Question 1

Production functions indicate the relationship between

Accepted Answer

A) factor costs and output prices. 
B) factor inputs and the quantity of output. 
C) the value of inputs and average costs. 
D) factor inputs and factor prices. 
A) factor costs and output prices. 
B) factor inputs and the quantity of output. 
C) the value of inputs and average costs. 
D) factor inputs and factor prices.

Question 2

When total product is increasing at a decreasing rate,marginal product is

Accepted Answer

A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative. 
A) positive and increasing. 
B) positive and decreasing. 
C) constant. 
D) negative.

Question 3

Why might firms experience diseconomies of scale?

Accepted Answer

The main reason for firms to experience

Question 4

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

Accepted Answer

A) $7 
B) $16 
C) $45 
D) $61 
A) $7 
B) $16 
C) $45 
D) $61

Question 5

What is the relationship between the marginal cost curve and marginal product? Explain.

Accepted Answer

The short-run cost curve is a reflection

Question 6

Marginal cost begins to rise when

Accepted Answer

A) diminishing marginal product begins. 
B) diminishing marginal product ends. 
C) average total cost falls. 
D) fixed cost falls. 
A) diminishing marginal product begins. 
B) diminishing marginal product ends. 
C) average total cost falls. 
D) fixed cost falls.

Question 7

Which of the following is NOT correct?

Accepted Answer

A) MC = change in TC/change in Q 
B) ATC = TC/Q 
C) AVC = TVC/Q 
D) ATC + AVC = AFC 
A) MC = change in TC/change in Q 
B) ATC = TC/Q 
C) AVC = TVC/Q 
D) ATC + AVC = AFC

Question 8

Total fixed cost is

Accepted Answer

A) the cost of buying and installing new machinery. 
B) the cost that does not change as output changes. 
C) the expenditure on imported raw materials. 
D) the wages paid to consultants. 
A) the cost of buying and installing new machinery. 
B) the cost that does not change as output changes. 
C) the expenditure on imported raw materials. 
D) the wages paid to consultants.

Question 9

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Input of Labor } \
\text { (no. of workers } \
\text { in weeks) }
\end{array} & \begin{array} { c } 
\text { Total Product } \
\text { (no. of snowboards } \
\text { produced) }
\end{array} \
\hline 0 & 0 \
1 & 30 \
2 & 68 \
3 & 110 \
4 & 140 \
5 & 135 \
\hline
\end{array}$$
-In the above table,which two workers have the same marginal physical product?

Accepted Answer

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

Question 10

A decrease in long-run average costs resulting from decreases in output is

Accepted Answer

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

Question 11

Economies 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 12

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm,she is making a

Accepted Answer

A) long-run decision. 
B) short-run decision. 
C) immediate-run decision. 
D) variable-input decision. 
A) long-run decision. 
B) short-run decision. 
C) immediate-run decision. 
D) variable-input decision.

Question 13

Suppose the total output curve increases at an increasing rate for workers 1-50,increases at a decreasing rate from workers 51-101,and decreases beyond 101 workers.We would know that

Accepted Answer

A) marginal product is increasing from workers 1-50 and then becomes negative after worker 51. 
B) marginal product is increasing from workers 1-50,decreasing after 51 workers,and becomes negative after the 101st worker. 
C) marginal product is decreasing from workers 1-101,becoming negative at the 102nd worker. 
D) marginal product is increasing from workers 1-50,constant from workers 51 to 101,and is decreasing after that. 
A) marginal product is increasing from workers 1-50 and then becomes negative after worker 51. 
B) marginal product is increasing from workers 1-50,decreasing after 51 workers,and becomes negative after the 101st worker. 
C) marginal product is decreasing from workers 1-101,becoming negative at the 102nd worker. 
D) marginal product is increasing from workers 1-50,constant from workers 51 to 101,and is decreasing after that.

Question 14

A decrease in long-run average costs resulting from increases in output is

Accepted Answer

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

Question 15

The point of saturation occurs when a firm

Accepted Answer

A) has total returns equal to zero. 
B) first encounters negative marginal product. 
C) first experiences positive marginal product. 
D) maximizes its total returns. 
A) has total returns equal to zero. 
B) first encounters negative marginal product. 
C) first experiences positive marginal product. 
D) maximizes its total returns.

Question 16

-Use the above figure.At an output equal to "Q" the total variable cost for the firm will be the area

Accepted Answer

A) OQAB. 
B) OQEB. 
C) OQFA. 
D) OQDC. 
A) OQAB. 
B) OQEB. 
C) OQFA. 
D) OQDC.

Question 17

The focus of firm decisions in the short run is primarily on

Accepted Answer

A) variable inputs. 
B) capital investment. 
C) plant size. 
D) economies of scale. 
A) variable inputs. 
B) capital investment. 
C) plant size. 
D) economies of scale.

Question 18

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 2nd worker?

Accepted Answer

A) 15 cookies 
B) 20 cookies 
C) 30 cookies 
D) 35 cookies 
A) 15 cookies 
B) 20 cookies 
C) 30 cookies 
D) 35 cookies

Question 19

At Phil's Hot Dog Stand,we found the following:
4 laborers produced 66 hot dogs
5 laborers produced 76 hot dogs
6 laborers produced 84 hot dogs
7 laborers produced 88 hot dogs
What was the marginal physical product of the seventh laborer?

Accepted Answer

A) 8 hot dogs 
B) 10 hot dogs 
C) 4 hot dogs 
D) none of the above due to insufficient information 
A) 8 hot dogs 
B) 10 hot dogs 
C) 4 hot dogs 
D) none of the above due to insufficient information

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.When output rises from 3 units to 4 units,marginal costs are

Accepted Answer

A) $16. 
B) $10. 
C) $22. 
D) $31. 
A) $16. 
B) $10. 
C) $22. 
D) $31.

Exam 9: The Firm: Cost and Output Determination

Production functions indicate the relationship between

When total product is increasing at a decreasing rate,marginal product is

Why might firms experience diseconomies of scale?

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.What is AVC at an output of 2 units?

What is the relationship between the marginal cost curve and marginal product? Explain.

Marginal cost begins to rise when

Which of the following is NOT correct?

Total fixed cost is

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,which two workers have the same marginal physical product?

A decrease in long-run average costs resulting from decreases in output is

Economies to scale are illustrated by

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm,she is making a

Suppose the total output curve increases at an increasing rate for workers 1-50,increases at a decreasing rate from workers 51-101,and decreases beyond 101 workers.We would know that

A decrease in long-run average costs resulting from increases in output is

The point of saturation occurs when a firm

-Use the above figure.At an output equal to "Q" the total variable cost for the firm will be the area

The focus of firm decisions in the short run is primarily on

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 2nd worker?

At Phil's Hot Dog Stand,we found the following: 4 laborers produced 66 hot dogs 5 laborers produced 76 hot dogs 6 laborers produced 84 hot dogs 7 laborers produced 88 hot dogs What was the marginal physical product of the seventh laborer?

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.When output rises from 3 units to 4 units,marginal costs are

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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