Question 1

The typical shape of the long-run average cost curve is like

Accepted Answer

A) the letter "C." 
B) the letter "U." 
C) an inverse of the letter "V." 
D) a circle. 
A) the letter "C." 
B) the letter "U." 
C) an inverse of the letter "V." 
D) a circle.

Question 2

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

Accepted Answer

A) $42. 
B) $30. 
C) $44. 
D) $14. 
A) $42. 
B) $30. 
C) $44. 
D) $14.

Question 3

A firm has the following production relationship between labor and output,for a fixed capital stock. $$\begin{array} { c r } 
\hline\text { Labor } & \text { Output } \
\hline0 & 0 \
1 & 5 \
2 & 11 \
3 & 18 \
4 & 23 \
5 & 26\\hline
\end{array}$$
-According to the above table,what is the marginal product of the 5th unit of labor?

Accepted Answer

A) 3 
B) 4 
C) 5.2 
D) 5 
A) 3 
B) 4 
C) 5.2 
D) 5

Question 4

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

Accepted Answer

A) specialization 
B) the dimensional factor 
C) improved productive equipment 
D) depreciation 
A) specialization 
B) the dimensional factor 
C) improved productive equipment 
D) depreciation

Question 5

If average variable costs are increasing while average total costs are decreasing,then

Accepted Answer

A) marginal cost must lie between average variable and average total costs. 
B) marginal cost must equal average variable cost. 
C) marginal cost must equal average total cost. 
D) fixed costs must be zero. 
A) marginal cost must lie between average variable and average total costs. 
B) marginal cost must equal average variable cost. 
C) marginal cost must equal average total cost. 
D) fixed costs must be zero.

Question 6

Marginal physical product is

Accepted Answer

A) the change in total output from using an additional unit of one variable input,holding other inputs constant. 
B) the change in total output from using an additional unit of all variable inputs. 
C) the total output divided by the number of units of the variable input. 
D) the change in total output divided by the number of units of the variable input,holding constant all other inputs. 
A) the change in total output from using an additional unit of one variable input,holding other inputs constant. 
B) the change in total output from using an additional unit of all variable inputs. 
C) the total output divided by the number of units of the variable input. 
D) the change in total output divided by the number of units of the variable input,holding constant all other inputs.

Question 7

When total product is rising,

Accepted Answer

A) fixed cost must be rising. 
B) marginal product must be positive. 
C) variable cost must be declining. 
D) marginal product must be negative. 
A) fixed cost must be rising. 
B) marginal product must be positive. 
C) variable cost must be declining. 
D) marginal product must be negative.

Question 8

If in the short run total product is decreasing as more workers are hired,then the marginal physical product is

Accepted Answer

A) increasing. 
B) zero. 
C) negative. 
D) positive. 
A) increasing. 
B) zero. 
C) negative. 
D) positive.

Question 9

An increase in output would result in no change in long-run average costs when there are

Accepted Answer

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

Question 10

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

Accepted Answer

A) 68. 
B) 98. 
C) 38. 
D) It cannot be determined. 
A) 68. 
B) 98. 
C) 38. 
D) It cannot be determined.

Question 11

$$\begin{array} { l c r l } 
\text { Q } & \text { TFC } & \text { TVC } & \text { TC } \
\hline 0 & \$ 90 & \$ 0 & \$ 90 \
1 & 90 & 25 & 115 \
2 & 90 & 32 & 122 \
3 & 90 & 42 & 132 \
4 & 90 & 64 & 154 \
5 & 90 & 95 & 185
\end{array}$$
-Refer to the above table.When output rises from 4 units to 5 units,marginal costs are

Accepted Answer

A) $19. 
B) $10. 
C) $22. 
D) $31. 
A) $19. 
B) $10. 
C) $22. 
D) $31.

Question 12

The law of diminishing marginal product indicates that

Accepted Answer

A) average product will eventually decrease. 
B) marginal product will eventually decrease. 
C) total product will eventually decrease. 
D) resources are inefficient. 
A) average product will eventually decrease. 
B) marginal product will eventually decrease. 
C) total product will eventually decrease. 
D) resources are inefficient.

Question 13

Increases in long-run average cost that result from output increases is

Accepted Answer

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

Question 14

Average fixed costs will

Accepted Answer

A) rise as output rises. 
B) fall then rise as output rises. 
C) rise then fall as output rises. 
D) fall as output rises. 
A) rise as output rises. 
B) fall then rise as output rises. 
C) rise then fall as output rises. 
D) fall as output rises.

Question 15

$$\begin{array} { c c c c } 
\text { Labor } & \text { Output } & \begin{array} { c } 
\text { Average Physical } \
\text { Product }
\end{array} & \text { Marginal Product } \
\hline 1 & 10 & & - \
2 & &12 & \
3 & & &15 \
4 & 52 & &  \
5 & & &9\
\end{array}$$
-Using the above table,the marginal product of the 2nd worker is

Accepted Answer

A) 12. 
B) 14. 
C) 15. 
D) 13. 
A) 12. 
B) 14. 
C) 15. 
D) 13.

Question 16

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

Accepted Answer

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

Question 17

Which of the following changes a firm's production function?

Accepted Answer

A) Hiring additional workers 
B) Acquiring additional physical capital 
C) Adding a second production facility exactly like its first production site 
D) Adopting new technology 
A) Hiring additional workers 
B) Acquiring additional physical capital 
C) Adding a second production facility exactly like its first production site 
D) Adopting new technology

Question 18

$$\begin{array} { c c } 
\text { Total Output } & \text { Total Costs } \
\hline 0 & \$ 10 \
1 & 18 \
2 & 21 \
3 & 23 \
4 & 24 \
5 & 26 \
6 & 29 \
7 & 33 \
8 & 38 \
9 & 44 \
10 & 51
\end{array}$$
-In the above table,the marginal cost of the fourth unit is

Accepted Answer

A) $1.00. 
B) $2.00. 
C) $6.00. 
D) $24.00. 
A) $1.00. 
B) $2.00. 
C) $6.00. 
D) $24.00.

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 does it become obvious that the law of diminishing marginal product has set in?

Accepted Answer

A) worker number 3 
B) worker number 4 
C) worker number 21 
D) worker number 5 
A) worker number 3 
B) worker number 4 
C) worker number 21 
D) worker number 5

Question 20

Assume that in the short run a firm is producing 100 units of output,has average total costs of $100,and average variable costs of $50.The firm's total fixed costs are

Accepted Answer

A) $50. 
B) $5,000. 
C) $150. 
D) $15,000. 
A) $50. 
B) $5,000. 
C) $150. 
D) $15,000.

Exam 9: The Firm: Cost and Output Determination

The typical shape of the long-run average cost curve is like

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.At an output of 3 units,average variable costs are

A firm has the following production relationship between labor and output,for a fixed capital stock. Labor Output 0 0 1 5 2 11 3 18 4 23 5 26 -According to the above table,what is the marginal product of the 5th unit of labor?

Which of the following is NOT one of the reasons a firm might be expected to experience economies of scale?

If average variable costs are increasing while average total costs are decreasing,then

Marginal physical product is

When total product is rising,

If in the short run total product is decreasing as more workers are hired,then the marginal physical product is

An increase in output would result in no change in long-run average costs when there are

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,the marginal product of the second worker is

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 4 units to 5 units,marginal costs are

The law of diminishing marginal product indicates that

Increases in long-run average cost that result from output increases is

Average fixed costs will

Labor Output Average Physical Product Marginal Product 1 10 - 2 12 3 15 4 52 5 9 -Using the above table,the marginal product of the 2nd 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 2nd unit of output?

Which of the following changes a firm's production function?

Total Output Total Costs 0 \ 10 1 18 2 21 3 23 4 24 5 26 6 29 7 33 8 38 9 44 10 51 -In the above table,the marginal cost of the fourth unit is

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 it become obvious that the law of diminishing marginal product has set in?

Assume that in the short run a firm is producing 100 units of output,has average total costs of $100,and average variable costs of $50.The firm's total fixed 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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