Question 1

When the minimum efficient scale occurs at a high level of industry output

Accepted Answer

A) the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B) there will only be a few firms in the industry. 
C) the government will have to take over the production of the good since it will be unprofitable for firms. 
D) there will be a lot of firms in this industry. 
A) the firms in the industry will be producing in the diseconomies of scale portion of the curve. 
B) there will only be a few firms in the industry. 
C) the government will have to take over the production of the good since it will be unprofitable for firms. 
D) there will be a lot of firms in this industry.

Question 2

The relationship Q = f(K,L)is an example of a

Accepted Answer

A) cost function. 
B) production function. 
C) demand equation. 
D) profit equation. 
A) cost function. 
B) production function. 
C) demand equation. 
D) profit equation.

Question 3

-Use the above figure.The ATC at output 5 is

Accepted Answer

A) $25.00. 
B) $2.00. 
C) $3.00. 
D) $5.00. 
A) $25.00. 
B) $2.00. 
C) $3.00. 
D) $5.00.

Question 4

$$\begin{array} { c c c c c c c } 
\text { Output } & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Costs }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Costs }
\end{array} \
\hline 0 & & \$ 0 & \$ 100 & & & \
1 & & 30 & & & & \
2 & & 50 & & & & \
3 & & 60 & & & & \
4 & & 120 & & & & \
5 & & 200 & & & & \
\hline
\end{array}$$
-In the above table,what is the marginal cost to produce the 5th unit of output?

Accepted Answer

A) $80 
B) $60 
C) $55 
D) $20 
A) $80 
B) $60 
C) $55 
D) $20

Question 5

If four laborers were hired and we discovered that we could produce 88 units of production,what is the average physical product of labor?

Accepted Answer

A) 44 
B) 352 
C) 11 
D) 22 
A) 44 
B) 352 
C) 11 
D) 22

Question 6

The long run is

Accepted Answer

A) over one year. 
B) over five years. 
C) when all factors of production are fixed. 
D) the time period in which all factors of production can be varied. 
A) over one year. 
B) over five years. 
C) when all factors of production are fixed. 
D) the time period in which all factors of production can be varied.

Question 7

$$\begin{array} { l c r l } 
\text { Q } & \text { TFC } & \text { TVC } & \text { TC } \
\hline 0 & \$ 90 & \$ 0 & \$ 90 \
1 & 90 & 25 & 115 \
2 & 90 & 32 & 122 \
3 & 90 & 42 & 132 \
4 & 90 & 64 & 154 \
5 & 90 & 95 & 185
\end{array}$$
-Refer to the above table.At an output of 2 units,average total costs are

Accepted Answer

A) $61. 
B) $122. 
C) $16. 
D) $45. 
A) $61. 
B) $122. 
C) $16. 
D) $45.

Question 8

-Use the above figure.The AVC at output 5 is

Accepted Answer

A) $35.00. 
B) $2.00. 
C) $3.00. 
D) $5.00. 
A) $35.00. 
B) $2.00. 
C) $3.00. 
D) $5.00.

Question 9

The time frame in which all factors of production can vary is

Accepted Answer

A) the short run. 
B) the intermediate run. 
C) the long run. 
D) indeterminate. 
A) the short run. 
B) the intermediate run. 
C) the long run. 
D) indeterminate.

Question 10

$$\begin{array}{l}
\begin{array} {lll } 
\text {Quantity of}&\text {Total}\
Labor & Product \
\hline 1 & 20 \
2 & 46 \
3 & 63 \
4 & 72\\hline
\end{array}
\end{array}$$
-Refer to the above table.When the quantity of labor equals 4,what does the average product equal?

Accepted Answer

A) 9 
B) 18 
C) 72 
D) 216 
A) 9 
B) 18 
C) 72 
D) 216

Question 11

Which equation is used by a manager when considering total cost?

Accepted Answer

A) total costs (T
C) = consumption (
C) + investment (I)+ government (G) 
B) total costs (T
C) = average fixed costs (AF
C) + number of workers 
C) total costs (T
C) = average total costs (AT
C)  
D) total costs (T
C) = total fixed costs (TF
C) + total variable costs (TV
C)  
A) total costs (T
C) = consumption (
C) + investment (I)+ government (G) 
B) total costs (T
C) = average fixed costs (AF
C) + number of workers 
C) total costs (T
C) = average total costs (AT
C)  
D) total costs (T
C) = total fixed costs (TF
C) + total variable costs (TV
C)

Question 12

Which of the following is NOT a reason why a firm may experience economies of scale?

Accepted Answer

A) Productive specialization 
B) Dimensional factors 
C) Improved productive equipment 
D) Increased levels of management 
A) Productive specialization 
B) Dimensional factors 
C) Improved productive equipment 
D) Increased levels of management

Question 13

Which of the following statements is correct?

Accepted Answer

A) Average variable costs always exceed average total costs. 
B) Average fixed costs are constant. 
C) Average variable cost reaches its minimum when average product equals its maximum. 
D) Average fixed costs are always less than average variable costs. 
A) Average variable costs always exceed average total costs. 
B) Average fixed costs are constant. 
C) Average variable cost reaches its minimum when average product equals its maximum. 
D) Average fixed costs are always less than average variable costs.

Question 14

$$\begin{array} { c c } 
\text { Total Output } & \text { Total Costs } \
\hline 0 & \$ 10 \
1 & 18 \
2 & 21 \
3 & 23 \
4 & 24 \
5 & 26 \
6 & 29 \
7 & 33 \
8 & 38 \
9 & 44 \
10 & 51
\end{array}$$
-In the above table,the marginal cost of the seventh unit is

Accepted Answer

A) $4.00. 
B) $5.00. 
C) $3.00. 
D) $33.00. 
A) $4.00. 
B) $5.00. 
C) $3.00. 
D) $33.00.

Question 15

The short run is

Accepted Answer

A) a year or less. 
B) up to three years. 
C) the period of time in which the firm can vary its rate of output. 
D) the period of time in which the firm cannot change its use of at least one input. 
A) a year or less. 
B) up to three years. 
C) the period of time in which the firm can vary its rate of output. 
D) the period of time in which the firm cannot change its use of at least one input.

Question 16

With a given plant size,an increase in output will NOT result in an increase in

Accepted Answer

A) total cost. 
B) average fixed cost. 
C) total fixed cost. 
D) average variable cost. 
A) total cost. 
B) average fixed cost. 
C) total fixed cost. 
D) average variable cost.

Question 17

Mr.James' company produces candy bars.Which is NOT a variable input for this firm?

Accepted Answer

A) Sugar 
B) Assembly line workers 
C) The big chocolate-stirring machines 
D) Packaging materials 
A) Sugar 
B) Assembly line workers 
C) The big chocolate-stirring machines 
D) Packaging materials

Question 18

Minimum efficient scale

Accepted Answer

A) is the point at which economies of scale begin for a particular firm. 
B) is the lowest rate of output per unit of time at which long-run average costs reach a minimum for a particular firm. 
C) applies only to firms with U-shaped long-run average cost curves. 
D) is the point at which diseconomies of scale begin for a particular firm. 
A) is the point at which economies of scale begin for a particular firm. 
B) is the lowest rate of output per unit of time at which long-run average costs reach a minimum for a particular firm. 
C) applies only to firms with U-shaped long-run average cost curves. 
D) is the point at which diseconomies of scale begin for a particular firm.

Question 19

$$\begin{array} { c c c c c c c } 
\text { Output } & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Costs }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Costs }
\end{array} \
\hline 0 & & \$ 0 & \$ 100 & & & \
1 & & 30 & & & & \
2 & & 50 & & & & \
3 & & 60 & & & & \
4 & & 120 & & & & \
5 & & 200 & & & & \
\hline
\end{array}$$
-In the above table,what is the average total cost to produce 5 units of output?

Accepted Answer

A) $80 
B) $55 
C) $40 
D) $60 
A) $80 
B) $55 
C) $40 
D) $60

Question 20

Which of the following activities is not included in the production process?

Accepted Answer

A) Determining the value of the goods 
B) Making the goods 
C) Packaging the goods 
D) Transporting the goods 
A) Determining the value of the goods 
B) Making the goods 
C) Packaging the goods 
D) Transporting the goods

Exam 9: The Firm: Cost and Output Determination

When the minimum efficient scale occurs at a high level of industry output

The relationship Q = f(K,L)is an example of a

-Use the above figure.The ATC at output 5 is

Output Fixed Costs Variable Costs Total Costs Average Total Costs Average Variable Costs Marginal Costs 0 \ 0 \ 100 1 30 2 50 3 60 4 120 5 200 -In the above table,what is the marginal cost to produce the 5th unit of output?

If four laborers were hired and we discovered that we could produce 88 units of production,what is the average physical product of labor?

The long run is

Q TFC TVC TC 0 \ 90 \ 0 \ 90 1 90 25 115 2 90 32 122 3 90 42 132 4 90 64 154 5 90 95 185 -Refer to the above table.At an output of 2 units,average total costs are

-Use the above figure.The AVC at output 5 is

The time frame in which all factors of production can vary is

Quantity of Total Labor Product 1 20 2 46 3 63 4 72 -Refer to the above table.When the quantity of labor equals 4,what does the average product equal?

Which equation is used by a manager when considering total cost?

Which of the following is NOT a reason why a firm may experience economies of scale?

Which of the following statements is correct?

Total Output Total Costs 0 \ 10 1 18 2 21 3 23 4 24 5 26 6 29 7 33 8 38 9 44 10 51 -In the above table,the marginal cost of the seventh unit is

The short run is

With a given plant size,an increase in output will NOT result in an increase in

Mr.James' company produces candy bars.Which is NOT a variable input for this firm?

Minimum efficient scale

Output Fixed Costs Variable Costs Total Costs Average Total Costs Average Variable Costs Marginal Costs 0 \ 0 \ 100 1 30 2 50 3 60 4 120 5 200 -In the above table,what is the average total cost to produce 5 units of output?

Which of the following activities is not included in the production process?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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