Question 1

-In the above table, what is the marginal cost to produce the 5th unit of output?

Accepted Answer

A)  $80 
B)  $60 
C)  $55 
D)  $20 
A)  $80 
B)  $60 
C)  $55 
D)  $20

Question 2

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

Accepted Answer

A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00. 
A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00.

Question 3

The best way to think of the short run and the long run is as

Accepted Answer

A)  specific periods of time, although the time periods may differ across industries. 
B)  planning terms that apply to managers. 
C)  concepts that apply to all people who work for a firm. 
D)  a concept that only accountants are concerned with. 
A)  specific periods of time, although the time periods may differ across industries. 
B)  planning terms that apply to managers. 
C)  concepts that apply to all people who work for a firm. 
D)  a concept that only accountants are concerned with.

Question 4

When the average physical product is rising,

Accepted Answer

A)  total cost is falling. 
B)  average total cost is increasing. 
C)  average variable cost is falling. 
D)  marginal cost is always rising. 
A)  total cost is falling. 
B)  average total cost is increasing. 
C)  average variable cost is falling. 
D)  marginal cost is always rising.

Question 5

-Using the above table, the total product and average physical product when 5 workers are employed are

Accepted Answer

A)  61 and 21, respectively. 
B)  62 and 13, respectively. 
C)  62 and 15, respectively. 
D)  61 and 12.2, respectively. 
A)  61 and 21, respectively. 
B)  62 and 13, respectively. 
C)  62 and 15, respectively. 
D)  61 and 12.2, respectively.

Question 6

The production function illustrates the amount of total physical product that can be produced with a given set of

Accepted Answer

A)  inputs. 
B)  outputs. 
C)  marginal product. 
D)  marginal input. 
A)  inputs. 
B)  outputs. 
C)  marginal product. 
D)  marginal input.

Question 7

Which of the following would NOT be a short-run decision for the firm?

Accepted Answer

A)  Recall workers who were previously laid-off 
B)  Have labor work two hours overtime each day in order to expand output 
C)  Build another wing on the plant in order to add a new assembly line 
D)  Place an order with a supplier for additional raw materials 
A)  Recall workers who were previously laid-off 
B)  Have labor work two hours overtime each day in order to expand output 
C)  Build another wing on the plant in order to add a new assembly line 
D)  Place an order with a supplier for additional raw materials

Question 8

The firm's short-run costs contain

Accepted Answer

A)  only variable costs. 
B)  only fixed costs. 
C)  both variable and fixed costs. 
D)  only opportunity costs. 
A)  only variable costs. 
B)  only fixed costs. 
C)  both variable and fixed costs. 
D)  only opportunity costs.

Question 9

-Use the above figure. The TFC at output level 10 is

Accepted Answer

A)  $10. 
B)  $3. 
C)  $2. 
D)  $1. 
A)  $10. 
B)  $3. 
C)  $2. 
D)  $1.

Question 10

Summing all of the costs that do not change as output varies yields

Accepted Answer

A)  variable costs. 
B)  fixed costs. 
C)  implicit costs. 
D)  explicit costs. 
A)  variable costs. 
B)  fixed costs. 
C)  implicit costs. 
D)  explicit costs.

Question 11

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

Accepted Answer

A)  specialization 
B)  the dimensional factor 
C)  improved productive equipment 
D)  depreciation 
A)  specialization 
B)  the dimensional factor 
C)  improved productive equipment 
D)  depreciation

Question 12

The focus of firm decisions in the short run is primarily on

Accepted Answer

A)  variable inputs. 
B)  capital investment. 
C)  plant size. 
D)  economies of scale. 
A)  variable inputs. 
B)  capital investment. 
C)  plant size. 
D)  economies of scale.

Question 13

For a firm, we define the short run as a period of time during which

Accepted Answer

A)  at least one input cannot be changed. 
B)  all inputs can be changed. 
C)  only the plant size can be changed. 
D)  all inputs cannot be changed. 
A)  at least one input cannot be changed. 
B)  all inputs can be changed. 
C)  only the plant size can be changed. 
D)  all inputs cannot be changed.

Question 14

-In the above table, marginal product becomes negative after employing the

Accepted Answer

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

Question 15

All of the following are reasons for economies of scale EXCEPT

Accepted Answer

A)  diminishing marginal product. 
B)  specialization. 
C)  dimensional factors. 
D)  improved production equipment. 
A)  diminishing marginal product. 
B)  specialization. 
C)  dimensional factors. 
D)  improved production equipment.

Question 16

Which of the following would be a fixed input to an automobile firm?

Accepted Answer

A)  Steel 
B)  A factory in Detroit 
C)  Car batteries 
D)  Engineers 
A)  Steel 
B)  A factory in Detroit 
C)  Car batteries 
D)  Engineers

Question 17

Marginal cost equals

Accepted Answer

A)  TC/Q. 
B)  TVC/Q. 
C)  TFC/Q. 
D)  change in total cost/change in output. 
A)  TC/Q. 
B)  TVC/Q. 
C)  TFC/Q. 
D)  change in total cost/change in output.

Question 18

-Refer to the above table. At an output of 2 units, average total costs are

Accepted Answer

A)  $61. 
B)  $122. 
C)  $16. 
D)  $45. 
A)  $61. 
B)  $122. 
C)  $16. 
D)  $45.

Question 19

Mr. James' company produces candy bars. Which is NOT a variable input for this firm?

Accepted Answer

A)  Sugar 
B)  Assembly line workers 
C)  The big chocolate-stirring machines 
D)  Packaging materials 
A)  Sugar 
B)  Assembly line workers 
C)  The big chocolate-stirring machines 
D)  Packaging materials

Question 20

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

Accepted Answer

A)  plant-size 
B)  long-run 
C)  short-run 
D)  fixed-input 
A)  plant-size 
B)  long-run 
C)  short-run 
D)  fixed-input

Exam 22: The Firm: Cost and Output Determination

-In the above table, what is the marginal cost to produce the 5th unit of output?

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

The best way to think of the short run and the long run is as

When the average physical product is rising,

-Using the above table, the total product and average physical product when 5 workers are employed are

The production function illustrates the amount of total physical product that can be produced with a given set of

Which of the following would NOT be a short-run decision for the firm?

The firm's short-run costs contain

-Use the above figure. The TFC at output level 10 is

Summing all of the costs that do not change as output varies yields

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

The focus of firm decisions in the short run is primarily on

For a firm, we define the short run as a period of time during which

-In the above table, marginal product becomes negative after employing the

All of the following are reasons for economies of scale EXCEPT

Which of the following would be a fixed input to an automobile firm?

Marginal cost equals

-Refer to the above table. At an output of 2 units, average total costs are

Mr. James' company produces candy bars. Which is NOT a variable input for this firm?

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

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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