Question 1

A negative value for the marginal physical product would indicate that

Accepted Answer

A) the company has not yet reached the point of saturation. 
B) total output increased by a significant amount. 
C) total output decreased when the extra unit of the variable input was added. 
D) total output increased,but the increase was very small. 
A) the company has not yet reached the point of saturation. 
B) total output increased by a significant amount. 
C) total output decreased when the extra unit of the variable input was added. 
D) total output increased,but the increase was very small.

Question 2

When Super Stuff Corporation produces 5,000 units,total costs equal $150,000 and total variable costs equal $75,000.At this level of output,what is Super Stuff's average fixed cost?

Accepted Answer

A) $75,000 
B) $30 
C) $225,000 
D) $15 
A) $75,000 
B) $30 
C) $225,000 
D) $15

Question 3

The marginal cost curve intersects

Accepted Answer

A) the average fixed cost curve at its minimum. 
B) the average total cost curve at its maximum. 
C) the minimum of the average fixed cost,average variable cost and the average total cost curves. 
D) the minimum of the average variable cost and average total cost curves. 
A) the average fixed cost curve at its minimum. 
B) the average total cost curve at its maximum. 
C) the minimum of the average fixed cost,average variable cost and the average total cost curves. 
D) the minimum of the average variable cost and average total cost curves.

Question 4

-In the above figure,the long-run cost curve between points C and D illustrates

Accepted Answer

A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale. 
A) diseconomies of scale. 
B) diminishing marginal product. 
C) constant returns to scale. 
D) economies of scale.

Question 5

As the amount of a variable input increases,while all other inputs are held constant,total product will

Accepted Answer

A) always increase. 
B) always decrease. 
C) initially decrease and then increase. 
D) initially increase and then decrease. 
A) always increase. 
B) always decrease. 
C) initially decrease and then increase. 
D) initially increase and then decrease.

Question 6

-Notice the costs of production for a firm in the table below.What are the total costs for outputs of 7 units and 8 units respectively? $$\begin{array} { c c c } 
\begin{array} { c } 
\text { Total Output } \
\text { (Q/day) }
\end{array} & \begin{array} { c } 
\text { Total Fixed Costs } \
\text { (TFC) }
\end{array} & \begin{array} { c } 
\text { Total Variable Costs } \
\text { (TVC) }
\end{array} \
\hline 0 & \$ 10 & \$ 0 \
1 & \$ 10 & \$ 3.50 \
2 & \$ 10 & \$ 4.75 \
3 & \$ 10 & \$ 5.80 \
4 & \$ 10 & \$ 6.40 \
5 & \$ 10 & \$ 7.25 \
6 & \$ 10 & \$ 8.32 \
7 & \$ 10 & \$ 9.33 \
8 & \$ 10 & \$ 10.12
\end{array}$$

Accepted Answer

A) $20.12; $19.33 
B) $17.25; $18.32 
C) $19.33; $20.12 
D) $9.33; $10.12 
A) $20.12; $19.33 
B) $17.25; $18.32 
C) $19.33; $20.12 
D) $9.33; $10.12

Question 7

Which of the following is a long-run adjustment?

Accepted Answer

A) A restaurant hires a new chef. 
B) A company builds a new manufacturing plant. 
C) A bank hires a new CEO. 
D) A company hires ten new management trainees. 
A) A restaurant hires a new chef. 
B) A company builds a new manufacturing plant. 
C) A bank hires a new CEO. 
D) A company hires ten new management trainees.

Question 8

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

Accepted Answer

Disagree.It is true that the average var

Question 9

-In the above figure,for any output level less than Q2,this firm experiences

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant economies of scale. 
D) decreasing long run average costs. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant economies of scale. 
D) decreasing long run average costs.

Question 10

Fixed costs include all but

Accepted Answer

A) a normal rate of return on investment. 
B) temporary labor. 
C) property tax on the existing buildings. 
D) machines that have been producing output. 
A) a normal rate of return on investment. 
B) temporary labor. 
C) property tax on the existing buildings. 
D) machines that have been producing output.

Question 11

Production

Accepted Answer

A) is a process by which resources are produced. 
B) is a process by which resources are transferred into goods and services. 
C) only applies to manufacturing of goods. 
D) is carried on by corporations,but not by sole proprietorships. 
A) is a process by which resources are produced. 
B) is a process by which resources are transferred into goods and services. 
C) only applies to manufacturing of goods. 
D) is carried on by corporations,but not by sole proprietorships.

Question 12

$$\begin{array} { c c c r } 
\begin{array} { c } 
\text { Quantity of } \
\text { Labor }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Product }
\end{array} & \begin{array} { r } 
\text { Marginal } \
\text { Product }
\end{array} \
\hline 1 & 22 & 22 & 22 \
2 & 52 & 26 & 30 \
3 & 81 & 27 & 29 \
4 & 100 & 25 & 19 \
5 & 115 & 23 & 15 \
6 & 126 & 21 & 11 \
\hline
\end{array}$$
-Refer to the above table.At what quantity of labor does the law of diminishing marginal product set in?

Accepted Answer

A) After 1 unit. 
B) After 2 units. 
C) After 3 units. 
D) After 6 units. 
A) After 1 unit. 
B) After 2 units. 
C) After 3 units. 
D) After 6 units.

Question 13

The total cost of the firm

Accepted Answer

A) includes explicit costs but excludes implicit costs. 
B) includes implicit costs but excludes explicit costs. 
C) includes implicit and explicit costs. 
D) includes implicit and explicit costs but excludes a normal rate of return on investment. 
A) includes explicit costs but excludes implicit costs. 
B) includes implicit costs but excludes explicit costs. 
C) includes implicit and explicit costs. 
D) includes implicit and explicit costs but excludes a normal rate of return on investment.

Question 14

When a firm is at its minimum efficient scale of operation,it produces the

Accepted Answer

A) maximum rate of output at which long-run average cost is minimized. 
B) minimum rate of output at which long-run average cost is minimized. 
C) maximum rate of output consistent with lowest long-run marginal cost. 
D) minimum rate of output consistent with lowest long-run marginal cost. 
A) maximum rate of output at which long-run average cost is minimized. 
B) minimum rate of output at which long-run average cost is minimized. 
C) maximum rate of output consistent with lowest long-run marginal cost. 
D) minimum rate of output consistent with lowest long-run marginal cost.

Question 15

The concept of the production function implies that a firm using resources inefficiently will

Accepted Answer

A) obtain less output than the theoretical production function shows. 
B) obtain more output than the theoretical production function shows. 
C) obtain exactly the amount that the theoretical production function shows. 
D) not be subject to diminishing marginal product. 
A) obtain less output than the theoretical production function shows. 
B) obtain more output than the theoretical production function shows. 
C) obtain exactly the amount that the theoretical production function shows. 
D) not be subject to diminishing marginal product.

Question 16

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

Accepted Answer

A) is zero. 
B) is at its minimum. 
C) is at its maximum. 
D) has a vertical slope. 
A) is zero. 
B) is at its minimum. 
C) is at its maximum. 
D) has a vertical slope.

Question 17

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Average Physical } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Marginal Physical } \
\text { Product }
\end{array} \
\hline 0 & 0 & & \
1 & 3 & & \
2 & 7 & & \
3 & 12 & & \
4 & 16 & & \
5 & 18 & & \
6 & 18 & & \
\hline
\end{array}$$
-In the above table,the average physical product for 5 workers and the marginal physical product of the 5th worker is

Accepted Answer

A) 3.6; 2. 
B) 0.72; 1. 
C) 2; 0.6. 
D) 16; 2. 
A) 3.6; 2. 
B) 0.72; 1. 
C) 2; 0.6. 
D) 16; 2.

Question 18

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

Accepted Answer

A) $30 
B) $60 
C) $55 
D) $20 
A) $30 
B) $60 
C) $55 
D) $20

Question 19

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

Accepted Answer

The short run is the time period when at

Question 20

If marginal product is zero,we know that

Accepted Answer

A) total product is also zero. 
B) average product is also zero. 
C) total output is maximized. 
D) average product is constant. 
A) total product is also zero. 
B) average product is also zero. 
C) total output is maximized. 
D) average product is constant.

A negative value for the marginal physical product would indicate that

When Super Stuff Corporation produces 5,000 units,total costs equal $150,000 and total variable costs equal $75,000.At this level of output,what is Super Stuff's average fixed cost?

The marginal cost curve intersects

-In the above figure,the long-run cost curve between points C and D illustrates

As the amount of a variable input increases,while all other inputs are held constant,total product will

Which of the following is a long-run adjustment?

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

-In the above figure,for any output level less than Q₂,this firm experiences

Fixed costs include all but

Production

Quantity of Labor Total Product Average Product Marginal Product 1 22 22 22 2 52 26 30 3 81 27 29 4 100 25 19 5 115 23 15 6 126 21 11 -Refer to the above table.At what quantity of labor does the law of diminishing marginal product set in?

The total cost of the firm

When a firm is at its minimum efficient scale of operation,it produces the

The concept of the production function implies that a firm using resources inefficiently will

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

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 average physical product for 5 workers and the marginal physical product of the 5th worker 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 4th unit of output?

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

If marginal product is zero,we know that

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

Exam 9: The Firm: Cost and Output Determination

A negative value for the marginal physical product would indicate that

When Super Stuff Corporation produces 5,000 units,total costs equal $150,000 and total variable costs equal $75,000.At this level of output,what is Super Stuff's average fixed cost?

The marginal cost curve intersects

-In the above figure,the long-run cost curve between points C and D illustrates

As the amount of a variable input increases,while all other inputs are held constant,total product will

Which of the following is a long-run adjustment?

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

-In the above figure,for any output level less than Q2,this firm experiences

Fixed costs include all but

Production

Quantity of Labor Total Product Average Product Marginal Product 1 22 22 22 2 52 26 30 3 81 27 29 4 100 25 19 5 115 23 15 6 126 21 11 -Refer to the above table.At what quantity of labor does the law of diminishing marginal product set in?

The total cost of the firm

When a firm is at its minimum efficient scale of operation,it produces the

The concept of the production function implies that a firm using resources inefficiently will

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

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 average physical product for 5 workers and the marginal physical product of the 5th worker 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 4th unit of output?

What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?

If marginal product is zero,we know that

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,for any output level less than Q₂,this firm experiences