Question 1

What is an isoquant? What is the slope of an isoquant?

Accepted Answer

An isoquant is curve that shows all the

Question 2

Figure 7-5  
-Refer to Figure 7-5.The vertical difference between curves F and G measures

Accepted Answer

A) average fixed costs. 
B) marginal costs. 
C) fixed costs. 
D) sunk costs. 
A) average fixed costs. 
B) marginal costs. 
C) fixed costs. 
D) sunk costs.

Question 3

Which of the following are implicit costs for a typical firm?

Accepted Answer

A) opportunity costs of capital owned and used by the firm 
B) the cost of labour hired by the firm 
C) utilities cost 
D) a business licensing fee 
A) opportunity costs of capital owned and used by the firm 
B) the cost of labour hired by the firm 
C) utilities cost 
D) a business licensing fee

Question 4

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 5

An isoquant is a curve that shows all the combinations of two inputs that will produce the same level of output.

Accepted Answer

A) True 
 B)False

Question 6

When a firm experiences a positive technological change

Accepted Answer

A) the price of a share of the firm's stock rises. 
B) the firm is able to produce more output using the same inputs,or the same output using fewer inputs. 
C) the value of the firm's assets rises. 
D) the firm will hire additional workers in order to increase production. 
A) the price of a share of the firm's stock rises. 
B) the firm is able to produce more output using the same inputs,or the same output using fewer inputs. 
C) the value of the firm's assets rises. 
D) the firm will hire additional workers in order to increase production.

Question 7

If average total cost is falling,marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is false?

Accepted Answer

A) When marginal cost equals average total cost,average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.' 
A) When marginal cost equals average total cost,average total cost is at its highest value. 
B) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. 
C) The difference between average total cost and average fixed cost is average variable cost. 
D) Firms often refer to the process of lowering average fixed cost as 'spreading the overhead.'

Question 9

If another worker adds 9 units of output to a group of workers who had an average product of 7 units,then the average product of labour

Accepted Answer

A) will remain the same. 
B) will increase. 
C) will decrease. 
D) and what will happen to it cannot be determined. 
A) will remain the same. 
B) will increase. 
C) will decrease. 
D) and what will happen to it cannot be determined.

Question 10

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

Accepted Answer

A) the first workers hired get to use the best equipment. 
B) specialisation allows a worker to focus on one task,thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point,a firm has hired too many workers. 
A) the first workers hired get to use the best equipment. 
B) specialisation allows a worker to focus on one task,thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point,a firm has hired too many workers.

Question 11

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 fixed cost curve?

Accepted Answer

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

Question 12

Which of the following is a factor of production that generally is fixed in the short run?

Accepted Answer

A) raw materials 
B) labour 
C) a factory building 
D) water 
A) raw materials 
B) labour 
C) a factory building 
D) water

Question 13

Table 7-8
   Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data.
-Refer to Table 7-8.What is the minimum efficient scale of production?

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 400 units

Question 14

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Accepted Answer

A) $1000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information. 
A) $1000. 
B) $700. 
C) $300. 
D) impossible to determine without additional information.

Question 15

Figure 7-11   Figure 7-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCS1U1B1aS1U1B0,ATCS1U1B1bS1U1B0 and ATCS1U1B1cS1U1B0.
-Refer to Figure 7-11.For output rates greater than 20 000 picture frames per month,

Accepted Answer

A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production. 
A) the firm will not make a profit because the average cost of production will be too high. 
B) the firm will experience diseconomies of scale. 
C) the firm will experience diminishing returns. 
D) the short-run average total cost will equal the long-run average total cost of production.

Question 16

If we have information about workers' marginal products,then total and average product can be found by

Accepted Answer

A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average. 
A) dividing marginal costs by the number of workers. 
B) multiplying the average marginal product times the number of workers. 
C) summing the marginal values to find the total and multiplying it times the number of workers to get the average. 
D) summing the marginal values to find the total and dividing it by the number of workers to get the average.

Question 17

Average total cost is

Accepted Answer

A) total cost divided by the quantity of output produced. 
B) total explicit costs divided by the quantity of output produced. 
C) variable cost divided by the quantity of output produced. 
D) the change in fixed plus variable cost divided by the quantity of output produced. 
A) total cost divided by the quantity of output produced. 
B) total explicit costs divided by the quantity of output produced. 
C) variable cost divided by the quantity of output produced. 
D) the change in fixed plus variable cost divided by the quantity of output produced.

Question 18

The basic activity of a firm is

Accepted Answer

A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services. 
A) to set the prices of its products as high as possible. 
B) to compete with other firms that produce similar products. 
C) to provide jobs for its employees. 
D) to use inputs to produce outputs of goods and services.

Question 19

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 20

If the marginal cost curve is below the average variable cost curve,then

Accepted Answer

A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing. 
A) average variable cost is increasing. 
B) average variable cost is decreasing. 
C) marginal cost must be decreasing. 
D) average variable cost could either be increasing or decreasing.

What is an isoquant? What is the slope of an isoquant?

Figure 7-5 -Refer to Figure 7-5.The vertical difference between curves F and G measures

Which of the following are implicit costs for a typical firm?

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

An isoquant is a curve that shows all the combinations of two inputs that will produce the same level of output.

When a firm experiences a positive technological change

If average total cost is falling,marginal cost must also be falling.

Which of the following statements is false?

If another worker adds 9 units of output to a group of workers who had an average product of 7 units,then the average product of labour

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

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 fixed cost curve?

Which of the following is a factor of production that generally is fixed in the short run?

Table 7-8 Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data. -Refer to Table 7-8.What is the minimum efficient scale of production?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Figure 7-11 Figure 7-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATC_a,ATC_b and ATC_c. -Refer to Figure 7-11.For output rates greater than 20 000 picture frames per month,

If we have information about workers' marginal products,then total and average product can be found by

Average total cost is

The basic activity of a firm is

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

If the marginal cost curve is below the average variable cost curve,then

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

What is an isoquant? What is the slope of an isoquant?

Figure 7-5 -Refer to Figure 7-5.The vertical difference between curves F and G measures

Which of the following are implicit costs for a typical firm?

If the long-run average total cost curve is downward-sloping,then the firm is experiencing decreasing returns to scale.

An isoquant is a curve that shows all the combinations of two inputs that will produce the same level of output.

When a firm experiences a positive technological change

If average total cost is falling,marginal cost must also be falling.

Which of the following statements is false?

If another worker adds 9 units of output to a group of workers who had an average product of 7 units,then the average product of labour

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that

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 fixed cost curve?

Which of the following is a factor of production that generally is fixed in the short run?

Table 7-8 Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data. -Refer to Table 7-8.What is the minimum efficient scale of production?

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Figure 7-11 Figure 7-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc. -Refer to Figure 7-11.For output rates greater than 20 000 picture frames per month,

If we have information about workers' marginal products,then total and average product can be found by

Average total cost is

The basic activity of a firm is

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

If the marginal cost curve is below the average variable cost curve,then

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 7-11 Figure 7-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATC_a,ATC_b and ATC_c. -Refer to Figure 7-11.For output rates greater than 20 000 picture frames per month,