Question 1

In the short run,if marginal product is at its maximum,then

Accepted Answer

A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum. 
A) average cost is at its minimum. 
B) average variable cost is at its minimum. 
C) marginal cost is at its minimum. 
D) total cost is at its maximum. C

Question 2

In the long run,which of the following is true?

Accepted Answer

A) Total cost = fixed cost + variable cost. 
B) The size of a firm's physical plant can be changed,but the firm cannot adopt new technology. 
C) There are no fixed costs. 
D) The firm can vary its explicit costs but not its implicit costs. 
A) Total cost = fixed cost + variable cost. 
B) The size of a firm's physical plant can be changed,but the firm cannot adopt new technology. 
C) There are no fixed costs. 
D) The firm can vary its explicit costs but not its implicit costs. C

Question 3

Figure 7-3   Fancy Footwear manufactures shoes.Figure 7-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 7-3.For what quantity of labour does production display diminishing returns?

Accepted Answer

A) for more than 1 unit of labour 
B) for more than 4 units of labour 
C) for more than 5 units of labour 
D) for more than 8 units of labour 
A) for more than 1 unit of labour 
B) for more than 4 units of labour 
C) for more than 5 units of labour 
D) for more than 8 units of labour B

Question 4

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can

Question 5

Figure 7-6   Figure 7-6 contains information about the short-run cost structure of a firm.
-Refer to Figure 7-6.In the figure above,which letter represents the average total cost curve?

Accepted Answer

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

Question 6

If,when a firm doubles all its inputs,its average cost of production increases,then production displays

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) declining fixed costs.

Question 7

Figure 7-13  
-Refer to Figure 7-13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit,then along the isocost AF,the total cost

Accepted Answer

A) is $500. 
B) is $750. 
C) is $1250. 
D) cannot be determined without the price of capital. 
A) is $500. 
B) is $750. 
C) is $1250. 
D) cannot be determined without the price of capital.

Question 8

All of the following statements are true of the minimum efficient scale except one.Which one?

Accepted Answer

A) All possible economies of scale have been exhausted. 
B) The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point. 
C) Any increase in the scale of operation will encounter diseconomies of scale. 
D) An increase in the output level will increase profit. 
A) All possible economies of scale have been exhausted. 
B) The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point. 
C) Any increase in the scale of operation will encounter diseconomies of scale. 
D) An increase in the output level will increase profit.

Question 9

Figure 7-5  
-Refer to Figure 7-5.Curve G approaches curve F because

Accepted Answer

A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced. 
A) marginal cost is above average variable costs. 
B) average fixed cost falls as output rises. 
C) fixed cost falls as capacity rises. 
D) total cost falls as more and more is produced.

Question 10

Jennifer Borts moves her office from the premises she rents at a local shopping centre to her home.As a result of this move

Accepted Answer

A) Jennifer's explicit costs fall and her implicit costs rise. 
B) Jennifer's total costs fall. 
C) Jennifer's implicit costs fall. 
D) Jennifer's opportunity costs fall. 
A) Jennifer's explicit costs fall and her implicit costs rise. 
B) Jennifer's total costs fall. 
C) Jennifer's implicit costs fall. 
D) Jennifer's opportunity costs fall.

Question 11

Figure 7-14  
-Refer to Figure 7-14.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labour for capital when labour is increased from 10 to 20 hours?

Accepted Answer

A) 1 unit of capital 
B) 10 units of capital 
C) 14 units of capital 
D) 24 units of capital 
A) 1 unit of capital 
B) 10 units of capital 
C) 14 units of capital 
D) 24 units of capital

Question 12

Figure 7-1  
-Refer to Figure 7-1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis,the marginal product curve

Accepted Answer

A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker. 
A) never intersects the horizontal axis. 
B) intersects the horizontal axis at a point corresponding to the 5th worker. 
C) intersects the horizontal axis at a point corresponding to the 6th worker. 
D) intersects the horizontal axis at a point corresponding to the 8th worker.

Question 13

Which of the following is an example of positive technological change?

Accepted Answer

A) A firm offers workers a higher wage to work on weekends and at night.As a result,the firm is able to increase its weekly production of surf boards. 
B) A firm buys an additional machine that it uses to make surf boards.As a result,the firm is able to increase its weekly production of surf boards. 
C) A firm conducts a new advertising campaign.As a result,the demand for the firm's surf boards increases. 
D) A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. 
A) A firm offers workers a higher wage to work on weekends and at night.As a result,the firm is able to increase its weekly production of surf boards. 
B) A firm buys an additional machine that it uses to make surf boards.As a result,the firm is able to increase its weekly production of surf boards. 
C) A firm conducts a new advertising campaign.As a result,the demand for the firm's surf boards increases. 
D) A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Question 14

A 'stockout' occurs when

Accepted Answer

A) brokers run out of shares of stock to sell of a particular company. 
B) a disruption due to a power outage,etc. ,causes a temporary production shutdown. 
C) a company holds too many goods in inventories. 
D) a firm loses sales because goods consumers want are not available. 
A) brokers run out of shares of stock to sell of a particular company. 
B) a disruption due to a power outage,etc. ,causes a temporary production shutdown. 
C) a company holds too many goods in inventories. 
D) a firm loses sales because goods consumers want are not available.

Question 15

Table 7-3
  
-Refer to Table 7-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.The average product of labour will equal 60 boxes when Manny hires

Accepted Answer

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

Question 16

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 17

Figure 7-17  
-Refer to Figure 7-17.Starting from point d,a movement along isoquant1 to point f

Accepted Answer

A) increases the total cost of production with no change in output. 
B) increases output but not the total cost of production. 
C) increases the total cost of production and decreases output. 
D) increases both the total cost of production and output. 
A) increases the total cost of production with no change in output. 
B) increases output but not the total cost of production. 
C) increases the total cost of production and decreases output. 
D) increases both the total cost of production and output.

Question 18

Marginal cost is equal to the

Accepted Answer

A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output. 
A) change in total cost divided by the change in output. 
B) change in average total costs divided by the change in output. 
C) change in total product divided by the change in output. 
D) change in average product divided by the change in output.

Question 19

If a firm's long-run average total curve shows that it can produce 5000 DVDs at an average cost of $2.00 and 15 000 DVDs at an average cost of $1.50,this is evidence of

Accepted Answer

A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) the law of supply. 
A) diminishing returns. 
B) economies of scale. 
C) diseconomies of scale. 
D) the law of supply.

Question 20

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Accepted Answer

A) $100 
B) $124.40 
C) $220 
D) $340 
A) $100 
B) $124.40 
C) $220 
D) $340

In the short run,if marginal product is at its maximum,then

In the long run,which of the following is true?

Figure 7-3 Fancy Footwear manufactures shoes.Figure 7-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 7-3.For what quantity of labour does production display diminishing returns?

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Figure 7-6 Figure 7-6 contains information about the short-run cost structure of a firm. -Refer to Figure 7-6.In the figure above,which letter represents the average total cost curve?

If,when a firm doubles all its inputs,its average cost of production increases,then production displays

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit,then along the isocost AF,the total cost

All of the following statements are true of the minimum efficient scale except one.Which one?

Figure 7-5 -Refer to Figure 7-5.Curve G approaches curve F because

Jennifer Borts moves her office from the premises she rents at a local shopping centre to her home.As a result of this move

Figure 7-14 -Refer to Figure 7-14.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labour for capital when labour is increased from 10 to 20 hours?

Figure 7-1 -Refer to Figure 7-1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis,the marginal product curve

Which of the following is an example of positive technological change?

A 'stockout' occurs when

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Figure 7-17 -Refer to Figure 7-17.Starting from point d,a movement along isoquant₁ to point f

Marginal cost is equal to the

If a firm's long-run average total curve shows that it can produce 5000 DVDs at an average cost of $2.00 and 15 000 DVDs at an average cost of $1.50,this is evidence of

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 7: Technology, Production and Costs

In the short run,if marginal product is at its maximum,then

In the long run,which of the following is true?

Figure 7-3 Fancy Footwear manufactures shoes.Figure 7-3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run. -Refer to Figure 7-3.For what quantity of labour does production display diminishing returns?

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Figure 7-6 Figure 7-6 contains information about the short-run cost structure of a firm. -Refer to Figure 7-6.In the figure above,which letter represents the average total cost curve?

If,when a firm doubles all its inputs,its average cost of production increases,then production displays

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit,then along the isocost AF,the total cost

All of the following statements are true of the minimum efficient scale except one.Which one?

Figure 7-5 -Refer to Figure 7-5.Curve G approaches curve F because

Jennifer Borts moves her office from the premises she rents at a local shopping centre to her home.As a result of this move

Figure 7-14 -Refer to Figure 7-14.Suppose Hilda produces 100 gooseberry pies.What is the marginal rate of technical substitution of labour for capital when labour is increased from 10 to 20 hours?

Figure 7-1 -Refer to Figure 7-1.In a diagram that shows the marginal product of labour on the vertical axis and labour on the horizontal axis,the marginal product curve

Which of the following is an example of positive technological change?

A 'stockout' occurs when

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Figure 7-17 -Refer to Figure 7-17.Starting from point d,a movement along isoquant1 to point f

Marginal cost is equal to the

If a firm's long-run average total curve shows that it can produce 5000 DVDs at an average cost of $2.00 and 15 000 DVDs at an average cost of $1.50,this is evidence of

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 7-17 -Refer to Figure 7-17.Starting from point d,a movement along isoquant₁ to point f