Question 1

Which of the following statements is false?

Accepted Answer

A) An implicit cost is a nonmonetary opportunity cost. 
B) Economic costs include both accounting costs and implicit costs. 
C) An explicit cost is a cost that involves spending money. 
D) Economists consider all costs to be implicit costs. 
A) An implicit cost is a nonmonetary opportunity cost. 
B) Economic costs include both accounting costs and implicit costs. 
C) An explicit cost is a cost that involves spending money. 
D) Economists consider all costs to be implicit costs.

Question 2

Figure 7-14  
-Refer to Figure 7-14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

Accepted Answer

A) combination e: 10 hours of labour and 48 units of capital 
B) combination f: 40 hours of labour and 24 units of capital 
C) combination g: 60 hours of labour and 14 units of capital 
D) combination h: 60 hours of labour and 9 units of capital 
A) combination e: 10 hours of labour and 48 units of capital 
B) combination f: 40 hours of labour and 24 units of capital 
C) combination g: 60 hours of labour and 14 units of capital 
D) combination h: 60 hours of labour and 9 units of capital

Question 3

The law of diminishing marginal returns

Accepted Answer

A) explains why the average total cost and marginal cost curves are U-shaped in the short run. 
B) explains why the average total cost,average fixed cost and the marginal cost curves are U-shaped in the short run. 
C) causes average total costs to rise at a decreasing rate as output increases. 
D) causes the difference between average total cost and average variable cost to get smaller as output increases. 
A) explains why the average total cost and marginal cost curves are U-shaped in the short run. 
B) explains why the average total cost,average fixed cost and the marginal cost curves are U-shaped in the short run. 
C) causes average total costs to rise at a decreasing rate as output increases. 
D) causes the difference between average total cost and average variable cost to get smaller as output increases.

Question 4

Suppose two countries use different combinations of inputs,such as labour and capital,to produce the same product.This implies all of the following except that

Accepted Answer

A) the two countries use different technologies to produce the product. 
B) the inputs are not equally productive in the two countries. 
C) the prices of the inputs are not the same in the countries. 
D) one country is more efficient in the production of the good than the other. 
A) the two countries use different technologies to produce the product. 
B) the inputs are not equally productive in the two countries. 
C) the prices of the inputs are not the same in the countries. 
D) one country is more efficient in the production of the good than the other.

Question 5

Figure 7-5  
-Refer to Figure 7-5.Identify the curves in the diagram.

Accepted Answer

A) E = average fixed cost curve;F = variable cost curve;G = total cost curve,H = marginal cost curve 
B) E = marginal cost curve;F = total cost curve;G = variable cost curve,H = average fixed cost curve 
C) E = average fixed cost curve;F = average total cost curve;G = average variable cost curve,   
D) E = marginal cost curve;F = average total cost curve;G = average variable cost curve;   
A) E = average fixed cost curve;F = variable cost curve;G = total cost curve,H = marginal cost curve 
B) E = marginal cost curve;F = total cost curve;G = variable cost curve,H = average fixed cost curve 
C) E = average fixed cost curve;F = average total cost curve;G = average variable cost curve,   
D) E = marginal cost curve;F = average total cost curve;G = average variable cost curve;

Question 6

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

Accepted Answer

A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero. 
A) negative. 
B) less than 8 chairs. 
C) more than 8 chairs. 
D) zero.

Question 7

The typical shape of an isoquant is

Accepted Answer

A) convex towards the origin. 
B) concave towards the origin. 
C) linear and downward sloping. 
D) linear and upward sloping. 
A) convex towards the origin. 
B) concave towards the origin. 
C) linear and downward sloping. 
D) linear and upward sloping.

Question 8

Over the past twenty years,the number of small family farms has fallen significantly,and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

Accepted Answer

A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labour in farming 
D) declining productivity 
A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labour in farming 
D) declining productivity

Question 9

What is the marginal product of labour and what is the average product of labour.

Accepted Answer

The marginal product of labour is the ad

Question 10

Figure 7-13  
-Refer to Figure 7-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

Accepted Answer

A) the price of capital increases while the price of labour remains unchanged. 
B) the price of labour decreases while the price of capital remains unchanged. 
C) the price of capital increases while the price of labour decreases. 
D) the price of capital decreases while the price of labour increases. 
A) the price of capital increases while the price of labour remains unchanged. 
B) the price of labour decreases while the price of capital remains unchanged. 
C) the price of capital increases while the price of labour decreases. 
D) the price of capital decreases while the price of labour increases.

Question 11

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Accepted Answer

A) its labour is more productive in a smaller plant. 
B) its diseconomies of scale are less. 
C) the firm should reduce its plant size even more. 
D) the firm is now profitable. 
A) its labour is more productive in a smaller plant. 
B) its diseconomies of scale are less. 
C) the firm should reduce its plant size even more. 
D) the firm is now profitable.

Question 12

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

Accepted Answer

A) 2 chairs. 
B) 3 chairs. 
C) 4 chairs. 
D) 38 chairs. 
A) 2 chairs. 
B) 3 chairs. 
C) 4 chairs. 
D) 38 chairs.

Question 13

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Accepted Answer

A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve. 
A) a long-run production function. 
B) a long-run marginal cost curve. 
C) a minimum efficient scale curve. 
D) a long-run average total cost curve.

Question 14

Which of the following is true at the output level where average total cost is at its minimum?

Accepted Answer

A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost. 
A) Marginal cost equals average total cost. 
B) Average variable cost equals fixed cost. 
C) Marginal cost equals average variable cost. 
D) Average total cost equals average fixed cost.

Question 15

The long-run average cost curve shows

Accepted Answer

A) the lowest average cost of producing every level of output in the long run. 
B) where the most profitable level of output occurs. 
C) the average cost of producing where diminishing returns are not present. 
D) the plant size or scale that the firm should build. 
A) the lowest average cost of producing every level of output in the long run. 
B) where the most profitable level of output occurs. 
C) the average cost of producing where diminishing returns are not present. 
D) the plant size or scale that the firm should build.

Question 16

An isocost line shows

Accepted Answer

A) combinations of two inputs that result in the same total cost for a firm. 
B) combinations of two inputs that result in the same total output for a firm. 
C) combinations of the two inputs that result in the same profit for a firm. 
D) the different levels of total cost that result from various combinations of two inputs. 
A) combinations of two inputs that result in the same total cost for a firm. 
B) combinations of two inputs that result in the same total output for a firm. 
C) combinations of the two inputs that result in the same profit for a firm. 
D) the different levels of total cost that result from various combinations of two inputs.

Question 17

A curve that shows all the combinations of two inputs,such as labour and capital,that will produce the same level of output is called

Accepted Answer

A) an isoquant. 
B) an isocost line. 
C) a budget line. 
D) an optimal input combination curve. 
A) an isoquant. 
B) an isocost line. 
C) a budget line. 
D) an optimal input combination curve.

Question 18

Figure 7-13  
-Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

Accepted Answer

A) the movement from CE to BF 
B) the movement from CE to AF 
C) the movement from BD to AF 
D) the movement from BD to CE 
A) the movement from CE to BF 
B) the movement from CE to AF 
C) the movement from BD to AF 
D) the movement from BD to CE

Question 19

The slope of an isocost line ________ and equals the negative of ________.

Accepted Answer

A) increases as we move down the line;the ratio of input prices 
B) decreases as we move down the line;the ratio of the marginal products 
C) is constant;the ratio of input prices 
D) is constant;the ratio of the marginal products 
A) increases as we move down the line;the ratio of input prices 
B) decreases as we move down the line;the ratio of the marginal products 
C) is constant;the ratio of input prices 
D) is constant;the ratio of the marginal products

Question 20

Figure 7-13  
-Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labour while the price of capital remains unchanged?

Accepted Answer

A) the movement from AF to BD 
B) the movement from AF to CE 
C) the movement from BF to BD 
D) the movement from BF to CE 
A) the movement from AF to BD 
B) the movement from AF to CE 
C) the movement from BF to BD 
D) the movement from BF to CE

Which of the following statements is false?

Figure 7-14 -Refer to Figure 7-14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

The law of diminishing marginal returns

Suppose two countries use different combinations of inputs,such as labour and capital,to produce the same product.This implies all of the following except that

Figure 7-5 -Refer to Figure 7-5.Identify the curves in the diagram.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

The typical shape of an isoquant is

Over the past twenty years,the number of small family farms has fallen significantly,and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

What is the marginal product of labour and what is the average product of labour.

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Which of the following is true at the output level where average total cost is at its minimum?

The long-run average cost curve shows

An isocost line shows

A curve that shows all the combinations of two inputs,such as labour and capital,that will produce the same level of output is called

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

The slope of an isocost line and equals the negative of .

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labour while the price of capital remains unchanged?

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

Which of the following statements is false?

Figure 7-14 -Refer to Figure 7-14.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?

The law of diminishing marginal returns

Suppose two countries use different combinations of inputs,such as labour and capital,to produce the same product.This implies all of the following except that

Figure 7-5 -Refer to Figure 7-5.Identify the curves in the diagram.

If diminishing marginal returns have already set in for Golden Lark Woodworks,and the marginal product of the 6th carpenter is 8 chairs,then the marginal product of the 7th carpenter is

The typical shape of an isoquant is

Over the past twenty years,the number of small family farms has fallen significantly,and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

What is the marginal product of labour and what is the average product of labour.

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

Which of the following is true at the output level where average total cost is at its minimum?

The long-run average cost curve shows

An isocost line shows

A curve that shows all the combinations of two inputs,such as labour and capital,that will produce the same level of output is called

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

The slope of an isocost line ________ and equals the negative of ________.

Figure 7-13 -Refer to Figure 7-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the price of labour while the price of capital remains unchanged?

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

The slope of an isocost line and equals the negative of .