Question 1

Which of the following is a fixed cost?

Accepted Answer

A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials 
A) payment to hire a security worker to guard the gate to the factory around the clock 
B) wages to hire assembly line workers 
C) payments to an electric utility 
D) costs of raw materials

Question 2

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Accepted Answer

A) True 
 B)False

Question 3

Figure 7-17  
-Refer to Figure 7-17.A curve that connects points a,d and e is called

Accepted Answer

A) an input-output curve. 
B) a total cost line. 
C) an expansion path. 
D) an indifference line. 
A) an input-output curve. 
B) a total cost line. 
C) an expansion path. 
D) an indifference line.

Question 4

Table 7-7
   Table 7-7 shows cost data for Lotus Lanterns,a producer of whimsical night lights.
-Refer to Table 7-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

Accepted Answer

A) $490 
B) $33.67 
C) $7.67 
D) $5.44 
A) $490 
B) $33.67 
C) $7.67 
D) $5.44

Question 5

Average fixed costs of production

Accepted Answer

A) remain constant. 
B) will rise at a fixed rate as more is produced. 
C) graph as a U-shaped curve. 
D) fall as long as output is increased. 
A) remain constant. 
B) will rise at a fixed rate as more is produced. 
C) graph as a U-shaped curve. 
D) fall as long as output is increased.

Question 6

Table 7-5
  
-Refer to Table 7-5.Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business.Suzette rents space for her factory for $400 a week in a nearby strip mall.She can hire temporary workers for $200 a week.Table 7-5 above shows her output and cost data.Use the table to answer questions a-e.
a.Complete the table.
b.In the last week of summer Suzette closes her business to go on a family vacation.What are her costs during that week?
c.In one week Suzette exactly breaks even.If her revenue for the week is $1200,how many boxes of fruit and nuts did she produce?
d.Judging from the marginal product of labour data,would you say that Suzette had to settle for increasingly unproductive workers? Explain your answer.
e.Suzette has received an order for 1500 boxes of nuts per week for the next 3 months.If she expects the trend in the marginal product of labour will continue in the same direction,what do you think she should do? Should she not commit until she can move to a larger space or should she just hire more workers? Explain your answer.

Accepted Answer

a.
 @#IMG-DLM& 
b.$400
c.840 boxes
d.Diminishing m

Question 7

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

Accepted Answer

A) the cost of labour 
B) the opportunity cost of capital owned and used by the firm 
C) the cost of energy used in production 
D) a business licensing fee 
A) the cost of labour 
B) the opportunity cost of capital owned and used by the firm 
C) the cost of energy used in production 
D) a business licensing fee

Question 8

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

Accepted Answer

A) production function. 
B) supply curve,or supply schedule. 
C) marginal product of labour. 
D) average product of labour. 
A) production function. 
B) supply curve,or supply schedule. 
C) marginal product of labour. 
D) average product of labour.

Question 9

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in

Question 10

The slope of an isocost line determines the marginal rate of substitution.

Accepted Answer

A) True 
 B)False

Question 11

The average total cost of production

Accepted Answer

A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output. 
A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output.

Question 12

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production 
A) better trained workers 
B) more efficient physical capital 
C) higher skill level of managers 
D) outsourcing some aspect of production

Question 13

When the marginal product of labour rises

Accepted Answer

A) the marginal cost of production will exceed the average total cost. 
B) the marginal cost of production also rises. 
C) the marginal cost of production falls. 
D) the average total cost of production also rises. 
A) the marginal cost of production will exceed the average total cost. 
B) the marginal cost of production also rises. 
C) the marginal cost of production falls. 
D) the average total cost of production also rises.

Question 14

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

Accepted Answer

A) True 
 B)False

Question 15

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Accepted Answer

Minimum efficient scale is the lowest le

Question 16

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Accepted Answer

A) impossible to determined with the information given. 
B) 12 800. 
C) 784. 
D) 50. 
A) impossible to determined with the information given. 
B) 12 800. 
C) 784. 
D) 50.

Question 17

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Accepted Answer

A) Diminishing returns are the result of changes in explicit costs.Diseconomies of scale are the result of changes in explicit costs and implicit costs. 
B) Diminishing returns refer to production while diseconomies of scale refer to costs. 
C) Diminishing returns cause a firm's marginal cost curve to rise;diseconomies of scale cause a firm's marginal cost curve to fall. 
D) Diminishing returns apply only to the short run;diseconomies of scale apply only in the long run. 
A) Diminishing returns are the result of changes in explicit costs.Diseconomies of scale are the result of changes in explicit costs and implicit costs. 
B) Diminishing returns refer to production while diseconomies of scale refer to costs. 
C) Diminishing returns cause a firm's marginal cost curve to rise;diseconomies of scale cause a firm's marginal cost curve to fall. 
D) Diminishing returns apply only to the short run;diseconomies of scale apply only in the long run.

Question 18

What is the difference between 'diminishing marginal returns' and 'diseconomies of scale'?

Accepted Answer

A) Both concepts explain why marginal cost increases after some point,but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
B) Both concepts explain why average total cost increases after some point,but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
C) Diminishing marginal returns,which applies only in the short run when at least one factor is fixed,explains why marginal cost increases,while diseconomies of scale,which applies in the long run when all factors are variable,explains why average cost increases. 
D) Diminishing marginal returns,which applies only in the long run when all factors are variable,explains why average variable cost increases,while diseconomies of scale,which applies in the short run when at least one factor is fixed,explains why average total cost increases. 
A) Both concepts explain why marginal cost increases after some point,but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
B) Both concepts explain why average total cost increases after some point,but diminishing marginal returns applies only in the short run when there is at least one fixed factor,while diseconomies of scale applies in the long run when all factors are variable. 
C) Diminishing marginal returns,which applies only in the short run when at least one factor is fixed,explains why marginal cost increases,while diseconomies of scale,which applies in the long run when all factors are variable,explains why average cost increases. 
D) Diminishing marginal returns,which applies only in the long run when all factors are variable,explains why average variable cost increases,while diseconomies of scale,which applies in the short run when at least one factor is fixed,explains why average total cost increases.

Question 19

What is an isocost line? What is the slope of an isocost line?

Accepted Answer

The isocost line shows all the combinati

Question 20

Which of the following equations is correct?

Accepted Answer

A) AVC - ATC = AFC 
B) AVC + ATC = AFC 
C) AFC + AVC = ATC 
D) ATC + AVC = AFC 
A) AVC - ATC = AFC 
B) AVC + ATC = AFC 
C) AFC + AVC = ATC 
D) ATC + AVC = AFC

Which of the following is a fixed cost?

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Figure 7-17 -Refer to Figure 7-17.A curve that connects points a,d and e is called

Table 7-7 Table 7-7 shows cost data for Lotus Lanterns,a producer of whimsical night lights. -Refer to Table 7-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

Average fixed costs of production

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

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

State the law of diminishing marginal returns.

The slope of an isocost line determines the marginal rate of substitution.

The average total cost of production

Which of the following is not a source of technological advancement for a producer?

When the marginal product of labour rises

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

What is the difference between 'diminishing marginal returns' and 'diseconomies of scale'?

What is an isocost line? What is the slope of an isocost line?

Which of the following equations is correct?

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

Which of the following is a fixed cost?

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Figure 7-17 -Refer to Figure 7-17.A curve that connects points a,d and e is called

Table 7-7 Table 7-7 shows cost data for Lotus Lanterns,a producer of whimsical night lights. -Refer to Table 7-7.What is the average variable cost per unit of production when the firm produces 90 lanterns?

Average fixed costs of production

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

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's

State the law of diminishing marginal returns.

The slope of an isocost line determines the marginal rate of substitution.

The average total cost of production

Which of the following is not a source of technological advancement for a producer?

When the marginal product of labour rises

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

What is the difference between 'diminishing marginal returns' and 'diseconomies of scale'?

What is an isocost line? What is the slope of an isocost line?

Which of the following equations is correct?

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