Question 1

For the cost function C(Q)= 200 + 3Q + 8Q2 + 4Q3,what is the average fixed cost of producing six units of output?

Accepted Answer

A)  18.31 
B)  212.61 
C)  42.12 
D)  33.33 
A)  18.31 
B)  212.61 
C)  42.12 
D)  33.33 D

Question 2

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What are the fixed costs?

Accepted Answer

A)  $50 
B)  $10 
C)  $1 
D)  $2 
A)  $50 
B)  $10 
C)  $1 
D)  $2 A

Question 3

What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately?

Accepted Answer

A)  Economies of scale 
B)  Diminishing average fixed costs 
C)  Cost complementarity 
D)  Economies of scope 
A)  Economies of scale 
B)  Diminishing average fixed costs 
C)  Cost complementarity 
D)  Economies of scope D

Question 4

Two firms producing identical products may merge due to the existence of:

Accepted Answer

A)  economies of scope. 
B)  economies of scale. 
C)  cost complementarities. 
D)  All of the preceding statements are correct. 
A)  economies of scope. 
B)  economies of scale. 
C)  cost complementarities. 
D)  All of the preceding statements are correct.

Question 5

Suppose that production for good X is characterized by the following production function,Q = K0.5L0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $15 and the per-unit wage,w,is $125,then the average fixed cost of using 16 units of capital and 25 units of labor is:

Accepted Answer

A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs.

Question 6

Suppose the production function is Q = min {3K,L}.How much output is produced when 6 units of labor and 3 units of capital are employed?

Accepted Answer

A)  3 
B)  6 
C)  9 
D)  None of the preceding statements is correct. 
A)  3 
B)  6 
C)  9 
D)  None of the preceding statements is correct.

Question 7

If the production function is Q = K.5L.5 and capital is fixed at 9 units,then the marginal product of labor when L = 49 is:

Accepted Answer

A)  3. 
B)  9/98. 
C)  3/14. 
D)  None of the answers are correct. 
A)  3. 
B)  9/98. 
C)  3/14. 
D)  None of the answers are correct.

Question 8

The following table summarizes the short-run production function for your firm.Your product sells for $5 per unit,labor costs $5 per unit,and the rental price of capital is $20 per unit.Complete the following table,and then answer the accompanying questions.
 $\begin{array}{|l|l|l|l|l|l|l|}
\hline(1) & (2) & (3) & (4) & (5) & (6) & (7) \
\hline K & L & Q & M P_{K} & A P_{K} & A P_{L} & V M P_{K} \
\hline 0 & 5 & 0 & & & & \
\hline 1 & 5 & 10 & & & & \
\hline 2 & 5 & 30 & & & & \
\hline 3 & 5 & 60 & & & & \
\hline 4 & 5 & 80 & & & & \
\hline 5 & 5 & 90 & & & & \
\hline 6 & 5 & 95 & & & & \
\hline 7 & 5 & 95 & & & & \
\hline 8 & 5 & 90 & & & & \
\hline 9 & 5 & 80 & & & & \
\hline 10 & 5 & 60 & & & & \
\hline 11 & 5 & 30 & & & & \
\hline
\end{array}$ a.Which inputs are fixed inputs?
 Which are the variable inputs?
b.How much are your fixed costs?
c.What is the variable cost of producing 20 units of output?
d.How many units of the variable input should be used to maximize profits?
e.What are your maximum profits?
f.Over what range of variable input usage do increasing marginal returns exist?
g.Over what range of variable input usage do decreasing marginal returns exist?
h.Over what range of variable input usage do negative marginal returns exist?

Accepted Answer

a.Labor is the fixed input while capital

Question 9

The inputs that a manager uses to alter production are referred to as:

Accepted Answer

A)  variable factors. 
B)  long-run factors. 
C)  fixed factors. 
D)  All of the preceding statements are correct. 
A)  variable factors. 
B)  long-run factors. 
C)  fixed factors. 
D)  All of the preceding statements are correct.

Question 10

An isoquant defines the combination of inputs that yield the producer:

Accepted Answer

A)  higher levels of output than the desired level of output. 
B)  lower levels of output than the desired level of output. 
C)  the same level of output. 
D)  None of the preceding statements is correct. 
A)  higher levels of output than the desired level of output. 
B)  lower levels of output than the desired level of output. 
C)  the same level of output. 
D)  None of the preceding statements is correct.

Question 11

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?

Accepted Answer

A)  3 
B)  4 
C)  11 
D)  45 
A)  3 
B)  4 
C)  11 
D)  45

Question 12

The average product of labor depends on how many units of:

Accepted Answer

A)  labor are used. 
B)  capital are used. 
C)  labor and capital are used. 
D)  None of the preceding statements is correct. 
A)  labor are used. 
B)  capital are used. 
C)  labor and capital are used. 
D)  None of the preceding statements is correct.

Question 13

The production function in the table below exhibits decreasing marginal returns to capital over what output range?
$$\begin{array}{l}
\text { Production Function far God } \mathbf { X }\
\begin{array} { l l l l l } 
L ^ { * } & K & Q & M _ { K } = ( \Delta Q / \Delta K ) & \begin{array} { l } 
\mathbf { M P } _ { K } = ( Q / K ) \
\text { Mverage }
\end{array} \
\text { Labor } & \text { Capital } & \text { Output } & \begin{array} { l } 
\text { Product of } \
\text { Capital }
\end{array} & \begin{array} { l } 
\text { Product of } \
\text { Capital }
\end{array} \
9 & 0 & 0 & - & - \
9 & 10 & 57 & 5.7 & 5.70 \
9 & 20 & 324 & 26.7 & 16.20 \
9 & 30 & 657 & 33.3 & \mathbf { B } \
9 & 40 & 1,072 & 41.5 & 26.80 \
9 & 50 & 1,524 & 45.2 & 30.48 \
9 & 60 & 1,976 & 45.2 & 32.93 \
9 & 70 & 2,391 & 41.5 & 34.16 \
9 & 80 & 2,724 & 33.3 & 34.05 \
9 & 90 & 2,991 & \mathbf { A } & 33.23 \
9 & 100 & 3,048 & 5.7 & 30.48 \
9 & 110 & 3,016 & - 3.2 & 27.42 \
9 & 120 & 2,945 & - 7.1 & 24.54
\end{array}
\end{array}$$

Accepted Answer

A)  Between 0 and 1,524 
B)  Between 0 and 2,991 
C)  Between 2,391 and 3,048 
D)  Between 3,016 and 2,945 
A)  Between 0 and 1,524 
B)  Between 0 and 2,991 
C)  Between 2,391 and 3,048 
D)  Between 3,016 and 2,945

Question 14

Suppose that production for good X is characterized by the following production function,Q = K0.5L0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $15 and the per-unit wage,w,is $5,then the average fixed cost of using 16 units of capital and 25 units of labor is:

Accepted Answer

A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs.

Question 15

Sunk costs are those costs that:

Accepted Answer

A)  do not vary without output. 
B)  are forever lost after they have been paid. 
C)  can be collected even after they have been paid. 
D)  do vary with output. 
A)  do not vary without output. 
B)  are forever lost after they have been paid. 
C)  can be collected even after they have been paid. 
D)  do vary with output.

Question 16

If the production function is Q = K.5L.5 and capital is fixed at 1 unit,then the average product of labor when L = 36 is:

Accepted Answer

A)  1/3. 
B)  1/6. 
C)  2/3. 
D)  None of the answers are correct. 
A)  1/3. 
B)  1/6. 
C)  2/3. 
D)  None of the answers are correct.

Question 17

For the multiproduct cost function C(Q1,Q2)= 100 + 2Q1Q2 + 4Q12,what is the marginal cost function for good one?

Accepted Answer

A)  MC1 = 2Q2 + 4Q1 − Q22. 
B)  MC1 = 2Q2 + 8Q1. 
C)  MC1 = 100 + 2Q1Q2 + 4Q12. 
D)  MC1 = 4Q12 − 2 Q22. 
A)  MC1 = 2Q2 + 4Q1 − Q22. 
B)  MC1 = 2Q2 + 8Q1. 
C)  MC1 = 100 + 2Q1Q2 + 4Q12. 
D)  MC1 = 4Q12 − 2 Q22.

Question 18

The difference between average total costs and average variable costs is:

Accepted Answer

A)  marginal cost. 
B)  average fixed cost. 
C)  fixed cost. 
D)  None of the preceding statements is correct. 
A)  marginal cost. 
B)  average fixed cost. 
C)  fixed cost. 
D)  None of the preceding statements is correct.

Question 19

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What is the variable cost of producing 10 units?

Accepted Answer

A)  $401 
B)  $1,060 
C)  $560 
D)  $1,010 
A)  $401 
B)  $1,060 
C)  $560 
D)  $1,010

Question 20

Suppose that production for good X is characterized by the following production function,Q = K0.5L0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $25 and the per-unit wage,w,is $15,then the average fixed cost of using 81 units of capital and 9 units of labor is:

Accepted Answer

A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs.

For the cost function C(Q)= 200 + 3Q + 8Q² + 4Q³,what is the average fixed cost of producing six units of output?

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What are the fixed costs?

What is implied when the total cost of producing Q₁ and Q₂ together is less than the total cost of producing Q₁ and Q₂ separately?

Two firms producing identical products may merge due to the existence of:

Suppose the production function is Q = min {3K,L}.How much output is produced when 6 units of labor and 3 units of capital are employed?

If the production function is Q = K^.5L^.5 and capital is fixed at 9 units,then the marginal product of labor when L = 49 is:

The inputs that a manager uses to alter production are referred to as:

An isoquant defines the combination of inputs that yield the producer:

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?

The average product of labor depends on how many units of:

Sunk costs are those costs that:

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit,then the average product of labor when L = 36 is:

For the multiproduct cost function C(Q₁,Q₂)= 100 + 2Q₁Q₂ + 4Q₁²,what is the marginal cost function for good one?

The difference between average total costs and average variable costs is:

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What is the variable cost of producing 10 units?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 5: The Production Process and Costs

For the cost function C(Q)= 200 + 3Q + 8Q2 + 4Q3,what is the average fixed cost of producing six units of output?

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What are the fixed costs?

What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately?

Two firms producing identical products may merge due to the existence of:

Suppose the production function is Q = min {3K,L}.How much output is produced when 6 units of labor and 3 units of capital are employed?

If the production function is Q = K.5L.5 and capital is fixed at 9 units,then the marginal product of labor when L = 49 is:

The inputs that a manager uses to alter production are referred to as:

An isoquant defines the combination of inputs that yield the producer:

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?

The average product of labor depends on how many units of:

Sunk costs are those costs that:

If the production function is Q = K.5L.5 and capital is fixed at 1 unit,then the average product of labor when L = 36 is:

For the multiproduct cost function C(Q1,Q2)= 100 + 2Q1Q2 + 4Q12,what is the marginal cost function for good one?

The difference between average total costs and average variable costs is:

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What is the variable cost of producing 10 units?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

For the cost function C(Q)= 200 + 3Q + 8Q² + 4Q³,what is the average fixed cost of producing six units of output?

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What are the fixed costs?

What is implied when the total cost of producing Q₁ and Q₂ together is less than the total cost of producing Q₁ and Q₂ separately?

If the production function is Q = K^.5L^.5 and capital is fixed at 9 units,then the marginal product of labor when L = 49 is:

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit,then the average product of labor when L = 36 is:

For the multiproduct cost function C(Q₁,Q₂)= 100 + 2Q₁Q₂ + 4Q₁²,what is the marginal cost function for good one?

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What is the variable cost of producing 10 units?