Question 1

Accounting costs exclude implicit costs.

Accepted Answer

A) True 
 B)False

Question 2

Figure 7-1  
-Refer to Figure 7-1.The marginal product of the 7th worker is

Accepted Answer

A) 66. 
B) 9.43. 
C) 2. 
D) -2. 
A) 66. 
B) 9.43. 
C) 2. 
D) -2.

Question 3

A firm's cost of production is determined by all of the following except

Accepted Answer

A) the technology used to produce its output. 
B) the productivity of its workers. 
C) the cost of raw material used in production. 
D) the amount of corporate taxes it must pay on its profit. 
A) the technology used to produce its output. 
B) the productivity of its workers. 
C) the cost of raw material used in production. 
D) the amount of corporate taxes it must pay on its profit.

Question 4

In the short run,why does a production function eventually display diminishing returns to labour?

Accepted Answer

A) As the number of workers increases,it becomes difficult to monitor them. 
B) As a firm hires more workers,the skills and the work ethic of the additional workers will eventually decline. 
C) As the number of workers increases,eventually the gains from the division of labour and specialisation are used up. 
D) The opportunity cost of hiring additional workers must eventually rise. 
A) As the number of workers increases,it becomes difficult to monitor them. 
B) As a firm hires more workers,the skills and the work ethic of the additional workers will eventually decline. 
C) As the number of workers increases,eventually the gains from the division of labour and specialisation are used up. 
D) The opportunity cost of hiring additional workers must eventually rise.

Question 5

The minimum efficient scale is

Accepted Answer

A) the level of output where diminishing returns have not set in yet. 
B) the plant size that yields the most profit. 
C) the level of operation where long-run average costs are lowest. 
D) the smallest output level where the firm finally reaches productive efficiency. 
A) the level of output where diminishing returns have not set in yet. 
B) the plant size that yields the most profit. 
C) the level of operation where long-run average costs are lowest. 
D) the smallest output level where the firm finally reaches productive efficiency.

Question 6

As output increases,the distance between average total cost and average variable cost increases.

Accepted Answer

A) True 
 B)False

Question 7

Figure 7-15  
-Refer to Figure 7-15.The figure above illustrates a series of isoquants.Which of the following statements is true?

Accepted Answer

A) Points x,z,and y all represent the same output. 
B) Points z and y represent the same output;this output is produced with more capital at z than at y. 
C) Point x and y represent the same output,but the cost of production at y is greater than the cost of production at x. 
D) Point z represents a greater output than point x or point y. 
A) Points x,z,and y all represent the same output. 
B) Points z and y represent the same output;this output is produced with more capital at z than at y. 
C) Point x and y represent the same output,but the cost of production at y is greater than the cost of production at x. 
D) Point z represents a greater output than point x or point y.

Question 8

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced. 
A) all economies of scale are exhausted. 
B) diminishing returns affect average total cost. 
C) the firm's long-run average total cost starts falling. 
D) the maximum output is produced.

Question 9

Figure 7-12  
-Refer to Figure 7-12.The movement from isoquant T to isoquant U depicts

Accepted Answer

A) a change in preferences with regards to input usage. 
B) an increase in the cost of production. 
C) an increase in output. 
D) an increase in labour usage holding capital and output constant. 
A) a change in preferences with regards to input usage. 
B) an increase in the cost of production. 
C) an increase in output. 
D) an increase in labour usage holding capital and output constant.

Question 10

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Maria's total cost per day when she does not produce any yiros and does not hire any workers?

Accepted Answer

A) $0 
B) $2 
C) $60 
D) $120 
A) $0 
B) $2 
C) $60 
D) $120

Question 11

An isoquant shows

Accepted Answer

A) the combinations of two goods that yield the same total satisfaction. 
B) the combinations of two inputs that yield the same total product. 
C) the combinations of two inputs that cost the same total quantity of money. 
D) the combination of two goods that cost the same amount of money. 
A) the combinations of two goods that yield the same total satisfaction. 
B) the combinations of two inputs that yield the same total product. 
C) the combinations of two inputs that cost the same total quantity of money. 
D) the combination of two goods that cost the same amount of money.

Question 12

If a firm experiences diminishing returns,its marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true?

Accepted Answer

A) The average product of labour is at its maximum when the average product of labour equals the marginal product of labour. 
B) The average product of labour is at its minimum when the average product of labour equals the marginal product of labour. 
C) The average product of labour tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labour is greater than the average product of labour the average product of labour must be decreasing. 
A) The average product of labour is at its maximum when the average product of labour equals the marginal product of labour. 
B) The average product of labour is at its minimum when the average product of labour equals the marginal product of labour. 
C) The average product of labour tells us how much output changes as the quantity of workers hired changes. 
D) Whenever the marginal product of labour is greater than the average product of labour the average product of labour must be decreasing.

Question 14

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

Accepted Answer

A) morning and evening. 
B) 6 months or less;6 months to 1 year;more than 1 year. 
C) a fixed period and a variable period. 
D) the short run and the long run. 
A) morning and evening. 
B) 6 months or less;6 months to 1 year;more than 1 year. 
C) a fixed period and a variable period. 
D) the short run and the long run.

Question 15

Figure 7-17  
-Refer to Figure 7-17.Starting from point e,a movement along the isocost to point f

Accepted Answer

A) decreases the total cost of production but not output. 
B) increases the total cost of production and decreases output. 
C) decreases both the total cost of production and output. 
D) decreases output but not the total cost of production. 
A) decreases the total cost of production but not output. 
B) increases the total cost of production and decreases output. 
C) decreases both the total cost of production and output. 
D) decreases output but not the total cost of production.

Question 16

If the marginal product of labour is decreasing,then marginal cost of production must be rising.

Accepted Answer

A) True 
 B)False

Question 17

What are economies of scale? What are diseconomies of scale?

Accepted Answer

Economies of scale occur when

Question 18

The marginal product of labour is defined as

Accepted Answer

A) the change in total revenue that results when an additional unit of a labour is hired. 
B) the additional labour required to produce one more unit of output. 
C) the additional labour cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker. 
A) the change in total revenue that results when an additional unit of a labour is hired. 
B) the additional labour required to produce one more unit of output. 
C) the additional labour cost of producing one more unit of output. 
D) the change in output that a firm produces as a result of hiring one more worker.

Question 19

Adam spent $10 000 on new equipment for his small business,'Adam's Fitness Studio.' Membership at his fitness center is very low and at this rate,Adam needs an additional $12 000 per year to keep his studio open.Which of the following is true?

Accepted Answer

A) The fixed cost of running the studio is $22 000. 
B) The variable cost of running the studio is $22 000. 
C) The $10 000 Adam spent on equipment is a fixed cost of business,and the $12 000 he'll need to continue operations is a variable cost. 
D) The $10 000 Adam spent on equipment is the total cost of starting the business,and the $12 000 he'll need to continue operations is a marginal cost. 
A) The fixed cost of running the studio is $22 000. 
B) The variable cost of running the studio is $22 000. 
C) The $10 000 Adam spent on equipment is a fixed cost of business,and the $12 000 he'll need to continue operations is a variable cost. 
D) The $10 000 Adam spent on equipment is the total cost of starting the business,and the $12 000 he'll need to continue operations is a marginal cost.

Question 20

Figure 7-16  
-Refer to Figure 7-16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Accepted Answer

A) point a to point b 
B) point a to point c 
C) point b to point c 
D) point b to point d 
A) point a to point b 
B) point a to point c 
C) point b to point c 
D) point b to point d

Accounting costs exclude implicit costs.

Figure 7-1 -Refer to Figure 7-1.The marginal product of the 7th worker is

A firm's cost of production is determined by all of the following except

In the short run,why does a production function eventually display diminishing returns to labour?

The minimum efficient scale is

As output increases,the distance between average total cost and average variable cost increases.

Figure 7-15 -Refer to Figure 7-15.The figure above illustrates a series of isoquants.Which of the following statements is true?

Minimum efficient scale is defined as the level of output at which

Figure 7-12 -Refer to Figure 7-12.The movement from isoquant T to isoquant U depicts

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Maria's total cost per day when she does not produce any yiros and does not hire any workers?

An isoquant shows

If a firm experiences diminishing returns,its marginal product must be negative.

Which of the following statements is true?

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

Figure 7-17 -Refer to Figure 7-17.Starting from point e,a movement along the isocost to point f

If the marginal product of labour is decreasing,then marginal cost of production must be rising.

What are economies of scale? What are diseconomies of scale?

The marginal product of labour is defined as

Adam spent $10 000 on new equipment for his small business,'Adam's Fitness Studio.' Membership at his fitness center is very low and at this rate,Adam needs an additional $12 000 per year to keep his studio open.Which of the following is true?

Figure 7-16 -Refer to Figure 7-16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

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

Accounting costs exclude implicit costs.

Figure 7-1 -Refer to Figure 7-1.The marginal product of the 7th worker is

A firm's cost of production is determined by all of the following except

In the short run,why does a production function eventually display diminishing returns to labour?

The minimum efficient scale is

As output increases,the distance between average total cost and average variable cost increases.

Figure 7-15 -Refer to Figure 7-15.The figure above illustrates a series of isoquants.Which of the following statements is true?

Minimum efficient scale is defined as the level of output at which

Figure 7-12 -Refer to Figure 7-12.The movement from isoquant T to isoquant U depicts

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc. )to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Maria's total cost per day when she does not produce any yiros and does not hire any workers?

An isoquant shows

If a firm experiences diminishing returns,its marginal product must be negative.

Which of the following statements is true?

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

Figure 7-17 -Refer to Figure 7-17.Starting from point e,a movement along the isocost to point f

If the marginal product of labour is decreasing,then marginal cost of production must be rising.

What are economies of scale? What are diseconomies of scale?

The marginal product of labour is defined as

Adam spent $10 000 on new equipment for his small business,'Adam's Fitness Studio.' Membership at his fitness center is very low and at this rate,Adam needs an additional $12 000 per year to keep his studio open.Which of the following is true?

Figure 7-16 -Refer to Figure 7-16.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

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