Question 1

Diseconomies of scale occur when

Accepted Answer

A) long-run average costs rise as a firm increases its output. 
B) long-run average costs fall as a firm expands its plant size. 
C) short-run average costs rise as a firm expands its plant size. 
D) long-run labour costs rise as a firm increases its output. 
A) long-run average costs rise as a firm increases its output. 
B) long-run average costs fall as a firm expands its plant size. 
C) short-run average costs rise as a firm expands its plant size. 
D) long-run labour costs rise as a firm increases its output.

Question 2

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.The minimum efficient scale of output is reached at what rate of output?

Accepted Answer

A) 10 000 workers 
B) 5000 picture frames 
C) 20 000 picture frames 
D) 10 000 picture frames 
A) 10 000 workers 
B) 5000 picture frames 
C) 20 000 picture frames 
D) 10 000 picture frames

Question 3

Assume that you observe the long-run average cost curve of a local Bookstores,a national chain.Starting from the point on the curve where output is zero and moving to the right,which of the following lists the behaviour of long-run average costs in the correct sequence (that is,which will be observed first,second,etc. )?

Accepted Answer

A) minimum efficient scale;economies of scale;constant returns to scale;diseconomies of scale 
B) economies of scale;constant returns to scale;diseconomies of scale;minimum efficient scale 
C) constant returns to scale;economies of scale;minimum efficient scale;diseconomies of scale 
D) economies of scale;minimum efficient scale;constant returns to scale;diseconomies of scale 
A) minimum efficient scale;economies of scale;constant returns to scale;diseconomies of scale 
B) economies of scale;constant returns to scale;diseconomies of scale;minimum efficient scale 
C) constant returns to scale;economies of scale;minimum efficient scale;diseconomies of scale 
D) economies of scale;minimum efficient scale;constant returns to scale;diseconomies of scale

Question 4

Marginal cost is calculated for a particular increase in output by

Accepted Answer

A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output. 
A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output.

Question 5

Fill in the missing values in the following table.Draw one graph showing how total output increases with the quantity of workers hired,and another graph showing the marginal product of labour and the average product of labour.

Accepted Answer

The answer of Fill in the missing values in the...

Question 6

Table 7-8
   Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data.
-Refer to Table 7-8.Elegant Settings experiences

Accepted Answer

A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400. 
A) economies of scale up to an output level of 400. 
B) diminishing returns up to an output level of 400. 
C) increasing returns beyond an output level of 400. 
D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400.

Question 7

Figure 7-2  
-Refer to Figure 7-2.The curve labeled 'F' is

Accepted Answer

A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve. 
A) the total product curve. 
B) the average product curve. 
C) the marginal product curve. 
D) the output supply curve.

Question 8

Is it possible for technological change to be negative? If so,give an example.

Accepted Answer

Technological change could be negative,f

Question 9

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Accepted Answer

A) The shape of the LRATC is affected by the law of diminishing returns. 
B) The SRATC,but not the LRATC,can be used by a firm's managers for planning. 
C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. 
A) The shape of the LRATC is affected by the law of diminishing returns. 
B) The SRATC,but not the LRATC,can be used by a firm's managers for planning. 
C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

Question 10

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the price of capital and labour remain constant.As a firm's expenditures for capital and labour increase,its isocost line

Accepted Answer

A) shifts out parallel to the original isocost line. 
B) shifts in parallel to the original isocost line. 
C) rotates outward on the Y-intercept. 
D) rotates outward on the X-intercept. 
A) shifts out parallel to the original isocost line. 
B) shifts in parallel to the original isocost line. 
C) rotates outward on the Y-intercept. 
D) rotates outward on the X-intercept.

Question 12

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

Accepted Answer

A) $65 
B) $50 
C) $15 
D) It is impossible to determine without additional information. 
A) $65 
B) $50 
C) $15 
D) It is impossible to determine without additional information.

Question 13

An avocado orchard employs five full-time workers.Currently,the average product of labour is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Accepted Answer

A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) less than the marginal product of labour. 
A) more than 120 pounds. 
B) less than 120 pounds. 
C) equal to 120 pounds. 
D) less than the marginal product of labour.

Question 14

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 15

The formula for total fixed cost is

Accepted Answer

A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC. 
A) TFC = TC + TVC. 
B) TFC = TVC - TC. 
C) TFC = TC/TVC. 
D) TFC = TC - TVC.

Question 16

Marginal cost is the

Accepted Answer

A) change in average cost when an additional unit of output is produced. 
B) additional output when total cost is increased by one dollar. 
C) additional cost of producing an additional unit of output. 
D) change in the price of inputs if a firm buys more inputs to produce an additional unit of output. 
A) change in average cost when an additional unit of output is produced. 
B) additional output when total cost is increased by one dollar. 
C) additional cost of producing an additional unit of output. 
D) change in the price of inputs if a firm buys more inputs to produce an additional unit of output.

Question 17

The marginal rate of technical substitution is

Accepted Answer

A) the rate at which a firm is able to substitute one input for another,while keeping total cost constant. 
B) the rate at which a firm is able to substitute one input for another,while keeping the level of output constant. 
C) the rate at which a firm is able to institute positive technological changes to its production process. 
D) the rate at which a firm is able to increase its output by replacing labour with technology. 
A) the rate at which a firm is able to substitute one input for another,while keeping total cost constant. 
B) the rate at which a firm is able to substitute one input for another,while keeping the level of output constant. 
C) the rate at which a firm is able to institute positive technological changes to its production process. 
D) the rate at which a firm is able to increase its output by replacing labour with technology.

Question 18

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

Accepted Answer

A) the marginal cost curve 
B) the average fixed cost curve 
C) the average total cost curve 
D) the average variable cost curve 
A) the marginal cost curve 
B) the average fixed cost curve 
C) the average total cost curve 
D) the average variable cost curve

Question 19

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

Accepted Answer

A) economies of scale 
B) diseconomies of scale 
C) higher average costs but lower total costs 
D) higher marginal costs but lower total costs 
A) economies of scale 
B) diseconomies of scale 
C) higher average costs but lower total costs 
D) higher marginal costs but lower total costs

Question 20

At the minimum efficient scale

Accepted Answer

A) all possible economies of scale have not been exhausted. 
B) the firm has achieved the lowest possible average cost of production. 
C) any increases in the scale of operation will encounter further economies of scale. 
D) marginal cost is at its minimum. 
A) all possible economies of scale have not been exhausted. 
B) the firm has achieved the lowest possible average cost of production. 
C) any increases in the scale of operation will encounter further economies of scale. 
D) marginal cost is at its minimum.

Diseconomies of scale occur when

Marginal cost is calculated for a particular increase in output by

Fill in the missing values in the following table.Draw one graph showing how total output increases with the quantity of workers hired,and another graph showing the marginal product of labour and the average product of labour.

Table 7-8 Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data. -Refer to Table 7-8.Elegant Settings experiences

Figure 7-2 -Refer to Figure 7-2.The curve labeled 'F' is

Is it possible for technological change to be negative? If so,give an example.

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

If average product is decreasing,then marginal product must be negative.

Suppose the price of capital and labour remain constant.As a firm's expenditures for capital and labour increase,its isocost line

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

An avocado orchard employs five full-time workers.Currently,the average product of labour is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

The formula for total fixed cost is

Marginal cost is the

The marginal rate of technical substitution is

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

At the minimum efficient scale

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

Diseconomies of scale occur when

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.The minimum efficient scale of output is reached at what rate of output?

Marginal cost is calculated for a particular increase in output by

Fill in the missing values in the following table.Draw one graph showing how total output increases with the quantity of workers hired,and another graph showing the marginal product of labour and the average product of labour.

Table 7-8 Elegant Settings manufactures stainless steel cutlery.Table 7-8 shows the company's cost data. -Refer to Table 7-8.Elegant Settings experiences

Figure 7-2 -Refer to Figure 7-2.The curve labeled 'F' is

Is it possible for technological change to be negative? If so,give an example.

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

If average product is decreasing,then marginal product must be negative.

Suppose the price of capital and labour remain constant.As a firm's expenditures for capital and labour increase,its isocost line

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35,what is the firm's average fixed cost at that level of output?

An avocado orchard employs five full-time workers.Currently,the average product of labour is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

The formula for total fixed cost is

Marginal cost is the

The marginal rate of technical substitution is

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,then the expansion would provide ________ to the airlines.

At the minimum efficient scale

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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