Question 1

A firm's long-run average cost curve is comprised of

Accepted Answer

A)  the minimum points of each of the firm's short-run average cost curves. 
B)  the lower envelope of the firm's short-run average cost curves. 
C)  the minimum points of each of the firm's short-run marginal cost curves. 
D)  the series of points where the short-run marginal cost curves intersect the short-run average cost curves. 
A)  the minimum points of each of the firm's short-run average cost curves. 
B)  the lower envelope of the firm's short-run average cost curves. 
C)  the minimum points of each of the firm's short-run marginal cost curves. 
D)  the series of points where the short-run marginal cost curves intersect the short-run average cost curves. B

Question 2

Suppose that a firm's long-run total cost curve can be expressed as   .This firm's long-run average total cost curve can be expressed as

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    . B

Question 3

A firm notices that when it increases output beyond an initial level   ,average total cost decreases.For this firm,the region of output beyond   is characterized by

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  the minimum efficient scale. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  the minimum efficient scale. A

Question 4

Which of the following factors may explain diseconomies of scale?

Accepted Answer

A)  Increasing returns to scale of inputs. 
B)  Specialization of labor. 
C)  Indivisible inputs. 
D)  Managerial diseconomies. 
A)  Increasing returns to scale of inputs. 
B)  Specialization of labor. 
C)  Indivisible inputs. 
D)  Managerial diseconomies.

Question 5

The percentage change in average variable cost for every 1 percent increase in cumulative volume is referred to as

Accepted Answer

A)  experience elasticity 
B)  experience curve 
C)  experience output 
D)  experience slope 
A)  experience elasticity 
B)  experience curve 
C)  experience output 
D)  experience slope

Question 6

A long-run total cost curve

Accepted Answer

A)  always has a constant slope. 
B)  is always upward sloping. 
C)  never has a constant slope. 
D)  is always downward sloping. 
A)  always has a constant slope. 
B)  is always upward sloping. 
C)  never has a constant slope. 
D)  is always downward sloping.

Question 7

An increase in the price of one input

Accepted Answer

A)  will always rotate the long-run total cost curve upward. 
B)  may rotate the long-run total cost curve upward or may leave the long-run total cost unchanged. 
C)  could actually rotate the long-run total cost downward. 
D)  will have no effect on the long-run total cost curve as long as long as the firm is using positive amounts of both inputs. 
A)  will always rotate the long-run total cost curve upward. 
B)  may rotate the long-run total cost curve upward or may leave the long-run total cost unchanged. 
C)  could actually rotate the long-run total cost downward. 
D)  will have no effect on the long-run total cost curve as long as long as the firm is using positive amounts of both inputs.

Question 8

Suppose   in the short-run.The firm's short-run fixed cost curve is

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

Suppose a firm produces 50,000 units of output,and determines that its marginal cost is $0.72 and its average total cost is $0.72.At this quantity of output,what is the slope of this firm's long run average total cost curve?

Accepted Answer

A)  Upward-sloping. 
B)  Downward-sloping. 
C)  Horizontal. 
D)  Vertical. 
A)  Upward-sloping. 
B)  Downward-sloping. 
C)  Horizontal. 
D)  Vertical.

Question 10

Which of the following factors would not explain economies of scale?

Accepted Answer

A)  Increasing returns to scale of inputs. 
B)  Specialization of labor. 
C)  Indivisible inputs. 
D)  Managerial diseconomies 
A)  Increasing returns to scale of inputs. 
B)  Specialization of labor. 
C)  Indivisible inputs. 
D)  Managerial diseconomies

Question 11

The relationship between the long-run total cost curve and the marginal and average cost curves is best described by which of the following statements?

Accepted Answer

A)  The slope of the total cost curve from the origin to a point on the total cost curve is how you derive the marginal cost curve while the average cost is given by TC/Q. 
B)  Marginal cost is MC/Q while average cost is TC/Q. 
C)  Marginal cost is derived by dividing total cost by a constant as is average cost. 
D)  The slope of the total cost curve at each point is how you derive the marginal cost curve while the slope from the origin to a point on the total cost curve is how you derive the average cost curve. 
A)  The slope of the total cost curve from the origin to a point on the total cost curve is how you derive the marginal cost curve while the average cost is given by TC/Q. 
B)  Marginal cost is MC/Q while average cost is TC/Q. 
C)  Marginal cost is derived by dividing total cost by a constant as is average cost. 
D)  The slope of the total cost curve at each point is how you derive the marginal cost curve while the slope from the origin to a point on the total cost curve is how you derive the average cost curve.

Question 12

Suppose that a firm's long-run total cost curve can be expressed as   .This firm's long-run marginal cost curve can be expressed as

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 13

Suppose a firm's short run total cost curve can be expressed as S   .This firm's short-run marginal cost can be expressed as

Accepted Answer

A)    . 
B)    . 
C)  50. 
D)  10. 
A)    . 
B)    . 
C)  50. 
D)  10.

Question 14

Let a firm's long run total cost be described by the constant elasticity total cost function.The coefficients of the log of the wage and the log of capital in this function should

Accepted Answer

A)  add up to one. 
B)  be negative. 
C)  be of opposite sign. 
D)  of indeterminate sign. 
A)  add up to one. 
B)  be negative. 
C)  be of opposite sign. 
D)  of indeterminate sign.

Question 15

Suppose   in the short-run.The firm's short-run total cost curve is

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 16

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units is average cost minimized?

Accepted Answer

A)  The first unit. 
B)  The fifth unit. 
C)  The third unit. 
D)  At the first, second and third units. 
A)  The first unit. 
B)  The fifth unit. 
C)  The third unit. 
D)  At the first, second and third units.

Question 17

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units are marginal and average costs equal?

Accepted Answer

A)  The first unit. 
B)  The fifth unit. 
C)  The third unit. 
D)  At the first, second and third units. 
A)  The first unit. 
B)  The fifth unit. 
C)  The third unit. 
D)  At the first, second and third units.

Question 18

When average cost is "u-shaped" (neither always rising or always falling),the marginal cost curve will

Accepted Answer

A)  cross through (bisect) the average cost curve at its maximum. 
B)  not intersect with the average cost curve at all. 
C)  be a fixed distance above the average cost curve. 
D)  cross through (bisect) the average cost curve at its minimum. 
A)  cross through (bisect) the average cost curve at its maximum. 
B)  not intersect with the average cost curve at all. 
C)  be a fixed distance above the average cost curve. 
D)  cross through (bisect) the average cost curve at its minimum.

Question 19

Economies of scale exist when firms have

Accepted Answer

A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  constant marginal cost. 
A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  constant marginal cost.

Question 20

When the prices of all inputs increase by a proportionate amount,

Accepted Answer

A)  the firm's total cost curve will remain unchanged since the cost-minimizing combination of inputs is unchanged. 
B)  the firm's total cost curve may rotate upward or may leave the long-run total cost curve unchanged. 
C)  will always rotate the long-run total cost curve upward. 
D)  could actually rotate the long-run total cost downward if the firm chooses to produce a lower level of output. 
A)  the firm's total cost curve will remain unchanged since the cost-minimizing combination of inputs is unchanged. 
B)  the firm's total cost curve may rotate upward or may leave the long-run total cost curve unchanged. 
C)  will always rotate the long-run total cost curve upward. 
D)  could actually rotate the long-run total cost downward if the firm chooses to produce a lower level of output.

A firm's long-run average cost curve is comprised of

Suppose that a firm's long-run total cost curve can be expressed as .This firm's long-run average total cost curve can be expressed as

A firm notices that when it increases output beyond an initial level ,average total cost decreases.For this firm,the region of output beyond is characterized by

Which of the following factors may explain diseconomies of scale?

The percentage change in average variable cost for every 1 percent increase in cumulative volume is referred to as

A long-run total cost curve

An increase in the price of one input

Suppose in the short-run.The firm's short-run fixed cost curve is

Suppose a firm produces 50,000 units of output,and determines that its marginal cost is $0.72 and its average total cost is $0.72.At this quantity of output,what is the slope of this firm's long run average total cost curve?

Which of the following factors would not explain economies of scale?

The relationship between the long-run total cost curve and the marginal and average cost curves is best described by which of the following statements?

Suppose that a firm's long-run total cost curve can be expressed as .This firm's long-run marginal cost curve can be expressed as

Suppose a firm's short run total cost curve can be expressed as S .This firm's short-run marginal cost can be expressed as

Let a firm's long run total cost be described by the constant elasticity total cost function.The coefficients of the log of the wage and the log of capital in this function should

Suppose in the short-run.The firm's short-run total cost curve is

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units is average cost minimized?

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units are marginal and average costs equal?

When average cost is "u-shaped" (neither always rising or always falling),the marginal cost curve will

Economies of scale exist when firms have

When the prices of all inputs increase by a proportionate amount,

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

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Exam 8: Cost Curves

A firm's long-run average cost curve is comprised of

Suppose that a firm's long-run total cost curve can be expressed as .This firm's long-run average total cost curve can be expressed as

A firm notices that when it increases output beyond an initial level ,average total cost decreases.For this firm,the region of output beyond is characterized by

Which of the following factors may explain diseconomies of scale?

The percentage change in average variable cost for every 1 percent increase in cumulative volume is referred to as

A long-run total cost curve

An increase in the price of one input

Suppose in the short-run.The firm's short-run fixed cost curve is

Suppose a firm produces 50,000 units of output,and determines that its marginal cost is $0.72 and its average total cost is $0.72.At this quantity of output,what is the slope of this firm's long run average total cost curve?

Which of the following factors would not explain economies of scale?

The relationship between the long-run total cost curve and the marginal and average cost curves is best described by which of the following statements?

Suppose that a firm's long-run total cost curve can be expressed as .This firm's long-run marginal cost curve can be expressed as

Suppose a firm's short run total cost curve can be expressed as S .This firm's short-run marginal cost can be expressed as

Let a firm's long run total cost be described by the constant elasticity total cost function.The coefficients of the log of the wage and the log of capital in this function should

Suppose in the short-run.The firm's short-run total cost curve is

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units is average cost minimized?

Suppose that a firm's total costs of production are 0 at an output of zero,10 at an output of 1,20 at an output of 2 units,30 at an output of three units,35 at an output of four units and 37 at an output of five units.At which number of units are marginal and average costs equal?

When average cost is "u-shaped" (neither always rising or always falling),the marginal cost curve will

Economies of scale exist when firms have

When the prices of all inputs increase by a proportionate amount,

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters