Question 1

-In the above figure, for any output level less than Q2, this firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  decreasing long run average costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  decreasing long run average costs.

Question 2

For a hotdog vendor, the hotdog buns represents his

Accepted Answer

A)  fixed input. 
B)  variable input. 
C)  sunk cost. 
D)  none of the above. 
A)  fixed input. 
B)  variable input. 
C)  sunk cost. 
D)  none of the above.

Question 3

-Use the above figure. At an output equal to "Q" the average fixed cost for the firm will be the line segment

Accepted Answer

A)  DE. 
B)  AB. 
C)  BE. 
D)  CD. 
A)  DE. 
B)  AB. 
C)  BE. 
D)  CD.

Question 4

-Refer to the above table. At an output of 3 units, average variable costs are

Accepted Answer

A)  $42. 
B)  $30. 
C)  $44. 
D)  $14. 
A)  $42. 
B)  $30. 
C)  $44. 
D)  $14.

Question 5

Increases in long-run average cost that result from output increases is

Accepted Answer

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

Question 6

-Refer to the above table. What are total fixed costs at an output of 3 units?

Accepted Answer

A)  $90 
B)  $120 
C)  $150 
D)  $270 
A)  $90 
B)  $120 
C)  $150 
D)  $270

Question 7

-In the above table, what is the marginal cost to produce the 4th unit of output?

Accepted Answer

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

Question 8

The observation that after some point, successive equal size increases in a variable factor of production, such as labor, added to fixed factors of production, will result in smaller increases in output is the

Accepted Answer

A)  law of diminishing marginal product. 
B)  streamlining production function. 
C)  consumer equilibrium. 
D)  theory of increasing marginal utility. 
A)  law of diminishing marginal product. 
B)  streamlining production function. 
C)  consumer equilibrium. 
D)  theory of increasing marginal utility.

Question 9

Which equation is used by a manager when considering total cost?

Accepted Answer

A)  total costs (T
C)  = consumption (
C)  + investment (I) + government (G) 
B)  total costs (T
C)  = average fixed costs (AF
C)  + number of workers 
C)  total costs (T
C)  = average total costs (AT
C)  
D)  total costs (T
C)  = total fixed costs (TF
C)  + total variable costs (TV
C)  
A)  total costs (T
C)  = consumption (
C)  + investment (I) + government (G) 
B)  total costs (T
C)  = average fixed costs (AF
C)  + number of workers 
C)  total costs (T
C)  = average total costs (AT
C)  
D)  total costs (T
C)  = total fixed costs (TF
C)  + total variable costs (TV
C)

Question 10

The point of saturation occurs when a firm

Accepted Answer

A)  has total returns equal to zero. 
B)  first encounters negative marginal product. 
C)  first experiences positive marginal product. 
D)  maximizes its total returns. 
A)  has total returns equal to zero. 
B)  first encounters negative marginal product. 
C)  first experiences positive marginal product. 
D)  maximizes its total returns.

Question 11

Which of the following statements is not true about the production function?

Accepted Answer

A)  It gives the maximum output that can be obtained for a given level of inputs. 
B)  A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C)  The production function depends upon the level of technology available to the firm. 
D)  It specifies the cost of inputs necessary to produce a certain level of outputs. 
A)  It gives the maximum output that can be obtained for a given level of inputs. 
B)  A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C)  The production function depends upon the level of technology available to the firm. 
D)  It specifies the cost of inputs necessary to produce a certain level of outputs.

Question 12

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?

Accepted Answer

A)  $5 
B)  $7 
C)  $20 
D)  $200 
A)  $5 
B)  $7 
C)  $20 
D)  $200

Question 13

What is the law of diminishing marginal product?

Accepted Answer

The law of diminishing marginal product

Question 14

The marginal cost curve intersects

Accepted Answer

A)  the average fixed cost curve at its minimum. 
B)  the average total cost curve at its maximum. 
C)  the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D)  the minimum of the average variable cost and average total cost curves. 
A)  the average fixed cost curve at its minimum. 
B)  the average total cost curve at its maximum. 
C)  the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D)  the minimum of the average variable cost and average total cost curves.

Question 15

When total product is increasing at an increasing rate, marginal product is

Accepted Answer

A)  positive and increasing. 
B)  positive and decreasing. 
C)  constant. 
D)  negative. 
A)  positive and increasing. 
B)  positive and decreasing. 
C)  constant. 
D)  negative.

Question 16

Which of the following statements about a firm's short-run variable costs is correct?

Accepted Answer

A)  They increase as the level of output decreases. 
B)  They typically include the cost of workers' wages. 
C)  They include the costs of plant and equipment. 
D)  They are always a greater expense than are fixed costs. 
A)  They increase as the level of output decreases. 
B)  They typically include the cost of workers' wages. 
C)  They include the costs of plant and equipment. 
D)  They are always a greater expense than are fixed costs.

Question 17

Which of the following would be an example of a fixed cost?

Accepted Answer

A)  the electric and gas bills 
B)  wages paid to temporary workers 
C)  property insurance premiums 
D)  expenditures on imported raw materials 
A)  the electric and gas bills 
B)  wages paid to temporary workers 
C)  property insurance premiums 
D)  expenditures on imported raw materials

Question 18

Fixed costs are

Accepted Answer

A)  costs that never change. 
B)  costs that a firm incurs even when output is zero. 
C)  not actually costs since they do not affect the decisions of a firm. 
D)  costs that increase at a constant rate when output increases. 
A)  costs that never change. 
B)  costs that a firm incurs even when output is zero. 
C)  not actually costs since they do not affect the decisions of a firm. 
D)  costs that increase at a constant rate when output increases.

Question 19

-In the above table, when the firm employs 4 workers, the marginal product will be

Accepted Answer

A)  140 snowboards. 
B)  30 snowboards. 
C)  35 snowboards. 
D)  208 snowboards. 
A)  140 snowboards. 
B)  30 snowboards. 
C)  35 snowboards. 
D)  208 snowboards.

Question 20

The relationship between inputs and outputs is known as

Accepted Answer

A)  business. 
B)  manufacturing. 
C)  a production function. 
D)  marginal product. 
A)  business. 
B)  manufacturing. 
C)  a production function. 
D)  marginal product.

Exam 22: The Firm: Cost and Output Determination

-In the above figure, for any output level less than Q2, this firm experiences

For a hotdog vendor, the hotdog buns represents his

-Use the above figure. At an output equal to "Q" the average fixed cost for the firm will be the line segment

-Refer to the above table. At an output of 3 units, average variable costs are

Increases in long-run average cost that result from output increases is

-Refer to the above table. What are total fixed costs at an output of 3 units?

-In the above table, what is the marginal cost to produce the 4th unit of output?

The observation that after some point, successive equal size increases in a variable factor of production, such as labor, added to fixed factors of production, will result in smaller increases in output is the

Which equation is used by a manager when considering total cost?

The point of saturation occurs when a firm

Which of the following statements is not true about the production function?

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?

What is the law of diminishing marginal product?

The marginal cost curve intersects

When total product is increasing at an increasing rate, marginal product is

Which of the following statements about a firm's short-run variable costs is correct?

Which of the following would be an example of a fixed cost?

Fixed costs are

-In the above table, when the firm employs 4 workers, the marginal product will be

The relationship between inputs and outputs is known as

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

Filters

-In the above figure, for any output level less than Q₂, this firm experiences