 bushel of wheat. 
B)  5 bushels of wheat. 
C)  79 bushels of wheat. 
D)  99 bushels of wheat. 
A)  -1 bushel of wheat. 
B)  5 bushels of wheat. 
C)  79 bushels of wheat. 
D)  99 bushels of wheat.

Question 4

-Refer to the above table. At an output of 4 units, average variable costs are

Accepted Answer

A)  $16. 
B)  $22. 
C)  $38.50. 
D)  $44. 
A)  $16. 
B)  $22. 
C)  $38.50. 
D)  $44.

Question 5

MC = AVC and MC = ATC at points at which

Accepted Answer

A)  the AVC and ATC curves are at their respective maximums. 
B)  the AVC and ATC curves are at their respective minimums. 
C)  the distance between the ATC and AVC curves is at its minimum. 
D)  the distance between the ATC and AVC curves is at its maximum. 
A)  the AVC and ATC curves are at their respective maximums. 
B)  the AVC and ATC curves are at their respective minimums. 
C)  the distance between the ATC and AVC curves is at its minimum. 
D)  the distance between the ATC and AVC curves is at its maximum.

Question 6

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

Accepted Answer

Disagree. Diminishing marginal product i

Question 7

When total product is rising,

Accepted Answer

A)  fixed cost must be rising. 
B)  marginal product must be positive. 
C)  variable cost must be declining. 
D)  marginal product must be negative. 
A)  fixed cost must be rising. 
B)  marginal product must be positive. 
C)  variable cost must be declining. 
D)  marginal product must be negative.

Question 8

In the short run, total costs equal

Accepted Answer

A)  the sum of total fixed costs and total variable costs. 
B)  the sum of total fixed costs and total explicit costs. 
C)  the sum of total variable costs and total implicit costs. 
D)  the sum of total fixed costs and total implicit costs. 
A)  the sum of total fixed costs and total variable costs. 
B)  the sum of total fixed costs and total explicit costs. 
C)  the sum of total variable costs and total implicit costs. 
D)  the sum of total fixed costs and total implicit costs.

Question 9

-Refer to the above table. When output rises from 3 units to 4 units, marginal costs are

Accepted Answer

A)  $16. 
B)  $10. 
C)  $22. 
D)  $31. 
A)  $16. 
B)  $10. 
C)  $22. 
D)  $31.

Question 10

-In the above figure, the long-run cost curve between points A and B illustrates

Accepted Answer

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

Question 11

The change in total variable cost which accompanies one extra unit of output is

Accepted Answer

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

Question 12

The change in total product occurring when a variable input is increased and all other inputs are held constant is

Accepted Answer

A)  average total cost. 
B)  marginal cost. 
C)  average physical product. 
D)  marginal physical product. 
A)  average total cost. 
B)  marginal cost. 
C)  average physical product. 
D)  marginal physical product.

Question 13

As long as output increases,

Accepted Answer

A)  average total costs decrease. 
B)  average variable costs decrease. 
C)  average fixed costs decrease. 
D)  marginal costs decrease. 
A)  average total costs decrease. 
B)  average variable costs decrease. 
C)  average fixed costs decrease. 
D)  marginal costs decrease.

Question 14

A decrease in long-run average costs resulting from increases in output is

Accepted Answer

A)  attributed to economies of scale. 
B)  attributed to diseconomies to scale. 
C)  attributed to constant returns to scale. 
D)  attributed to the law of diminishing marginal product. 
A)  attributed to economies of scale. 
B)  attributed to diseconomies to scale. 
C)  attributed to constant returns to scale. 
D)  attributed to the law of diminishing marginal product.

Question 15

-In the above table, what are the total fixed costs for an output of 4?

Accepted Answer

A)  $0 
B)  $120 
C)  $100 
D)  $220 
A)  $0 
B)  $120 
C)  $100 
D)  $220

Question 16

The time period during which all factors of production can be varied is the

Accepted Answer

A)  production time. 
B)  calendar year. 
C)  long run. 
D)  short run. 
A)  production time. 
B)  calendar year. 
C)  long run. 
D)  short run.

Question 17

What is minimum efficient scale? Why is it important?

Accepted Answer

Minimum efficient scale (MES) is the low

Question 18

-In the above table, what is the marginal cost to produce the 2nd unit of output?

Accepted Answer

A)  $30 
B)  $60 
C)  $55 
D)  $20 
A)  $30 
B)  $60 
C)  $55 
D)  $20

Question 19

Which of the following activities is not included in the production process?

Accepted Answer

A)  Determining the value of the goods 
B)  Making the goods 
C)  Packaging the goods 
D)  Transporting the goods 
A)  Determining the value of the goods 
B)  Making the goods 
C)  Packaging the goods 
D)  Transporting the goods

Question 20

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making a

Accepted Answer

A)  long-run decision. 
B)  short-run decision. 
C)  immediate-run decision. 
D)  variable-input decision. 
A)  long-run decision. 
B)  short-run decision. 
C)  immediate-run decision. 
D)  variable-input decision.

Exam 22: The Firm: Cost and Output Determination

Marginal physical product of labor equals

When the minimum efficient scale occurs at a high level of industry output

If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker was

-Refer to the above table. At an output of 4 units, average variable costs are

MC = AVC and MC = ATC at points at which

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

When total product is rising,

In the short run, total costs equal

-Refer to the above table. When output rises from 3 units to 4 units, marginal costs are

-In the above figure, the long-run cost curve between points A and B illustrates

The change in total variable cost which accompanies one extra unit of output is

The change in total product occurring when a variable input is increased and all other inputs are held constant is

As long as output increases,

A decrease in long-run average costs resulting from increases in output is

-In the above table, what are the total fixed costs for an output of 4?

The time period during which all factors of production can be varied is the

What is minimum efficient scale? Why is it important?

-In the above table, what is the marginal cost to produce the 2nd unit of output?

Which of the following activities is not included in the production process?

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making a

The Nature of Economics

Scarcity and the World of Trade-Offs

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Public Spending and Public Choice

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The Macroeconomy: Unemployment, Inflation, and Deflation

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Global Economic Growth and Development

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Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

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Regulation and Antitrust Policy in a Globalized Economy

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Environmental Economics

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