Question 1

If the marginal product of labor equals the average product of labor, then the

Accepted Answer

A)  average product is maximized. 
B)  marginal product is maximized. 
C)  marginal product is still increasing. 
D)  average product is still increasing. 
A)  average product is maximized. 
B)  marginal product is maximized. 
C)  marginal product is still increasing. 
D)  average product is still increasing.

Question 2

Related to the Economics in Practice on page 157: Which of the following is the best analysis of the question of how fast delivery truck drivers should drive in order to reduce costs?

Accepted Answer

A)  They should drive as quickly as possible in order to make more deliveries per day. 
B)  They should drive at the most fuel-efficient rate in order to reduce fuel consumption costs. 
C)  They should balance the concerns of speed and fuel efficiency and drive at a speed that minimizes total expenses. 
D)  They should drive as close to the legal speed limit as possible. 
A)  They should drive as quickly as possible in order to make more deliveries per day. 
B)  They should drive at the most fuel-efficient rate in order to reduce fuel consumption costs. 
C)  They should balance the concerns of speed and fuel efficiency and drive at a speed that minimizes total expenses. 
D)  They should drive as close to the legal speed limit as possible.

Question 3

Refer to Scenario 7.4 below to answer the questions that follow.
SCENARIO 7.4: A lawn service company has the following production possibilities. With one, two, three, and four workers, the company can mow 4, 9, 12, and 14 lawns per day, respectively.
-Refer to Scenario 4. The marginal product of the second worker is

Accepted Answer

A)  3 
B)  4 
C)  5 
D)  9 
A)  3 
B)  4 
C)  5 
D)  9

Question 4

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

Accepted Answer

A) True 
 B)False

Question 5

What is the formula for the average product of labor?

Accepted Answer

A)  Δq/ΔL 
B)  ΔL/Δq 
C)  q/L 
D)  L/q 
A)  Δq/ΔL 
B)  ΔL/Δq 
C)  q/L 
D)  L/q

Question 6

If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm

Accepted Answer

A)  is minimizing costs. 
B)  should use more labor and less capital to minimize costs. 
C)  should use less labor and more capital to minimize costs. 
D)  should increase the price paid to labor and decrease the price paid to capital to minimize costs. 
A)  is minimizing costs. 
B)  should use more labor and less capital to minimize costs. 
C)  should use less labor and more capital to minimize costs. 
D)  should increase the price paid to labor and decrease the price paid to capital to minimize costs.

Question 7

Refer to the information provided in Figure 7.10 below to answer the questions that follow.   Figure 7.10
-Refer to Figure 7.10. The firm's isocost line would shift from CE to CD if

Accepted Answer

A)  the price of capital rises. 
B)  the firm's total expenditure on inputs decreased. 
C)  the price of labor rises. 
D)  either the price of labor fell or the firm's total expenditure on inputs decreased. 
A)  the price of capital rises. 
B)  the firm's total expenditure on inputs decreased. 
C)  the price of labor rises. 
D)  either the price of labor fell or the firm's total expenditure on inputs decreased.

Question 8

Refer to the information provided in Figure 7.11 below to answer the questions that follow.   Figure 7.11
-Refer to Figure 7.11. The slope of the isocost line is

Accepted Answer

A)  -2. 
B)  -1/2. 
C)  1/2. 
D)  2. 
A)  -2. 
B)  -1/2. 
C)  1/2. 
D)  2.

Question 9

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.

Accepted Answer

A)  40; 20 
B)  20; 100 
C)  13.33; 6.67 
D)  120; 100 
A)  40; 20 
B)  20; 100 
C)  13.33; 6.67 
D)  120; 100

Question 10

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

Accepted Answer

A)  $50. 
B)  $100. 
C)  $250. 
D)  $350. 
A)  $50. 
B)  $100. 
C)  $250. 
D)  $350.

Question 11

If the marginal product of labor is less than the average product of labor, then the average product of labor is increasing.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the information provided in Figure 7.1 below to answer the following questions.   Figure 7.1
-Refer to Figure 7.1. This corn producer earns a total revenue of $900. Each bushel of corn is sold for $5. This corn producer must be selling ________ bushels of corn.

Accepted Answer

A)  180 
B)  450 
C)  900 
D)  4,500 
A)  180 
B)  450 
C)  900 
D)  4,500

Question 13

If Pets.com is earning a rate of return less than necessary for the business to continue operations, then

Accepted Answer

A)  total revenue exceeds economic costs. 
B)  economic costs exceed total revenue. 
C)  normal profit is zero. 
D)  economic profit is zero. 
A)  total revenue exceeds economic costs. 
B)  economic costs exceed total revenue. 
C)  normal profit is zero. 
D)  economic profit is zero.

Question 14

Refer to the information provided in Figure 7.2 below to answer the questions that follow.   Figure 7.2
-Refer to Figure 7.2. The marginal product of the second worker is ________ lawns mowed.

Accepted Answer

A)  3 
B)  5 
C)  8 
D)  11 
A)  3 
B)  5 
C)  8 
D)  11

Question 15

Refer to the information provided in Figure 7.6 below to answer the questions that follow.   Figure 7.6
-Refer to Figure 7.6. If the price of capital is $10 and the price of labor is $20, the optimal production technique is

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 16

Refer to the information provided in Figure 7.10 below to answer the questions that follow.   Figure 7.10
-Refer to Figure 7.10. The firm's isocost line could shift from AB to CD if

Accepted Answer

A)  the price of capital decreased. 
B)  the firm's total expenditures increased by 50%. 
C)  the price of capital and labor each decreased by 33.3%. 
D)  either B or C 
A)  the price of capital decreased. 
B)  the firm's total expenditures increased by 50%. 
C)  the price of capital and labor each decreased by 33.3%. 
D)  either B or C

Question 17

A firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should

Accepted Answer

A)  employ more labor and less capital. 
B)  employ more capital and less labor. 
C)  employ more capital and labor. 
D)  employ less capital and labor. 
A)  employ more labor and less capital. 
B)  employ more capital and less labor. 
C)  employ more capital and labor. 
D)  employ less capital and labor.

Question 18

Deciding to invest in capital is a short-run decision.

Accepted Answer

A) True 
 B)False

Question 19

Use the information provided in Table 7.2 below to answer the questions that follow.
Table 7.2
Inputs Required to Produce a Product Using Alternative Technologies $$\begin{array} { c c c } 
\text { Technology } & \text { Units of Capital } & \text { Number of Employees } \
\hline \text { A } & 16 & 8 \
\text { B } & 12 & 12 \
\text { C } & 8 & 20 \
\text { D } & 6 & 24
\end{array}$$
-Refer to Table 7.2. Which technology is the most labor intensive?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

Refer to the information provided in Figure 7.11 below to answer the questions that follow.   Figure 7.11
-Refer to Figure 7.11. At Point C, the slope of q2 = 200 is

Accepted Answer

A)  -2. 
B)  -1/2. 
C)  -1. 
D)  indeterminate from this information. 
A)  -2. 
B)  -1/2. 
C)  -1. 
D)  indeterminate from this information.

If the marginal product of labor equals the average product of labor, then the

Related to the Economics in Practice on page 157: Which of the following is the best analysis of the question of how fast delivery truck drivers should drive in order to reduce costs?

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

What is the formula for the average product of labor?

If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm

Refer to the information provided in Figure 7.10 below to answer the questions that follow. Figure 7.10 -Refer to Figure 7.10. The firm's isocost line would shift from CE to CD if

Refer to the information provided in Figure 7.11 below to answer the questions that follow. Figure 7.11 -Refer to Figure 7.11. The slope of the isocost line is

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is , and the marginal product of the third worker is .

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

If the marginal product of labor is less than the average product of labor, then the average product of labor is increasing.

Refer to the information provided in Figure 7.1 below to answer the following questions. Figure 7.1 -Refer to Figure 7.1. This corn producer earns a total revenue of $900. Each bushel of corn is sold for $5. This corn producer must be selling ________ bushels of corn.

If Pets.com is earning a rate of return less than necessary for the business to continue operations, then

Refer to the information provided in Figure 7.2 below to answer the questions that follow. Figure 7.2 -Refer to Figure 7.2. The marginal product of the second worker is ________ lawns mowed.

Refer to the information provided in Figure 7.6 below to answer the questions that follow. Figure 7.6 -Refer to Figure 7.6. If the price of capital is $10 and the price of labor is $20, the optimal production technique is

Refer to the information provided in Figure 7.10 below to answer the questions that follow. Figure 7.10 -Refer to Figure 7.10. The firm's isocost line could shift from AB to CD if

A firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should

Deciding to invest in capital is a short-run decision.

Refer to the information provided in Figure 7.11 below to answer the questions that follow. Figure 7.11 -Refer to Figure 7.11. At Point C, the slope of q2 = 200 is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing and Transitional Economies

Filters

Exam 7: The Production Process: the Behavior of Profit-Maximizing Firms

If the marginal product of labor equals the average product of labor, then the

Related to the Economics in Practice on page 157: Which of the following is the best analysis of the question of how fast delivery truck drivers should drive in order to reduce costs?

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

What is the formula for the average product of labor?

If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm

Refer to the information provided in Figure 7.10 below to answer the questions that follow. Figure 7.10 -Refer to Figure 7.10. The firm's isocost line would shift from CE to CD if

Refer to the information provided in Figure 7.11 below to answer the questions that follow. Figure 7.11 -Refer to Figure 7.11. The slope of the isocost line is

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

If the marginal product of labor is less than the average product of labor, then the average product of labor is increasing.

Refer to the information provided in Figure 7.1 below to answer the following questions. Figure 7.1 -Refer to Figure 7.1. This corn producer earns a total revenue of $900. Each bushel of corn is sold for $5. This corn producer must be selling ________ bushels of corn.

If Pets.com is earning a rate of return less than necessary for the business to continue operations, then

Refer to the information provided in Figure 7.2 below to answer the questions that follow. Figure 7.2 -Refer to Figure 7.2. The marginal product of the second worker is ________ lawns mowed.

Refer to the information provided in Figure 7.6 below to answer the questions that follow. Figure 7.6 -Refer to Figure 7.6. If the price of capital is $10 and the price of labor is $20, the optimal production technique is

Refer to the information provided in Figure 7.10 below to answer the questions that follow. Figure 7.10 -Refer to Figure 7.10. The firm's isocost line could shift from AB to CD if

A firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should

Deciding to invest in capital is a short-run decision.

Refer to the information provided in Figure 7.11 below to answer the questions that follow. Figure 7.11 -Refer to Figure 7.11. At Point C, the slope of q2 = 200 is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing and Transitional Economies

Filters

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is , and the marginal product of the third worker is .