Question 1

-In the above figure, the long-run cost curve between points C and D 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 2

Which of the following statement is correct?

Accepted Answer

A)  When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing. 
B)  When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing. 
C)  When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product. 
D)  When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate. 
A)  When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing. 
B)  When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing. 
C)  When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product. 
D)  When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate.

Question 3

-Refer to the above figure. Average total costs are represented by curve

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 4

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

Accepted Answer

A)  diminishing marginal product. 
B)  diminishing marginal utility. 
C)  diminishing marginal workforce. 
D)  diminishing marginal inputs. 
A)  diminishing marginal product. 
B)  diminishing marginal utility. 
C)  diminishing marginal workforce. 
D)  diminishing marginal inputs.

Question 5

Which of the following statements is FALSE?

Accepted Answer

A)  Included in the firm's short-run production function are both fixed and variable inputs. 
B)  An efficient firm can obtain more output than the production function shows. 
C)  The production function shows the technical relationship between a firm's inputs and outputs. 
D)  The production function presents the technically efficient methods of combining inputs to produce output. 
A)  Included in the firm's short-run production function are both fixed and variable inputs. 
B)  An efficient firm can obtain more output than the production function shows. 
C)  The production function shows the technical relationship between a firm's inputs and outputs. 
D)  The production function presents the technically efficient methods of combining inputs to produce output.

Question 6

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Accepted Answer

A)  $19. 
B)  $10. 
C)  $22. 
D)  $31. 
A)  $19. 
B)  $10. 
C)  $22. 
D)  $31.

Question 7

-In the above table, what is the average total cost to produce 3 units of output?

Accepted Answer

A)  $33.33 
B)  $53.33 
C)  $55 
D)  $20 
A)  $33.33 
B)  $53.33 
C)  $55 
D)  $20

Question 8

The time period during at least one input cannot be changed 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 9

The minimum possible short-run average costs are equal to long-run average costs when

Accepted Answer

A)  the plant is producing at its short-run minimum point. 
B)  short-run and long-run costs are declining. 
C)  the long-run curve is at a minimum point. 
D)  production is at any point on the LAC curve. 
A)  the plant is producing at its short-run minimum point. 
B)  short-run and long-run costs are declining. 
C)  the long-run curve is at a minimum point. 
D)  production is at any point on the LAC curve.

Question 10

What factors generate economies of scale?

Accepted Answer

Economies of scale can be generated by s

Question 11

Notice the costs as given in the table below. What is the total fixed cost in the table below?

Accepted Answer

A)  $5 
B)  $0 
C)  $10 
D)  $9 
A)  $5 
B)  $0 
C)  $10 
D)  $9

Question 12

-In the above table, diminishing marginal product occurs after employing the

Accepted Answer

A)  first worker. 
B)  second worker. 
C)  third worker. 
D)  fourth worker. 
A)  first worker. 
B)  second worker. 
C)  third worker. 
D)  fourth worker.

Question 13

The physical output that is due to the addition of one more unit of a variable factor of production 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 14

A firm's long-run average cost curve is

Accepted Answer

A)  the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted. 
B)  the locus of points made up of the minimum point on each short-run average total cost curve when only one input may be adjusted. 
C)  the envelope of the firm's variable cost curves. 
D)  identical to the lowest short-run average cost curve the firm has. 
A)  the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted. 
B)  the locus of points made up of the minimum point on each short-run average total cost curve when only one input may be adjusted. 
C)  the envelope of the firm's variable cost curves. 
D)  identical to the lowest short-run average cost curve the firm has.

Question 15

Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

Accepted Answer

The production function is the relations

Question 16

In economics, a fixed cost is a cost that

Accepted Answer

A)  is present only in the short run. 
B)  goes up as the level of output goes up. 
C)  goes down as the level of output goes up. 
D)  does not vary with the level of output. 
A)  is present only in the short run. 
B)  goes up as the level of output goes up. 
C)  goes down as the level of output goes up. 
D)  does not vary with the level of output.

Question 17

The amount of calendar time associated with the long run

Accepted Answer

A)  is less than five years. 
B)  is greater than one year. 
C)  is between one and five years. 
D)  varies by industry. 
A)  is less than five years. 
B)  is greater than one year. 
C)  is between one and five years. 
D)  varies by industry.

Question 18

-Refer to the above table. What are total variable costs at an output of 2 units?

Accepted Answer

A)  $50 
B)  $100 
C)  $150 
D)  $200 
A)  $50 
B)  $100 
C)  $150 
D)  $200

Question 19

Total fixed cost is

Accepted Answer

A)  the cost of buying and installing new machinery. 
B)  the cost that does not change as output changes. 
C)  the expenditure on imported raw materials. 
D)  the wages paid to consultants. 
A)  the cost of buying and installing new machinery. 
B)  the cost that does not change as output changes. 
C)  the expenditure on imported raw materials. 
D)  the wages paid to consultants.

Question 20

-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

Accepted Answer

A)  $20, $2.50, and $15, respectively. 
B)  $35, $2.50, and $30, respectively. 
C)  $30, $2.50, and $40, respectively. 
D)  $35, $2.50, and $20, respectively. 
A)  $20, $2.50, and $15, respectively. 
B)  $35, $2.50, and $30, respectively. 
C)  $30, $2.50, and $40, respectively. 
D)  $35, $2.50, and $20, respectively.

Exam 22: The Firm: Cost and Output Determination

-In the above figure, the long-run cost curve between points C and D illustrates

Which of the following statement is correct?

-Refer to the above figure. Average total costs are represented by curve

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

Which of the following statements is FALSE?

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

-In the above table, what is the average total cost to produce 3 units of output?

The time period during at least one input cannot be changed is the

The minimum possible short-run average costs are equal to long-run average costs when

What factors generate economies of scale?

Notice the costs as given in the table below. What is the total fixed cost in the table below?

-In the above table, diminishing marginal product occurs after employing the

The physical output that is due to the addition of one more unit of a variable factor of production is

A firm's long-run average cost curve is

Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

In economics, a fixed cost is a cost that

The amount of calendar time associated with the long run

-Refer to the above table. What are total variable costs at an output of 2 units?

Total fixed cost is

-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

The Nature of Economics

Scarcity and the World of Trade-Offs

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Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

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Classical and Keynesian Macro Analyses

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Money, Banking, and Central Banking

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Stabilization in an Integrated World Economy

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Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

Monopoly

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Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

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Environmental Economics

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