Question 1

Use the information from the below table to answer following question(s).
  
-In the above table, the marginal product of the fourth worker is

Accepted Answer

A)  30. 
B)  25. 
C)  20. 
D)  15. 
A)  30. 
B)  25. 
C)  20. 
D)  15.

Question 2

-In the above table, what is the average variable cost to produce 2 units of output?

Accepted Answer

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

Question 3

-Refer to the above table. What does the marginal product equal when the quantity of labor goes from 2 to 3?

Accepted Answer

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

Question 4

The law of diminishing marginal product is a statement

Accepted Answer

A)  that concerns changes in variable input and changes in output. 
B)  that concerns the long run. 
C)  that concerns changes in profits. 
D)  that relates to plant size. 
A)  that concerns changes in variable input and changes in output. 
B)  that concerns the long run. 
C)  that concerns changes in profits. 
D)  that relates to plant size.

Question 5

The average fixed cost curve

Accepted Answer

A)  is parallel to the x-axis. 
B)  is the distance between the TC and TVC curves. 
C)  slopes downward as output increases. 
D)  increases as the cost of inputs rise. 
A)  is parallel to the x-axis. 
B)  is the distance between the TC and TVC curves. 
C)  slopes downward as output increases. 
D)  increases as the cost of inputs rise.

Question 6

In the short run, the additional output that results from hiring an additional unit of a variable input is the

Accepted Answer

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

Question 7

For an economist, the short run means a time period

Accepted Answer

A)  during which new firms are prohibited from entering the industry. 
B)  during which firms are not allowed to change the amount of imported resources they use. 
C)  that is between one and five years. 
D)  during which the firm is unable to change its plant size. 
A)  during which new firms are prohibited from entering the industry. 
B)  during which firms are not allowed to change the amount of imported resources they use. 
C)  that is between one and five years. 
D)  during which the firm is unable to change its plant size.

Question 8

Diseconomies of scale occur

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  because of fixed costs. 
D)  none of the above. 
A)  only in the short run. 
B)  only in the long run. 
C)  because of fixed costs. 
D)  none of the above.

Question 9

If marginal product is negative, then

Accepted Answer

A)  total product is rising. 
B)  total product is falling. 
C)  marginal cost is falling. 
D)  average profit is rising. 
A)  total product is rising. 
B)  total product is falling. 
C)  marginal cost is falling. 
D)  average profit is rising.

Question 10

As a firm continues to produce additional output, which of the following will continue to decline as output expands?

Accepted Answer

A)  average total costs 
B)  marginal costs 
C)  average fixed costs 
D)  opportunity costs 
A)  average total costs 
B)  marginal costs 
C)  average fixed costs 
D)  opportunity costs

Question 11

The planning horizon is the

Accepted Answer

A)  long run. 
B)  short run. 
C)  point where production begins. 
D)  point where diminishing marginal product starts. 
A)  long run. 
B)  short run. 
C)  point where production begins. 
D)  point where diminishing marginal product starts.

Question 12

The law of diminishing marginal product indicates that

Accepted Answer

A)  average product will eventually decrease. 
B)  marginal product will eventually decrease. 
C)  total product will eventually decrease. 
D)  resources are inefficient. 
A)  average product will eventually decrease. 
B)  marginal product will eventually decrease. 
C)  total product will eventually decrease. 
D)  resources are inefficient.

Question 13

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

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 14

-Refer to the above table. What is MC when output rises from 0 unit to 1 unit?

Accepted Answer

A)  $0 
B)  $25 
C)  $90 
D)  $115 
A)  $0 
B)  $25 
C)  $90 
D)  $115

Question 15

-In the above table, the average physical product for 5 workers and the marginal physical product of the 5th worker is

Accepted Answer

A)  3.6; 2. 
B)  0.72; 1. 
C)  2; 0.6. 
D)  16; 2. 
A)  3.6; 2. 
B)  0.72; 1. 
C)  2; 0.6. 
D)  16; 2.

Question 16

Average physical product is calculated by dividing total product by the

Accepted Answer

A)  amount of variable and fixed inputs employed. 
B)  quantity of the variable input. 
C)  quantity of the fixed input. 
D)  production function. 
A)  amount of variable and fixed inputs employed. 
B)  quantity of the variable input. 
C)  quantity of the fixed input. 
D)  production function.

Question 17

The observation that beyond some point, successive increases in a variable factor of production added to a fixed factor of production lead to smaller and smaller increases in output is

Accepted Answer

A)  the law of marginal utility. 
B)  the law of averages. 
C)  the law of diminishing marginal product. 
D)  the law of opportunity costs. 
A)  the law of marginal utility. 
B)  the law of averages. 
C)  the law of diminishing marginal product. 
D)  the law of opportunity costs.

Question 18

A basic distinction between the long run and the short run is that

Accepted Answer

A)  if a firm produces no output in the long run, it still incurs a cost. 
B)  the opportunity costs of production are lower in the short run than in the long run. 
C)  in the long run, some inputs are fixed, while in the short run, all inputs are variable. 
D)  in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted. 
A)  if a firm produces no output in the long run, it still incurs a cost. 
B)  the opportunity costs of production are lower in the short run than in the long run. 
C)  in the long run, some inputs are fixed, while in the short run, all inputs are variable. 
D)  in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted.

Question 19

The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called the

Accepted Answer

A)  foreseeable future. 
B)  minimum efficient time period. 
C)  non-adjustment period. 
D)  planning horizon. 
A)  foreseeable future. 
B)  minimum efficient time period. 
C)  non-adjustment period. 
D)  planning horizon.

Question 20

Which of the following is NOT correct?

Accepted Answer

A)  MC = change in TC/change in Q 
B)  ATC = TC/Q 
C)  AVC = TVC/Q 
D)  ATC + AVC = AFC 
A)  MC = change in TC/change in Q 
B)  ATC = TC/Q 
C)  AVC = TVC/Q 
D)  ATC + AVC = AFC

Exam 22: The Firm: Cost and Output Determination

Use the information from the below table to answer following question(s). -In the above table, the marginal product of the fourth worker is

-In the above table, what is the average variable cost to produce 2 units of output?

-Refer to the above table. What does the marginal product equal when the quantity of labor goes from 2 to 3?

The law of diminishing marginal product is a statement

The average fixed cost curve

In the short run, the additional output that results from hiring an additional unit of a variable input is the

For an economist, the short run means a time period

Diseconomies of scale occur

If marginal product is negative, then

As a firm continues to produce additional output, which of the following will continue to decline as output expands?

The planning horizon is the

The law of diminishing marginal product indicates that

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

-Refer to the above table. What is MC when output rises from 0 unit to 1 unit?

-In the above table, the average physical product for 5 workers and the marginal physical product of the 5th worker is

Average physical product is calculated by dividing total product by the

The observation that beyond some point, successive increases in a variable factor of production added to a fixed factor of production lead to smaller and smaller increases in output is

A basic distinction between the long run and the short run is that

The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called the

Which of the following is NOT correct?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

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

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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