Question 1

What is the relationship between marginal cost and marginal physical product?

Accepted Answer

Assuming labor is the only variable inpu

Question 2

Total product will start to decrease

Accepted Answer

A)  at the quantity where the law of diminishing returns starts. 
B)  when average physical product decreases. 
C)  when marginal physical product increases. 
D)  when marginal physical product becomes negative. 
A)  at the quantity where the law of diminishing returns starts. 
B)  when average physical product decreases. 
C)  when marginal physical product increases. 
D)  when marginal physical product becomes negative.

Question 3

-In the above table, how many workers are employed when marginal product reaches its maximum?

Accepted Answer

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

Question 4

-In the above table, when output is 8 units, average total costs are

Accepted Answer

A)  $4.75. 
B)  $3.50. 
C)  $38. 
D)  $28. 
A)  $4.75. 
B)  $3.50. 
C)  $38. 
D)  $28.

Question 5

-In the above table, the marginal physical product of the 3rd worker is

Accepted Answer

A)  5. 
B)  4. 
C)  3. 
D)  12. 
A)  5. 
B)  4. 
C)  3. 
D)  12.

Question 6

The law of diminishing marginal product is responsible for

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  none of the long-run relationships. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  none of the long-run relationships.

Question 7

The typical shape of the long-run average cost curve is like

Accepted Answer

A)  the letter "C." 
B)  the letter "U." 
C)  an inverse of the letter "V." 
D)  a circle. 
A)  the letter "C." 
B)  the letter "U." 
C)  an inverse of the letter "V." 
D)  a circle.

Question 8

-Refer to the above table. MC is the lowest

Accepted Answer

A)  between 0 and 1 units of output. 
B)  between 1 and 2 units of output. 
C)  between 3 and 4 units of output. 
D)  at 0 units of output. 
A)  between 0 and 1 units of output. 
B)  between 1 and 2 units of output. 
C)  between 3 and 4 units of output. 
D)  at 0 units of output.

Question 9

When long-run average costs decline as output increases, the firm is experiencing

Accepted Answer

A)  negative returns to scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  economies of scale. 
A)  negative returns to scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  economies of scale.

Question 10

-In the above table, average physical product is 30 snowboards when

Accepted Answer

A)  4 workers are employed. 
B)  3 workers are employed. 
C)  2 workers are employed. 
D)  1 worker is employed. 
A)  4 workers are employed. 
B)  3 workers are employed. 
C)  2 workers are employed. 
D)  1 worker is employed.

Question 11

Fred's Franks originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Fred purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been successful. When Fred's Franks expanded to two locations, which of the following did NOT occur?

Accepted Answer

A)  Fred's production function changed. 
B)  Production increased. 
C)  The company increased the inputs it employs. 
D)  The firm employed additional capital. 
A)  Fred's production function changed. 
B)  Production increased. 
C)  The company increased the inputs it employs. 
D)  The firm employed additional capital.

Question 12

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

Accepted Answer

The short run is the time period when at

Question 13

Marginal cost begins to rise when

Accepted Answer

A)  diminishing marginal product begins. 
B)  diminishing marginal product ends. 
C)  average total cost falls. 
D)  fixed cost falls. 
A)  diminishing marginal product begins. 
B)  diminishing marginal product ends. 
C)  average total cost falls. 
D)  fixed cost falls.

Question 14

-Refer to the above table. At what quantity of labor is the average product of labor maximized?

Accepted Answer

A)  1 unit. 
B)  2 units. 
C)  3 units. 
D)  6 units. 
A)  1 unit. 
B)  2 units. 
C)  3 units. 
D)  6 units.

Question 15

Economists generally define the short run as being

Accepted Answer

A)  that period of time in which at least one of the firm's inputs, usually plant size, is fixed. 
B)  that period of time in which all inputs are variable. 
C)  any period of time less than one year. 
D)  any period of time less than six months. 
A)  that period of time in which at least one of the firm's inputs, usually plant size, is fixed. 
B)  that period of time in which all inputs are variable. 
C)  any period of time less than one year. 
D)  any period of time less than six months.

Question 16

Which of the following statements is not true about the short run and the long run?

Accepted Answer

A)  The short run for a firm is today while the long run is next week. 
B)  These terms apply to the planning decisions of firms. 
C)  The firm is always operating in the short run. 
D)  In the short run, the firm can change the amount of variable inputs. 
A)  The short run for a firm is today while the long run is next week. 
B)  These terms apply to the planning decisions of firms. 
C)  The firm is always operating in the short run. 
D)  In the short run, the firm can change the amount of variable inputs.

Question 17

-Using the above table, the marginal product of the 4th worker is

Accepted Answer

A)  12. 
B)  13. 
C)  14. 
D)  15. 
A)  12. 
B)  13. 
C)  14. 
D)  15.

Question 18

The long run for a business is a period of time

Accepted Answer

A)  longer than a year. 
B)  when most inputs are variable. 
C)  when all inputs can change. 
D)  when labor is the only input used by the business. 
A)  longer than a year. 
B)  when most inputs are variable. 
C)  when all inputs can change. 
D)  when labor is the only input used by the business.

Question 19

Which of the following statements is true about the planning horizon?

Accepted Answer

A)  All inputs are fixed. 
B)  All inputs are variable. 
C)  There are fixed and variable inputs. 
D)  Costs do not exist. 
A)  All inputs are fixed. 
B)  All inputs are variable. 
C)  There are fixed and variable inputs. 
D)  Costs do not exist.

Question 20

What is the most important determinant of the firm's short-run cost curves?

Accepted Answer

The short-run cost curves owe their shap

Exam 22: The Firm: Cost and Output Determination

What is the relationship between marginal cost and marginal physical product?

Total product will start to decrease

-In the above table, how many workers are employed when marginal product reaches its maximum?

-In the above table, when output is 8 units, average total costs are

-In the above table, the marginal physical product of the 3rd worker is

The law of diminishing marginal product is responsible for

The typical shape of the long-run average cost curve is like

-Refer to the above table. MC is the lowest

When long-run average costs decline as output increases, the firm is experiencing

-In the above table, average physical product is 30 snowboards when

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

Marginal cost begins to rise when

-Refer to the above table. At what quantity of labor is the average product of labor maximized?

Economists generally define the short run as being

Which of the following statements is not true about the short run and the long run?

-Using the above table, the marginal product of the 4th worker is

The long run for a business is a period of time

Which of the following statements is true about the planning horizon?

What is the most important determinant of the firm's short-run cost curves?

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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