Question 1

Average physical product is calculated by dividing total product by the

Accepted Answer

A) amount of variable and fixed inputs employed. 
B) quantity of the variable input. 
C) quantity of the fixed input. 
D) production function. 
A) amount of variable and fixed inputs employed. 
B) quantity of the variable input. 
C) quantity of the fixed input. 
D) production function.

Question 2

Which of the following is correct?

Accepted Answer

A) AFC = TC/Q - TVC/Q 
B) AVC = TVC - AFC 
C) TC = AVC∗Q 
D) MC = TC - TVC 
A) AFC = TC/Q - TVC/Q 
B) AVC = TVC - AFC 
C) TC = AVC∗Q 
D) MC = TC - TVC

Question 3

The minimum possible short-run average costs are equal to long-run average costs when

Accepted Answer

A) the plant is producing at its short-run minimum point. 
B) short-run and long-run costs are declining. 
C) the long-run curve is at a minimum point. 
D) production is at any point on the LAC curve. 
A) the plant is producing at its short-run minimum point. 
B) short-run and long-run costs are declining. 
C) the long-run curve is at a minimum point. 
D) production is at any point on the LAC curve.

Question 4

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Labor }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Product }
\end{array} \
\hline 1 & & 320 & \
2 & & 335 & \
3 & & & 338 \
4 &&&320 \
\hline
\end{array}$$
-Refer to the above table.What does total product equal when 3 units of labor are used?

Accepted Answer

A) 336 
B) 1008 
C) 338 
D) 3 
A) 336 
B) 1008 
C) 338 
D) 3

Question 5

-Refer to the above figure.Marginal costs are represented by curve

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 6

A horizontal long-run average cost curve indicates

Accepted Answer

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

Question 7

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

Accepted Answer

A) marginal costs decrease. 
B) fixed costs increase. 
C) average variable cost increases. 
D) total costs decrease. 
A) marginal costs decrease. 
B) fixed costs increase. 
C) average variable cost increases. 
D) total costs decrease.

Question 8

What is the relationship between marginal cost and marginal physical product?

Accepted Answer

Assuming labor is the only variable inpu

Question 9

In a map showing short-run cost functions,one curve begins at the origin and rises as output expands.It is called the

Accepted Answer

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

Question 10

For a hotdog vendor,the hotdog stand represents his

Accepted Answer

A) fixed input. 
B) variable input. 
C) diseconomies of scale. 
D) none of the above. 
A) fixed input. 
B) variable input. 
C) diseconomies of scale. 
D) none of the above.

Question 11

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

Accepted Answer

A) 5. 
B) 4. 
C) 3. 
D) 12. 
A) 5. 
B) 4. 
C) 3. 
D) 12.

Question 12

Which of the following is correct?

Accepted Answer

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

Question 13

Which of the following statements is true?

Accepted Answer

A) If a firm is experiencing economies of scale,diminishing marginal product has not set in yet. 
B) No firm would ever operate at a level of output for which it experiences diseconomies of scale. 
C) A firm can experience diminishing marginal product and economies of scale at the same time. 
D) Diseconomies of scale is a short-run concept,while economies of scale is a long-run concept. 
A) If a firm is experiencing economies of scale,diminishing marginal product has not set in yet. 
B) No firm would ever operate at a level of output for which it experiences diseconomies of scale. 
C) A firm can experience diminishing marginal product and economies of scale at the same time. 
D) Diseconomies of scale is a short-run concept,while economies of scale is a long-run concept.

Question 14

Assume that in the short run a firm is producing 100 units of output,has average total costs of $100,and average fixed costs of $20.The firm's total variable cost at this output level is

Accepted Answer

A) $120. 
B) $80. 
C) $8,000. 
D) $12,000. 
A) $120. 
B) $80. 
C) $8,000. 
D) $12,000.

Question 15

The time period during which all factors of production can be varied 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 16

The law of diminishing marginal product

Accepted Answer

A) holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B) does not hold in the short run because of fixed costs. 
C) does not hold in the long run because there are no fixed inputs in the long run. 
D) holds in the short and long run because of economies to scale. 
A) holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. 
B) does not hold in the short run because of fixed costs. 
C) does not hold in the long run because there are no fixed inputs in the long run. 
D) holds in the short and long run because of economies to scale.

Question 17

In the long run,a firm can change

Accepted Answer

A) nothing. 
B) only one input,such as plant size. 
C) all inputs. 
D) None of the above are correct. 
A) nothing. 
B) only one input,such as plant size. 
C) all inputs. 
D) None of the above are correct.

Question 18

Diseconomies to scale are illustrated by

Accepted Answer

A) a downward sloping long-run average cost curve. 
B) a horizontal long-run average cost curve. 
C) an upward sloping long-run average cost curve. 
D) a long-run average cost curve that is shaped like an upside down U. 
A) a downward sloping long-run average cost curve. 
B) a horizontal long-run average cost curve. 
C) an upward sloping long-run average cost curve. 
D) a long-run average cost curve that is shaped like an upside down U.

Question 19

Which of the following is a short-run decision for a firm?

Accepted Answer

A) Downsizing the firm's manufacturing plant 
B) Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C) Firing workers 
D) Investing in a new addition to the firm's manufacturing plant 
A) Downsizing the firm's manufacturing plant 
B) Expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks. 
C) Firing workers 
D) Investing in a new addition to the firm's manufacturing plant

Question 20

$$\begin{array} { l c r l } 
\text { Q } & \text { TFC } & \text { TVC } & \text { TC } \
\hline 0 & \$ 90 & \$ 0 & \$ 90 \
1 & 90 & 25 & 115 \
2 & 90 & 32 & 122 \
3 & 90 & 42 & 132 \
4 & 90 & 64 & 154 \
5 & 90 & 95 & 185
\end{array}$$
-Refer to the above table.MC is the lowest

Accepted Answer

A) between 0 and 1 units of output. 
B) between 1 and 2 units of output. 
C) between 3 and 4 units of output. 
D) at 0 units of output. 
A) between 0 and 1 units of output. 
B) between 1 and 2 units of output. 
C) between 3 and 4 units of output. 
D) at 0 units of output.

Exam 9: The Firm: Cost and Output Determination

Average physical product is calculated by dividing total product by the

Which of the following is correct?

The minimum possible short-run average costs are equal to long-run average costs when

Quantity of Labor Total Product Average Product Marginal Product 1 320 2 335 3 338 4 320 -Refer to the above table.What does total product equal when 3 units of labor are used?

-Refer to the above figure.Marginal costs are represented by curve

A horizontal long-run average cost curve indicates

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

What is the relationship between marginal cost and marginal physical product?

In a map showing short-run cost functions,one curve begins at the origin and rises as output expands.It is called the

For a hotdog vendor,the hotdog stand represents his

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 of the 3rd worker is

Which of the following is correct?

Which of the following statements is true?

Assume that in the short run a firm is producing 100 units of output,has average total costs of $100,and average fixed costs of $20.The firm's total variable cost at this output level is

The time period during which all factors of production can be varied is the

The law of diminishing marginal product

In the long run,a firm can change

Diseconomies to scale are illustrated by

Which of the following is a short-run decision for a firm?

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.MC is the lowest

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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