Question 1

All of the following are most likely to be fixed costs EXCEPT the cost relating to

Accepted Answer

A) insurance. 
B) taxes. 
C) rent. 
D) packaging. 
A) insurance. 
B) taxes. 
C) rent. 
D) packaging.

Question 2

In the table below,what are the marginal costs of the fourth unit of output? $$\begin{array} { c c } 
\begin{array} { c } 
\text { Total } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Variable Cost }
\end{array} \
\hline 0 & \$ 0 \
1 & \$ 10,000 \
2 & \$ 20,000 \
3 & \$ 30,000 \
4 & \$ 40,000 \
\hline
\end{array}$$

Accepted Answer

A) $10,000 
B) $20,000 
C) $30,000 
D) $40,000 
A) $10,000 
B) $20,000 
C) $30,000 
D) $40,000

Question 3

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Average Physical } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Marginal Physical } \
\text { Product }
\end{array} \
\hline 0 & 0 & & \
1 & 3 & & \
2 & 7 & & \
3 & 12 & & \
4 & 16 & & \
5 & 18 & & \
6 & 18 & & \
\hline
\end{array}$$
-In the above table,the law of diminishing marginal product sets in after the ________ worker.

Accepted Answer

A) first 
B) sixth 
C) third 
D) fourth 
A) first 
B) sixth 
C) third 
D) fourth

Question 4

Which of the following statements is not true about the production function?

Accepted Answer

A) It gives the maximum output that can be obtained for a given level of inputs. 
B) A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C) The production function depends upon the level of technology available to the firm. 
D) It specifies the cost of inputs necessary to produce a certain level of outputs. 
A) It gives the maximum output that can be obtained for a given level of inputs. 
B) A new production function does not have to be developed when there is technical progress since technology is included in the function. 
C) The production function depends upon the level of technology available to the firm. 
D) It specifies the cost of inputs necessary to produce a certain level of outputs.

Question 5

Which one of the following statements is FALSE?

Accepted Answer

A) TC = TFC + TVC 
B) ATC = AFC + AVC 
C) AFC = TFC divided by Q 
D) MC = TC divided by Q 
A) TC = TFC + TVC 
B) ATC = AFC + AVC 
C) AFC = TFC divided by Q 
D) MC = TC divided by Q

Question 6

-In the above figure,at an output level of Q1,total variable cost is

Accepted Answer

A) OF times Q1. 
B) OD times Q2. 
C) OF. 
D) OF minus DF. 
A) OF times Q1. 
B) OD times Q2. 
C) OF. 
D) OF minus DF.

Question 7

Use the information from the below table to answer following question(s). $$\begin{array} { c c } 
\begin{array} { c } 
\text { Input of } \
\text { Labor }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} \
\hline 0 & 0 \
1 & 20 \
2 & 50 \
3 & 80 \
4 & 105 \
5 & 125 \
6 & 140 \
7 & 150\\hline
\end{array}$$
-In the above table,the marginal product of the sixth worker is

Accepted Answer

A) 10. 
B) 25. 
C) 20. 
D) 15. 
A) 10. 
B) 25. 
C) 20. 
D) 15.

Question 8

The change in total costs due to a one-unit change in the production rate is

Accepted Answer

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

Question 9

Marginal physical product of labor equals

Accepted Answer

A) the wage. 
B) the wage divided by marginal cost. 
C) marginal cost divided by the wage. 
D) marginal cost times the wage. 
A) the wage. 
B) the wage divided by marginal cost. 
C) marginal cost divided by the wage. 
D) marginal cost times the wage.

Question 10

If the price of labor is constant and a firm experiences diminishing marginal product,then its

Accepted Answer

A) marginal costs increase. 
B) marginal costs decrease. 
C) fixed costs increase. 
D) total costs decrease. 
A) marginal costs increase. 
B) marginal costs decrease. 
C) fixed costs increase. 
D) total costs decrease.

Question 11

The law of diminishing marginal product states that

Accepted Answer

A) output will continue to increase indefinitely if more variable factors of production are added to an existing stock of fixed factors. 
B) successive equal-sized increases in labor,when added to fixed factors of production,will result in smaller increases of output. 
C) a doubling all inputs will double output. 
D) variable costs tend to decrease with output. 
A) output will continue to increase indefinitely if more variable factors of production are added to an existing stock of fixed factors. 
B) successive equal-sized increases in labor,when added to fixed factors of production,will result in smaller increases of output. 
C) a doubling all inputs will double output. 
D) variable costs tend to decrease with output.

Question 12

-Refer to the above figure.Economies of scale exist

Accepted Answer

A) over the entire range of output. 
B) from output $\mathrm { Q } _ { 2 }$ to
$\mathrm { Q } _ { 5 }$ . 
C) up to output $\mathrm { Q } _ { 2 }$ . 
D) after output $\mathrm { Q } _ { 5 }$ . 
A) over the entire range of output. 
B) from output $\mathrm { Q } _ { 2 }$ to
$\mathrm { Q } _ { 5 }$ . 
C) up to output $\mathrm { Q } _ { 2 }$ . 
D) after output $\mathrm { Q } _ { 5 }$ .

Question 13

During the short run,a firm cannot

Accepted Answer

A) increase its use of labor. 
B) change its plant size. 
C) purchase more raw materials. 
D) change its variable costs. 
A) increase its use of labor. 
B) change its plant size. 
C) purchase more raw materials. 
D) change its variable costs.

Question 14

The planning horizon is the

Accepted Answer

A) long run. 
B) short run. 
C) point where production begins. 
D) point where diminishing marginal product starts. 
A) long run. 
B) short run. 
C) point where production begins. 
D) point where diminishing marginal product starts.

Question 15

What is the most important determinant of the firm's short-run cost curves?

Accepted Answer

The short-run cost curves owe their shap

Question 16

What is the law of diminishing marginal product?

Accepted Answer

The law of diminishing marginal product

Question 17

The difference between the short run and the long run is

Accepted Answer

A) economic profits are negative in the short run and positive in the long run. 
B) economic and accounting profits are not equal in the short run but are equal in the long run. 
C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D) the short run is a period less than a year while the long run is a period greater than a year. 
A) economic profits are negative in the short run and positive in the long run. 
B) economic and accounting profits are not equal in the short run but are equal in the long run. 
C) that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D) the short run is a period less than a year while the long run is a period greater than a year.

Question 18

Phil found that as he continued to crowd laborers into his hot dog stand,the extra output he was receiving from each additional laborer was beginning to fall off.This is an example of the

Accepted Answer

A) law of increasing opportunities. 
B) law of demand. 
C) law of diminishing marginal utility. 
D) law of diminishing product. 
A) law of increasing opportunities. 
B) law of demand. 
C) law of diminishing marginal utility. 
D) law of diminishing product.

Question 19

If the marginal product curve is intersecting the average product curve,we know that

Accepted Answer

A) the average variable cost curve is intersecting the average total cost curve. 
B) the marginal cost curve is intersecting the average fixed cost curve. 
C) the average total cost curve lies above the marginal cost curve. 
D) the marginal cost curve is intersecting the average total cost curve. 
A) the average variable cost curve is intersecting the average total cost curve. 
B) the marginal cost curve is intersecting the average fixed cost curve. 
C) the average total cost curve lies above the marginal cost curve. 
D) the marginal cost curve is intersecting the average total cost curve.

Question 20

-Use the above figure.At an output equal to "Q" the average fixed cost for the firm will be the line segment

Accepted Answer

A) DE. 
B) AB. 
C) BE. 
D) CD. 
A) DE. 
B) AB. 
C) BE. 
D) CD.

Exam 9: The Firm: Cost and Output Determination

All of the following are most likely to be fixed costs EXCEPT the cost relating to

In the table below,what are the marginal costs of the fourth unit of output? Total Output Total Variable Cost 0 \ 0 1 \ 10,000 2 \ 20,000 3 \ 30,000 4 \ 40,000

Quantity of Workers Total Product Average Physical Product Marginal Physical Product 0 0 1 3 2 7 3 12 4 16 5 18 6 18 -In the above table,the law of diminishing marginal product sets in after the ________ worker.

Which of the following statements is not true about the production function?

Which one of the following statements is FALSE?

-In the above figure,at an output level of Q1,total variable cost is

Use the information from the below table to answer following question(s). Input of Labor Total Product 0 0 1 20 2 50 3 80 4 105 5 125 6 140 7 150 -In the above table,the marginal product of the sixth worker is

The change in total costs due to a one-unit change in the production rate is

Marginal physical product of labor equals

If the price of labor is constant and a firm experiences diminishing marginal product,then its

The law of diminishing marginal product states that

-Refer to the above figure.Economies of scale exist

During the short run,a firm cannot

The planning horizon is the

What is the most important determinant of the firm's short-run cost curves?

What is the law of diminishing marginal product?

The difference between the short run and the long run is

Phil found that as he continued to crowd laborers into his hot dog stand,the extra output he was receiving from each additional laborer was beginning to fall off.This is an example of the

If the marginal product curve is intersecting the average product curve,we know that

-Use the above figure.At an output equal to "Q" the average fixed cost for the firm will be the line segment

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

Filters

-In the above figure,at an output level of Q₁,total variable cost is