Question 1

The feasible means of converting raw inputs such as steel,labor,and machinery into an output are summarized by:

Accepted Answer

A)  land. 
B)  production. 
C)  capital. 
D)  technology. 
A)  land. 
B)  production. 
C)  capital. 
D)  technology.

Question 2

For a cost function C = 100 + 10Q + Q2,the average fixed cost of producing 10 units of output is:

Accepted Answer

A)  10. 
B)  5. 
C)  1. 
D)  None of the answers are correct. 
A)  10. 
B)  5. 
C)  1. 
D)  None of the answers are correct.

Question 3

The change in total output attributable to the last unit of an input is the:

Accepted Answer

A)  total product. 
B)  average product. 
C)  marginal product. 
D)  marginal return. 
A)  total product. 
B)  average product. 
C)  marginal product. 
D)  marginal return.

Question 4

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

Accepted Answer

A)  long run, since K is the fixed input. 
B)  short run, since L is the fixed input. 
C)  long run, since K is the variable input. 
D)  short run, since L is the variable input. 
A)  long run, since K is the fixed input. 
B)  short run, since L is the fixed input. 
C)  long run, since K is the variable input. 
D)  short run, since L is the variable input.

Question 5

The production function Q = L.5K.5 is called:

Accepted Answer

A)  Cobb Douglas. 
B)  Leontief. 
C)  linear. 
D)  None of the answers are correct. 
A)  Cobb Douglas. 
B)  Leontief. 
C)  linear. 
D)  None of the answers are correct.

Question 6

According to the table below,what is the average variable cost of producing 50 units of output?
$$\begin{array} { | l | l | l |} 
\hline \mathbf { Q } & \mathbf { F C } & \mathbf { V C } \
\hline 0 & 1,000 & 0 \
\hline 20 & 1,000 & 350 \
\hline 50 & 1,000 & 700 \
\hline 90 & 1,000 & 1,050 \
\hline 125 & 1,000 & 1,400 \
\hline 145 & 1,000 & 1,750 \
\hline 160 & 1,000 & 2,100 \
\hline
\end{array}$$

Accepted Answer

A)  21 
B)  34 
C)  14 
D)  20 
A)  21 
B)  34 
C)  14 
D)  20

Question 7

Larger firms can produce a product at lower average cost than small firms when:

Accepted Answer

A)  economies of scope exist. 
B)  diseconomies of scale exist. 
C)  economies of scale exist. 
D)  cost complementarities exist. 
A)  economies of scope exist. 
B)  diseconomies of scale exist. 
C)  economies of scale exist. 
D)  cost complementarities exist.

Question 8

For the cost function C(Q)= 100 + 2Q + 3Q2,the marginal cost of producing 2 units of output is:

Accepted Answer

A)  2. 
B)  3. 
C)  12. 
D)  14. 
A)  2. 
B)  3. 
C)  12. 
D)  14.

Question 9

Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?

Accepted Answer

A)  The MRTS is equal to the ratio of input prices. 
B)  The marginal product per dollar spent on all inputs is equal. 
C)  The marginal products of all inputs are equal. 
D)  The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal. 
A)  The MRTS is equal to the ratio of input prices. 
B)  The marginal product per dollar spent on all inputs is equal. 
C)  The marginal products of all inputs are equal. 
D)  The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal.

Question 10

When there are economies of scope between two products which are separately produced by two firms,merging into a single firm can:

Accepted Answer

A)  accomplish an increase in sales. 
B)  accomplish a reduction in costs. 
C)  lead to an increase in cost. 
D)  lead to a reduction in sales. 
A)  accomplish an increase in sales. 
B)  accomplish a reduction in costs. 
C)  lead to an increase in cost. 
D)  lead to a reduction in sales.

Question 11

Which of the following cost functions exhibits economies of scope over the specified output range?

Accepted Answer

A)  C(Q1,Q2) = 2 − 0.5Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0 
B)  C(Q1,Q2) = 2 − 3Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0 
C)  C(Q1,Q2) = 2 − 0.5Q1Q2 − (Q1)2 + (Q2)2, for all Q1 2 1,Q2) = 2 − 3Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 4 and Q2 > 4 
A)  C(Q1,Q2) = 2 − 0.5Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0 
B)  C(Q1,Q2) = 2 − 3Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0 
C)  C(Q1,Q2) = 2 − 0.5Q1Q2 − (Q1)2 + (Q2)2, for all Q1 2 1,Q2) = 2 − 3Q1Q2 − (Q1)2 + (Q2)2, for all Q1 > 4 and Q2 > 4

Question 12

According to the table below,at what level of output is marginal cost minimized?
$$\begin{array} { | l | l | l| } 
\hline \mathbf { Q } & \mathbf { F C } & \mathbf { V C } \
\hline 0 & 1,000 & 0 \
\hline 20 & 1,000 & 350 \
\hline 50 & 1,000 & 700 \
\hline 90 & 1,000 & 1,050 \
\hline 125 & 1,000 & 1,400 \
\hline 145 & 1,000 & 1,750 \
\hline 160 & 1,000 & 2,100 \
\hline
\end{array}$$

Accepted Answer

A)  90 
B)  50 
C)  125 
D)  160 
A)  90 
B)  50 
C)  125 
D)  160

Question 13

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor,then in order to minimize costs the firm should use:

Accepted Answer

A)  less capital and more labor. 
B)  less labor and more capital. 
C)  less labor and less capital. 
D)  more labor and more capital. 
A)  less capital and more labor. 
B)  less labor and more capital. 
C)  less labor and less capital. 
D)  more labor and more capital.

Question 14

When there are economies of scope between products,selling off an unprofitable subsidiary could lead to:

Accepted Answer

A)  a major reduction in costs. 
B)  only a minor reduction in costs. 
C)  only a minor reduction in sales. 
D)  a major reduction in sales. 
A)  a major reduction in costs. 
B)  only a minor reduction in costs. 
C)  only a minor reduction in sales. 
D)  a major reduction in sales.

Question 15

To open a new business,a manager must obtain a license from the city for $20,000.The license is transferable,but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs?
 Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license,should the manager accept the offer?

Accepted Answer

a.Fixed costs are $20,000.Sunk costs are

Question 16

As long as marginal product is increasing,marginal product is:

Accepted Answer

A)  less than average product. 
B)  greater than average product. 
C)  equal to average output. 
D)  equal to total product. 
A)  less than average product. 
B)  greater than average product. 
C)  equal to average output. 
D)  equal to total product.

Question 17

Suppose the production function is given by Q = 2K + 5L.What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

Accepted Answer

A)  2 
B)  5 
C)  25 
D)  50 
A)  2 
B)  5 
C)  25 
D)  50

Question 18

Suppose the production function is Q = min {K,2L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

Accepted Answer

A)  2 
B)  4 
C)  8 
D)  9 
A)  2 
B)  4 
C)  8 
D)  9

Question 19

You are the manager of Telecall Inc.,a small telemarketing company.Your company pays $10,000 per month for office space.A real estate agent has noticed that you are only using 75 percent of your available space and tells you that Telecall could add $800 per month to its bottom line by renting out the space it does not use.Telecall has been asked to do a new telemarketing campaign for a large credit card company,but this would require it to use the remaining office space.What is the opportunity cost of using the extra office space to handle the credit card company's promotion?

Accepted Answer

The $800 per month t

Question 20

The isoquants are normally drawn with a convex shape because inputs are:

Accepted Answer

A)  not perfectly substitutable. 
B)  perfectly substitutable. 
C)  perfect complements. 
D)  normal goods. 
A)  not perfectly substitutable. 
B)  perfectly substitutable. 
C)  perfect complements. 
D)  normal goods.

The feasible means of converting raw inputs such as steel,labor,and machinery into an output are summarized by:

For a cost function C = 100 + 10Q + Q²,the average fixed cost of producing 10 units of output is:

The change in total output attributable to the last unit of an input is the:

The production function Q = L^.5K^.5 is called:

According to the table below,what is the average variable cost of producing 50 units of output? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

Larger firms can produce a product at lower average cost than small firms when:

For the cost function C(Q)= 100 + 2Q + 3Q²,the marginal cost of producing 2 units of output is:

Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?

When there are economies of scope between two products which are separately produced by two firms,merging into a single firm can:

Which of the following cost functions exhibits economies of scope over the specified output range?

According to the table below,at what level of output is marginal cost minimized? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor,then in order to minimize costs the firm should use:

When there are economies of scope between products,selling off an unprofitable subsidiary could lead to:

As long as marginal product is increasing,marginal product is:

Suppose the production function is given by Q = 2K + 5L.What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

Suppose the production function is Q = min {K,2L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

The isoquants are normally drawn with a convex shape because inputs are:

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

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Exam 5: The Production Process and Costs

The feasible means of converting raw inputs such as steel,labor,and machinery into an output are summarized by:

For a cost function C = 100 + 10Q + Q2,the average fixed cost of producing 10 units of output is:

The change in total output attributable to the last unit of an input is the:

The production function Q = L.5K.5 is called:

According to the table below,what is the average variable cost of producing 50 units of output? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

Larger firms can produce a product at lower average cost than small firms when:

For the cost function C(Q)= 100 + 2Q + 3Q2,the marginal cost of producing 2 units of output is:

Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?

When there are economies of scope between two products which are separately produced by two firms,merging into a single firm can:

Which of the following cost functions exhibits economies of scope over the specified output range?

According to the table below,at what level of output is marginal cost minimized? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor,then in order to minimize costs the firm should use:

When there are economies of scope between products,selling off an unprofitable subsidiary could lead to:

As long as marginal product is increasing,marginal product is:

Suppose the production function is given by Q = 2K + 5L.What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

Suppose the production function is Q = min {K,2L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

The isoquants are normally drawn with a convex shape because inputs are:

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 a cost function C = 100 + 10Q + Q²,the average fixed cost of producing 10 units of output is:

The production function Q = L^.5K^.5 is called:

For the cost function C(Q)= 100 + 2Q + 3Q²,the marginal cost of producing 2 units of output is: