Question 1

If total costs are $50,000 when 1000 units are produced,and total costs are $50,100 when 1001 units are produced,we can conclude that

Accepted Answer

A) average variable costs are $100. 
B) average total costs are $100. 
C) average fixed costs are $100. 
D) marginal costs are $100. 
A) average variable costs are $100. 
B) average total costs are $100. 
C) average fixed costs are $100. 
D) marginal costs are $100.

Question 2

The long-run average cost curve

Accepted Answer

A) is always a downward sloping straight line. 
B) is a curve which is tangent to each member of a set of short-run average cost curves. 
C) is identical to the marginal cost curve. 
D) should always be horizontal. 
A) is always a downward sloping straight line. 
B) is a curve which is tangent to each member of a set of short-run average cost curves. 
C) is identical to the marginal cost curve. 
D) should always be horizontal.

Question 3

The law of diminishing marginal product shows the relationship

Accepted Answer

A) between accounting and economic profits. 
B) between short-run and long-run outputs of a firm. 
C) between inputs and outputs for a firm in the short run. 
D) between inputs and outputs for a firm in the long run. 
A) between accounting and economic profits. 
B) between short-run and long-run outputs of a firm. 
C) between inputs and outputs for a firm in the short run. 
D) between inputs and outputs for a firm in the long run.

Question 4

The law of diminishing marginal product is NOT responsible for the shape of

Accepted Answer

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

Question 5

The firm's short-run costs contain

Accepted Answer

A) only variable costs. 
B) only fixed costs. 
C) both variable and fixed costs. 
D) only opportunity costs. 
A) only variable costs. 
B) only fixed costs. 
C) both variable and fixed costs. 
D) only opportunity costs.

Question 6

As a firm increases the level of output that it produces,short-run average fixed cost

Accepted Answer

A) rises and then falls. 
B) remains constant since fixed costs are constant. 
C) decreases. 
D) decreases up to a particular level of output and then increases. 
A) rises and then falls. 
B) remains constant since fixed costs are constant. 
C) decreases. 
D) decreases up to a particular level of output and then increases.

Question 7

-Use the above figure.The TFC at output level 10 is

Accepted Answer

A) $10. 
B) $3. 
C) $2. 
D) $1. 
A) $10. 
B) $3. 
C) $2. 
D) $1.

Question 8

$$\begin{array} { l l l l l l l } 
\text { Q } & \text { TFC } & \text { TVC } & \text { TC } & \text { AFC } & \text { AVC } & \text { ATC } \
1 & & & & & & \
2 & & & & \$ 75 & \$ 25 & \
3 & & & & & \$ 40 & \
\hline
\end{array}$$
-Refer to the above table.What are total costs at an output of 2 units?

Accepted Answer

A) $50 
B) $100 
C) $150 
D) $200 
A) $50 
B) $100 
C) $150 
D) $200

Question 9

The distance between the TC and the TVC curve

Accepted Answer

A) is constant. 
B) decreases as output increases. 
C) increases as output increases. 
D) is the MC curve. 
A) is constant. 
B) decreases as output increases. 
C) increases as output increases. 
D) is the MC curve.

Question 10

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

Accepted Answer

A) $33.33 
B) $53.33 
C) $55 
D) $20 
A) $33.33 
B) $53.33 
C) $55 
D) $20

Question 11

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

Accepted Answer

A) the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B) the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C) long-run average total cost is lowest at that rate of output. 
D) total fixed costs are minimized at that rate of output. 
A) the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B) the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C) long-run average total cost is lowest at that rate of output. 
D) total fixed costs are minimized at that rate of output.

Question 12

When the marginal physical product is rising,

Accepted Answer

A) total cost is falling. 
B) average total cost is increasing. 
C) marginal cost is falling. 
D) marginal cost is rising. 
A) total cost is falling. 
B) average total cost is increasing. 
C) marginal cost is falling. 
D) marginal cost is rising.

Question 13

The time period during at least one input cannot be changed is the

Accepted Answer

A) production time. 
B) calendar year. 
C) long run. 
D) short run. 
A) production time. 
B) calendar year. 
C) long run. 
D) short run.

Question 14

The locus of points representing the minimum unit cost of producing any given rate of output is the

Accepted Answer

A) short-run average total cost curve. 
B) long-run marginal cost curve. 
C) short-run total cost curve. 
D) long-run average cost curve. 
A) short-run average total cost curve. 
B) long-run marginal cost curve. 
C) short-run total cost curve. 
D) long-run average cost curve.

Question 15

Suppose that one worker can produce 15 cookies,two workers can produce 35 cookies together,and three workers can produce 65 cookies together.What is the marginal product of the 3rd worker?

Accepted Answer

A) 21.67 cookies 
B) 65 cookies 
C) 30 cookies 
D) 35 cookies 
A) 21.67 cookies 
B) 65 cookies 
C) 30 cookies 
D) 35 cookies

Question 16

When long-run average costs decline as output increases,the firm is experiencing

Accepted Answer

A) negative returns to scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) economies of scale. 
A) negative returns to scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) economies of scale.

Question 17

In the short run,the additional output that results from hiring an additional unit of a variable input is the

Accepted Answer

A) marginal physical product. 
B) average product. 
C) average variable cost. 
D) marginal cost. 
A) marginal physical product. 
B) average product. 
C) average variable cost. 
D) marginal cost.

Question 18

At an output at which MC is greater than ATC

Accepted Answer

A) the ATC curve is downward sloping. 
B) the ATC curve is upward sloping. 
C) the AFC curve is upward sloping. 
D) the AVC curve is downward sloping. 
A) the ATC curve is downward sloping. 
B) the ATC curve is upward sloping. 
C) the AFC curve is upward sloping. 
D) the AVC curve is downward sloping.

Question 19

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

Accepted Answer

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

Question 20

As the quantity of labor increases while the amount of other inputs are held constant,marginal product of labor will

Accepted Answer

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

Exam 9: The Firm: Cost and Output Determination

If total costs are $50,000 when 1000 units are produced,and total costs are $50,100 when 1001 units are produced,we can conclude that

The long-run average cost curve

The law of diminishing marginal product shows the relationship

The law of diminishing marginal product is NOT responsible for the shape of

The firm's short-run costs contain

As a firm increases the level of output that it produces,short-run average fixed cost

-Use the above figure.The TFC at output level 10 is

Q TFC TVC TC AFC AVC ATC 1 2 \ 75 \ 25 3 \ 40 -Refer to the above table.What are total costs at an output of 2 units?

The distance between the TC and the TVC curve

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 3 units of output?

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

When the marginal physical product is rising,

The time period during at least one input cannot be changed is the

The locus of points representing the minimum unit cost of producing any given rate of output is the

Suppose that one worker can produce 15 cookies,two workers can produce 35 cookies together,and three workers can produce 65 cookies together.What is the marginal product of the 3rd worker?

When long-run average costs decline as output increases,the firm is experiencing

In the short run,the additional output that results from hiring an additional unit of a variable input is the

At an output at which MC is greater than ATC

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 is the average product of labor maximized?

As the quantity of labor increases while the amount of other inputs are held constant,marginal product of labor will

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