Question 1

If production displays constant returns to scale,then all economies of scale have been exhausted.

Accepted Answer

A) True 
 B)False

Question 2

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.

Accepted Answer

The relationship between marginal and av

Question 3

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

Accepted Answer

A) True 
 B)False

Question 4

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

Question 5

If production displays economies of scale,the long-run average cost curve is

Accepted Answer

A) above the short-run average total cost curve. 
B) downward sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve. 
A) above the short-run average total cost curve. 
B) downward sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve.

Question 6

The marginal rate of technical substitution is measured by

Accepted Answer

A) the slope of the isoquant. 
B) the relative input prices. 
C) the slope of the isocost line. 
D) the ratio of the product's price to the product's cost of production. 
A) the slope of the isoquant. 
B) the relative input prices. 
C) the slope of the isocost line. 
D) the ratio of the product's price to the product's cost of production.

Question 7

In the short run,marginal product of labour increases at first and then falls because

Accepted Answer

A) as more labour is hired,they are not as skilled as the first ones hired. 
B) there are fewer opportunities for division of labour and specialisation when fewer workers are hired. 
C) managerial inefficiency sets in when a firm gets too large. 
D) the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive. 
A) as more labour is hired,they are not as skilled as the first ones hired. 
B) there are fewer opportunities for division of labour and specialisation when fewer workers are hired. 
C) managerial inefficiency sets in when a firm gets too large. 
D) the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive.

Question 8

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

Accepted Answer

A) price of capital increases. 
B) price of labour decreases. 
C) price of labour increases. 
D) marginal product of labour increases. 
A) price of capital increases. 
B) price of labour decreases. 
C) price of labour increases. 
D) marginal product of labour increases.

Question 9

If a firm produces 20 units of output and incurs a total cost of $1000,and the variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

Accepted Answer

A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information. 
A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information.

Question 10

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays

Accepted Answer

A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs. 
A) increasing returns to scale. 
B) constant returns to scale. 
C) decreasing returns to scale. 
D) constant average fixed costs.

Question 11

Describe the difference between technology and positive technological change.

Accepted Answer

A firm's technology refers to the proces

Question 12

In economics,what is the difference between the short run and the long run?

Accepted Answer

In economics,the short run refers to the

Question 13

Figure 7-8  
-Refer to Figure 7-8 above to answer the following questions.
a.Identify the curves in the diagram.
A ________
B ________
C ________
b.What is the numerical value of fixed cost when the quantity of output = 10?
c.What is the numerical value of variable cost when the quantity of output = 10?
d.What is the numerical value of total cost when the quantity of output = 10?
e.What is the numerical value of average fixed cost when the quantity of output = 10?
f.What is the numerical value of average total cost when the quantity of output = 10?
g.On the graph identify the area that represents the total variable cost of production when the quantity of output = 10.
h.On the graph identify the area that represents the fixed cost of production when the quantity of output = 10.

Accepted Answer

a.A=Marginal cost curve;B = Av

Question 14

Academic book publishers hire editors,designers,and production and marketing managers who help prepare books for publication.Because these employees work on several books simultaneously,the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year.The salaries and benefits of people in these job categories will be included in

Accepted Answer

A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost. 
A) fixed cost and marginal cost but not variable cost. 
B) fixed cost but not variable cost and total cost. 
C) marginal cost and total cost but not fixed cost. 
D) fixed cost and total cost but not variable cost.

Question 15

Which of the following statements correctly describes the distinction between technology and technological change?

Accepted Answer

A) Technology refers to the processes used by a firm to transform inputs into output of goods and services,while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B) Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs,and technological change is the process by which the firm achieves this productivity gain. 
C) Technology is product-centered in that it refers to developing new products with limited resources,while technological change is process-centered in that it focuses on developing new production techniques. 
D) Technology involves research and development,while technological change involves the use of more efficient machinery. 
A) Technology refers to the processes used by a firm to transform inputs into output of goods and services,while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B) Technology refers to the ability of a firm to increase its maximum output from a given quantity of inputs,and technological change is the process by which the firm achieves this productivity gain. 
C) Technology is product-centered in that it refers to developing new products with limited resources,while technological change is process-centered in that it focuses on developing new production techniques. 
D) Technology involves research and development,while technological change involves the use of more efficient machinery.

Question 16

As a firm moves to higher isocost lines,

Accepted Answer

A) its profits increase. 
B) its revenue increases. 
C) its input price ratio increases. 
D) its total cost increases. 
A) its profits increase. 
B) its revenue increases. 
C) its input price ratio increases. 
D) its total cost increases.

Question 17

In the world oil market,oil is supplied up to the point where

Accepted Answer

A) the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B) the marginal cost of the last barrel is zero. 
C) the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D) the marginal cost of the last barrel is at a maximum. 
A) the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel. 
B) the marginal cost of the last barrel is zero. 
C) the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel. 
D) the marginal cost of the last barrel is at a maximum.

Question 18

Figure 7-12  
-Refer to Figure 7-12.Which of the following statements about the input combinations shown in the diagram is false?

Accepted Answer

A) The firm produces a higher output level when it uses input combination b compared to input combination a. 
B) The firm produces a lower output level when it uses input combination d compared to input combination a. 
C) The firm produces the same output level when it uses input combination a or c. 
D) The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output. 
A) The firm produces a higher output level when it uses input combination b compared to input combination a. 
B) The firm produces a lower output level when it uses input combination d compared to input combination a. 
C) The firm produces the same output level when it uses input combination a or c. 
D) The firm incurs the same total cost when it uses input combination a or c to produce a given quantity of output.

Question 19

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 20

Figure 7-1  
-Refer to Figure 7-1.The average product of the 4th worker

Accepted Answer

A) is 68. 
B) is 17. 
C) is 11. 
D) cannot be determined. 
A) is 68. 
B) is 17. 
C) is 11. 
D) cannot be determined.

If production displays constant returns to scale,then all economies of scale have been exhausted.

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

If production displays economies of scale,the long-run average cost curve is

The marginal rate of technical substitution is measured by

In the short run,marginal product of labour increases at first and then falls because

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

If a firm produces 20 units of output and incurs a total cost of $1000,and the variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays

Describe the difference between technology and positive technological change.

In economics,what is the difference between the short run and the long run?

Which of the following statements correctly describes the distinction between technology and technological change?

As a firm moves to higher isocost lines,

In the world oil market,oil is supplied up to the point where

Figure 7-12 -Refer to Figure 7-12.Which of the following statements about the input combinations shown in the diagram is false?

Economic costs include implicit costs but not explicit costs.

Figure 7-1 -Refer to Figure 7-1.The average product of the 4th worker

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

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Exam 7: Technology, Production and Costs

If production displays constant returns to scale,then all economies of scale have been exhausted.

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.

When a firm experiences negative technological change,it can produce the same output with fewer inputs.

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

If production displays economies of scale,the long-run average cost curve is

The marginal rate of technical substitution is measured by

In the short run,marginal product of labour increases at first and then falls because

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

If a firm produces 20 units of output and incurs a total cost of $1000,and the variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

When a firm's long-run average cost curve is horizontal for a range of output,then that range of production displays

Describe the difference between technology and positive technological change.

In economics,what is the difference between the short run and the long run?

Which of the following statements correctly describes the distinction between technology and technological change?

As a firm moves to higher isocost lines,

In the world oil market,oil is supplied up to the point where

Figure 7-12 -Refer to Figure 7-12.Which of the following statements about the input combinations shown in the diagram is false?

Economic costs include implicit costs but not explicit costs.

Figure 7-1 -Refer to Figure 7-1.The average product of the 4th worker

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