Question 1

If,in the short run,the level of output is zero,which of the following statement is true?

Accepted Answer

A) total variable cost is zero but total cost equals total fixed cost,and both of the latter exceed zero 
B) total cost and total fixed cost graphs will begin at the origin 
C) total fixed cost will also be zero at first but will rise once output rises 
D) none of the above 
A) total variable cost is zero but total cost equals total fixed cost,and both of the latter exceed zero 
B) total cost and total fixed cost graphs will begin at the origin 
C) total fixed cost will also be zero at first but will rise once output rises 
D) none of the above

Question 2

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Input of Labor } \
\text { (no. of workers } \
\text { in weeks) }
\end{array} & \begin{array} { c } 
\text { Total Product } \
\text { (no. of snowboards } \
\text { produced) }
\end{array} \
\hline 0 & 0 \
1 & 30 \
2 & 68 \
3 & 110 \
4 & 140 \
5 & 135 \
\hline
\end{array}$$
-In the above table,how many workers are employed when marginal product reaches its maximum?

Accepted Answer

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

Question 3

Which of the following statements is FALSE?

Accepted Answer

A) Included in the firm's short-run production function are both fixed and variable inputs. 
B) An efficient firm can obtain more output than the production function shows. 
C) The production function shows the technical relationship between a firm's inputs and outputs. 
D) The production function presents the technically efficient methods of combining inputs to produce output. 
A) Included in the firm's short-run production function are both fixed and variable inputs. 
B) An efficient firm can obtain more output than the production function shows. 
C) The production function shows the technical relationship between a firm's inputs and outputs. 
D) The production function presents the technically efficient methods of combining inputs to produce output.

Question 4

-Refer to the above figure.Curve (4)is the

Accepted Answer

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

Question 5

The production function

Accepted Answer

A) gives the maximum amount of output for a given level of inputs. 
B) gives the implicit costs for all inputs. 
C) gives the amount of time necessary to reach the long run. 
D) allows us to compute the difference between accounting and economic profits. 
A) gives the maximum amount of output for a given level of inputs. 
B) gives the implicit costs for all inputs. 
C) gives the amount of time necessary to reach the long run. 
D) allows us to compute the difference between accounting and economic profits.

Question 6

The average product of labor is equal to

Accepted Answer

A) total product divided by quantity of labor. 
B) change in total product divided by quantity of labor. 
C) total product divided by change in quantity of labor. 
D) change in total product divided by change in quantity of labor. 
A) total product divided by quantity of labor. 
B) change in total product divided by quantity of labor. 
C) total product divided by change in quantity of labor. 
D) change in total product divided by change in quantity of labor.

Question 7

What are the relationships between the marginal cost curve and the average cost curves? Explain in words.

Accepted Answer

When the marginal cost curve is below ea

Question 8

Suppose that when the level of output for the firm increases from 100 to 110 units,its variable costs increase from $500 to $700.What is the firm's marginal cost?

Accepted Answer

A) $5 
B) $7 
C) $20 
D) $200 
A) $5 
B) $7 
C) $20 
D) $200

Question 9

Which of the following statements with respect to the figure below is INCORRECT?

Accepted Answer

A) All the possible short-run average cost curves that correspond to the different plant sizes are shown as $\mathrm { SAC } _ { 1 }$ -
$\mathrm { SAC } _ { 8 }$ . 
B) If the anticipated permanent rate of output per unit time period is $\mathrm { Q } _ { 1 }$ in panel (a),the optimal plant would correspond to
$\mathrm { SAC } _ { 1 }$ . 
C) If the permanent rate of output increases to $\mathrm { Q } _ { 2 }$ in panel (a),it will be more profitable to have a plant size corresponding to
$\mathrm { SAC } _ { 3 }$ . 
D) The long-run average cost curve LAC in panel (b)is sometimes called the planning curve representing the locus (path)of points. 
A) All the possible short-run average cost curves that correspond to the different plant sizes are shown as $\mathrm { SAC } _ { 1 }$ -
$\mathrm { SAC } _ { 8 }$ . 
B) If the anticipated permanent rate of output per unit time period is $\mathrm { Q } _ { 1 }$ in panel (a),the optimal plant would correspond to
$\mathrm { SAC } _ { 1 }$ . 
C) If the permanent rate of output increases to $\mathrm { Q } _ { 2 }$ in panel (a),it will be more profitable to have a plant size corresponding to
$\mathrm { SAC } _ { 3 }$ . 
D) The long-run average cost curve LAC in panel (b)is sometimes called the planning curve representing the locus (path)of points.

Question 10

$$\begin{array} { c c c c } 
\text { Labor } & \text { Output } & \begin{array} { c } 
\text { Average Physical } \
\text { Product }
\end{array} & \text { Marginal Product } \
\hline 1 & 10 & & - \
2 & &12 & \
3 & & &15 \
4 & 52 & &  \
5 & & &9\
\end{array}$$
-Using the above table,the total product and average physical product when 3 workers are employed are

Accepted Answer

A) 36 and 12,respectively. 
B) 39 and 13,respectively. 
C) 37 and 27,respectively. 
D) 40 and 10,respectively. 
A) 36 and 12,respectively. 
B) 39 and 13,respectively. 
C) 37 and 27,respectively. 
D) 40 and 10,respectively.

Question 11

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

Accepted Answer

A) $30 
B) $60 
C) $10 
D) $20 
A) $30 
B) $60 
C) $10 
D) $20

Question 12

A decrease in the long-run average costs resulting from increasing output is referred to as

Accepted Answer

A) diseconomies of scale. 
B) constant return to scale. 
C) a scale invariant process. 
D) economies of scale. 
A) diseconomies of scale. 
B) constant return to scale. 
C) a scale invariant process. 
D) economies of scale.

Question 13

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

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 14

Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

Accepted Answer

Given the information on total physical

Question 15

-Refer to the above figure.Minimum efficient scale is at output rate

Accepted Answer

A)  $\mathrm { Q } _ { 1 }$ . 
B)  $\mathrm { Q } _ { 2 }$ . 
C)  $\mathrm { Q } _ { 3 }$ . 
D)  $\mathrm { Q } _ { 5 }$ . 
A)  $\mathrm { Q } _ { 1 }$ . 
B)  $\mathrm { Q } _ { 2 }$ . 
C)  $\mathrm { Q } _ { 3 }$ . 
D)  $\mathrm { Q } _ { 5 }$ .

Question 16

$$\begin{array} { c c r r r r r r } 
\text { Q (output) } & \text { TFC } & \text { TVC } & \text { TC } & \text { AFC } & \text { AVC } & \text { ATC } & \text { MC } \
\hline 0 & \$ 0 & - & & - & & - & - \
1 & & & & & \$ 10 & & \
2 & \$ 5 & & & & \$ 15 & & \
3 & & & & & \$ 15 & & \
4 & & & & &\$16.75
\end{array}$$
-Using the above table,the TVC,the TC,and MC when output is 3 units are

Accepted Answer

A) $45,$50,and $15,respectively. 
B) $15,$20,and $15,respectively. 
C) $45,$18,and $15,respectively. 
D) $15,$45,and $15,respectively. 
A) $45,$50,and $15,respectively. 
B) $15,$20,and $15,respectively. 
C) $45,$18,and $15,respectively. 
D) $15,$45,and $15,respectively.

Question 17

-In the above figure,if this firm produces output level Q2,it has average variable costs of

Accepted Answer

A) OF. 
B) OE. 
C) OC. 
D) OD. 
A) OF. 
B) OE. 
C) OC. 
D) OD.

Question 18

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

Accepted Answer

A) $90 
B) $120 
C) $150 
D) $270 
A) $90 
B) $120 
C) $150 
D) $270

Question 19

What factors generate economies of scale?

Accepted Answer

Economies of scale can be generated by s

Question 20

The ratio of total costs to the quantity produced is referred to as

Accepted Answer

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

Exam 9: The Firm: Cost and Output Determination

If,in the short run,the level of output is zero,which of the following statement is true?

Input of Labor (no. of workers in weeks) Total Product (no. of snowboards produced) 0 0 1 30 2 68 3 110 4 140 5 135 -In the above table,how many workers are employed when marginal product reaches its maximum?

Which of the following statements is FALSE?

-Refer to the above figure.Curve (4)is the

The production function

The average product of labor is equal to

What are the relationships between the marginal cost curve and the average cost curves? Explain in words.

Suppose that when the level of output for the firm increases from 100 to 110 units,its variable costs increase from $500 to $700.What is the firm's marginal cost?

Which of the following statements with respect to the figure below is INCORRECT?

Labor Output Average Physical Product Marginal Product 1 10 - 2 12 3 15 4 52 5 9 -Using the above table,the total product and average physical product when 3 workers are employed are

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 variable cost to produce 3 units of output?

A decrease in the long-run average costs resulting from increasing output is referred to as

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 marginal cost curve start to increase?

Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

-Refer to the above figure.Minimum efficient scale is at output rate

Q (output) TFC TVC TC AFC AVC ATC MC 0 \ 0 - - - - 1 \ 10 2 \ 5 \ 15 3 \ 15 4 \1 6.75 -Using the above table,the TVC,the TC,and MC when output is 3 units are

-In the above figure,if this firm produces output level Q2,it has average variable costs of

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

What factors generate economies of scale?

The ratio of total costs to the quantity produced is referred to as

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,if this firm produces output level Q₂,it has average variable costs of