Question 1

-In the above figure,the long-run cost curve between points A and B illustrates

Accepted Answer

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

Question 2

If a firm gets so large that management of employees and other resources becomes a costly problem,it will be experiencing

Accepted Answer

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

Question 3

Explain how the long-run average cost curve is constructed graphically.

Accepted Answer

The long-run average cost curv

Question 4

Average variable costs equal

Accepted Answer

A) total variable costs divided by marginal costs. 
B) total variable costs divided by output. 
C) the change in marginal costs from producing another unit of output. 
D) output divided by the change in total costs. 
A) total variable costs divided by marginal costs. 
B) total variable costs divided by output. 
C) the change in marginal costs from producing another unit of output. 
D) output divided by the change in total costs.

Question 5

-In the above figure,point B is called

Accepted Answer

A) the maximum efficient scale. 
B) the minimum efficient scale. 
C) the planning horizon. 
D) the point of diminishing marginal product. 
A) the maximum efficient scale. 
B) the minimum efficient scale. 
C) the planning horizon. 
D) the point of diminishing marginal product.

Question 6

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

If a firm is experiencing diseconomies of scale,then

Accepted Answer

A) proportional increases in all inputs result in proportional increases in output. 
B) the long-run average cost curve is rising as output expands. 
C) the long-run average cost curve is decreasing as output expands. 
D) the firm should expand the size of its operation. 
A) proportional increases in all inputs result in proportional increases in output. 
B) the long-run average cost curve is rising as output expands. 
C) the long-run average cost curve is decreasing as output expands. 
D) the firm should expand the size of its operation.

Question 8

What happens at a firm's point of saturation?

Accepted Answer

A) For the first time,hiring an additional worker decreases total product. 
B) Workers cannot take on any additional tasks without working overtime hours. 
C) The market for a firm's output has been saturated and sales fall to zero. 
D) The firm's total costs exceed its revenues. 
A) For the first time,hiring an additional worker decreases total product. 
B) Workers cannot take on any additional tasks without working overtime hours. 
C) The market for a firm's output has been saturated and sales fall to zero. 
D) The firm's total costs exceed its revenues.

Question 9

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

Accepted Answer

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

Question 10

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

Accepted Answer

Disagree.Diminishing marginal product is

Question 11

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

Accepted Answer

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

Question 12

Suppose there are fixed costs and marginal costs that are constant.Then we know that

Accepted Answer

A) average total costs are also constant. 
B) average variable costs decrease continuously as output increases,and lie above the marginal cost curve. 
C) average total costs decrease continuously as output increases,and lie above the average variable cost curve,which also is decreasing continuously. 
D) average total costs decrease continuously as output increases,and lie above the average variable cost curve,which is constant. 
A) average total costs are also constant. 
B) average variable costs decrease continuously as output increases,and lie above the marginal cost curve. 
C) average total costs decrease continuously as output increases,and lie above the average variable cost curve,which also is decreasing continuously. 
D) average total costs decrease continuously as output increases,and lie above the average variable cost curve,which is constant.

Question 13

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend,it is making a ________ decision.

Accepted Answer

A) plant-size 
B) long-run 
C) short-run 
D) fixed-input 
A) plant-size 
B) long-run 
C) short-run 
D) fixed-input

Question 14

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

Accepted Answer

A) $0 
B) $25 
C) $90 
D) $115 
A) $0 
B) $25 
C) $90 
D) $115

Question 15

Which of the following is NOT a reason a firm might experience economies of scale?

Accepted Answer

A) Specialization 
B) Dimensional factors 
C) Increasing long-run average costs 
D) More productive equipment 
A) Specialization 
B) Dimensional factors 
C) Increasing long-run average costs 
D) More productive equipment

Question 16

Suppose that a firm is currently producing 1,000 units of output.At this level of output,AVC is $1 per unit,and TFC is $500.What is the firm's TC?

Accepted Answer

A) $1,500 
B) $1,000 
C) $501 
D) $499 
A) $1,500 
B) $1,000 
C) $501 
D) $499

Question 17

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

Accepted Answer

A) $10.00. 
B) $5.00. 
C) $8.00. 
D) $18.00. 
A) $10.00. 
B) $5.00. 
C) $8.00. 
D) $18.00.

Question 19

As long as output increases,

Accepted Answer

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

Question 20

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

Accepted Answer

A) 35. 
B) 135. 
C) -5. 
D) 27. 
A) 35. 
B) 135. 
C) -5. 
D) 27.

Exam 9: The Firm: Cost and Output Determination

-In the above figure,the long-run cost curve between points A and B illustrates

If a firm gets so large that management of employees and other resources becomes a costly problem,it will be experiencing

Explain how the long-run average cost curve is constructed graphically.

Average variable costs equal

-In the above figure,point B is called

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 marginal physical product of the 3rd worker is

If a firm is experiencing diseconomies of scale,then

What happens at a firm's point of saturation?

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

"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?

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

Suppose there are fixed costs and marginal costs that are constant.Then we know that

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend,it is making a ________ decision.

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 MC when output rises from 0 unit to 1 unit?

Which of the following is NOT a reason a firm might experience economies of scale?

Suppose that a firm is currently producing 1,000 units of output.At this level of output,AVC is $1 per unit,and TFC is $500.What is the firm's TC?

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 average variable cost curve start to increase?

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,total fixed costs are

As long as output increases,

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 average product of the fifth worker is

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 total costs of