Question 1

In the long run,when a firm adds physical capital,workers become more productive,so variable costs increase.

Accepted Answer

A) True 
 B)False

Question 2

As production increases and the fixed cost is divided by larger quantities of output,average fixed cost drops.This is referred to as the _____ effect.

Accepted Answer

A)  diminishing returns 
B)  spreading 
C)  constant cost 
D)  increasing returns 
A)  diminishing returns 
B)  spreading 
C)  constant cost 
D)  increasing returns

Question 3

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day.Darren shuts down every year during the last week of July and the first week of August (meaning it is open 50 weeks a year).What is his annual fixed cost if he is open 6 days per week?

Accepted Answer

A)  $18 000 
B)  $3 000 
C)  $60 
D)  The answer cannot be determined with the information available. 
A)  $18 000 
B)  $3 000 
C)  $60 
D)  The answer cannot be determined with the information available.

Question 4

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { of Output }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
( \boldsymbol { V C } )
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & 0 & 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & 190 & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Cost Data)Use Table: Cost Data.When the purse factory produces 5 units of output (purses):

Accepted Answer

A)  marginal cost is above average total cost,and average total cost is rising. 
B)  average total cost is above average variable cost,and average variable cost is falling. 
C)  marginal cost is below average variable cost,and average variable cost is falling. 
D)  marginal cost is above average variable cost and below average total cost,and average total cost is rising. 
A)  marginal cost is above average total cost,and average total cost is rising. 
B)  average total cost is above average variable cost,and average variable cost is falling. 
C)  marginal cost is below average variable cost,and average variable cost is falling. 
D)  marginal cost is above average variable cost and below average total cost,and average total cost is rising.

Question 5

A cost that does NOT depend on the quantity of output produced is:

Accepted Answer

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

Question 6

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run BEST demonstrates:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  being too small for the relevant market. 
D)  not having enough managers. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  being too small for the relevant market. 
D)  not having enough managers.

Question 7

Use the following to answer questions :  
-When a firm adds physical capital,in the short run fixed costs will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  decrease at first and then increase. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  decrease at first and then increase.

Question 8

Use the following to answer questions :  
-(Figure: Long-Run and Short-Run Average Cost Curves)Use Figure: Long-Run and Short-Run Average Cost Curves.If a firm is producing at point C on the ATC2 but anticipates increasing output to 225 000 units in the long run,the firm will build a _____ plant and have _____ of scale.

Accepted Answer

A)  smaller;economies 
B)  smaller;diseconomies 
C)  bigger;economies 
D)  bigger;diseconomies 
A)  smaller;economies 
B)  smaller;diseconomies 
C)  bigger;economies 
D)  bigger;diseconomies

Question 9

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { of Output }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
( \boldsymbol { V C } )
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & 0 & 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & 190 & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Cost Data)Use Table: Cost Data.The average fixed cost of producing five purses is:

Accepted Answer

A)  $0. 
B)  $50. 
C)  $25. 
D)  $10. 
A)  $0. 
B)  $50. 
C)  $25. 
D)  $10.

Question 10

Use the following to answer question 358: $$\begin{array}{l}
\text { Table: Linda's Copy Shop Production }\
\begin{array} { l c } 
\hline \begin{array} { l } 
\text { Quantity of } \
\text { Variable Input } \
\text { (units) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Output } \
\text { (copies) }
\end{array} \
\hline 0 & 0 \
1 & 100 \
2 & 200 \
3 & 350 \
4 & 450 \
5 & 525 \
\hline
\end{array}
\end{array}$$
-(Table: Linda's Copy Shop Production)Use Table: Linda's Copy Shop Production.Linda's production runs into diminishing returns to her variable inputs when she employs the _____ unit.

Accepted Answer

A)  second 
B)  third 
C)  fourth 
D)  fifth 
A)  second 
B)  third 
C)  fourth 
D)  fifth

Question 11

Total cost divided by the quantity of output produced is:

Accepted Answer

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

Question 12

Average total cost is:

Accepted Answer

A)  the change in variable cost divided by the change in quantity. 
B)  total cost divided by quantity. 
C)  the change in quantity divided by the change in labour costs. 
D)  total cost times quantity. 
A)  the change in variable cost divided by the change in quantity. 
B)  total cost divided by quantity. 
C)  the change in quantity divided by the change in labour costs. 
D)  total cost times quantity.

Question 13

The level of inputs a firm employs will determine a firm's:

Accepted Answer

A)  ability to produce output. 
B)  elasticity of demand. 
C)  stock price. 
D)  location of production. 
A)  ability to produce output. 
B)  elasticity of demand. 
C)  stock price. 
D)  location of production.

Question 14

You own a deli.Which input of production is MOST likely fixed at your deli?

Accepted Answer

A)  the dining room 
B)  the bread used to make sandwiches 
C)  the tomato sauce used to make soups 
D)  the employees 
A)  the dining room 
B)  the bread used to make sandwiches 
C)  the tomato sauce used to make soups 
D)  the employees

Question 15

The _____ cost curve is NOT affected by diminishing returns.

Accepted Answer

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

Question 16

In the short run,the costs associated with variable inputs are _____,and the costs associated with _____ inputs are _____.

Accepted Answer

A)  variable;fixed;fixed 
B)  fixed;fixed;variable 
C)  variable;fixed;variable 
D)  fixed;fixed;fixed 
A)  variable;fixed;fixed 
B)  fixed;fixed;variable 
C)  variable;fixed;variable 
D)  fixed;fixed;fixed

Question 17

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Tonya's Production Function for Apples }\
\begin{array} { l c c } 
\hline \begin{array} { l } 
\text { Quantity } \
\text { of Land } \
\text { (hectares) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { of Labour }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product } \
\text { (apples picked) }
\end{array} \
\hline 10 & 0 & 0 \
10 & 1 & 8 \
10 & 2 & 15 \
10 & 3 & 21 \
10 & 4 & 26
\end{array}
\end{array}$$
-(Table: Tonya's Production Function for Apples)Use Table: Tonya's Production Function for Apples.Tonya is operating:

Accepted Answer

A)  in the long run. 
B)  in the short run. 
C)  in a very expensive location. 
D)  at a loss. 
A)  in the long run. 
B)  in the short run. 
C)  in a very expensive location. 
D)  at a loss.

Question 18

The shape of the marginal cost curve is the mirror image of the shape of the _____ curve.

Accepted Answer

A)  total product 
B)  average product 
C)  marginal product 
D)  average total cost 
A)  total product 
B)  average product 
C)  marginal product 
D)  average total cost

Question 19

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Function for Soybeans }\
\begin{array} { l c } 
\begin{array} { l } 
\text { Quantity } \
\text { of Labour } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Soybeans (bushels) }
\end{array} \
\hline 0 & 0 \
1 & 25 \
2 & 45 \
3 & 60 \
4 & 70 \
5 & 75
\end{array}
\end{array}$$
-(Table: Production Function for Soybeans)Use Table: Production Function for Soybeans.Assume that the fixed input,capital,is 10 hectares of land and a tractor,which have a combined cost of $150 per day.The cost of labour is $100 per worker per day.The total cost of producing 70 kilograms of soybeans is:

Accepted Answer

A)  $250. 
B)  $400. 
C)  $550. 
D)  $1 024. 
A)  $250. 
B)  $400. 
C)  $550. 
D)  $1 024.

Question 20

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { of Output }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
( \boldsymbol { V C } )
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & 0 & 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & 190 & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Cost Data)Use Table: Cost Data.The average total cost of producing two purses is:

Accepted Answer

A)  $60. 
B)  $120. 
C)  $190. 
D)  $220. 
A)  $60. 
B)  $120. 
C)  $190. 
D)  $220.

In the long run,when a firm adds physical capital,workers become more productive,so variable costs increase.

As production increases and the fixed cost is divided by larger quantities of output,average fixed cost drops.This is referred to as the _____ effect.

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day.Darren shuts down every year during the last week of July and the first week of August (meaning it is open 50 weeks a year).What is his annual fixed cost if he is open 6 days per week?

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.When the purse factory produces 5 units of output (purses):

A cost that does NOT depend on the quantity of output produced is:

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run BEST demonstrates:

Use the following to answer questions : -When a firm adds physical capital,in the short run fixed costs will:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average fixed cost of producing five purses is:

Total cost divided by the quantity of output produced is:

Average total cost is:

The level of inputs a firm employs will determine a firm's:

You own a deli.Which input of production is MOST likely fixed at your deli?

The _____ cost curve is NOT affected by diminishing returns.

In the short run,the costs associated with variable inputs are ___,and the costs associated with _ inputs are ___.

The shape of the marginal cost curve is the mirror image of the shape of the _____ curve.

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average total cost of producing two purses is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 11: Behind the Supply Curve- Inputs and Costs

In the long run,when a firm adds physical capital,workers become more productive,so variable costs increase.

As production increases and the fixed cost is divided by larger quantities of output,average fixed cost drops.This is referred to as the _____ effect.

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day.Darren shuts down every year during the last week of July and the first week of August (meaning it is open 50 weeks a year).What is his annual fixed cost if he is open 6 days per week?

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.When the purse factory produces 5 units of output (purses):

A cost that does NOT depend on the quantity of output produced is:

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run BEST demonstrates:

Use the following to answer questions : -When a firm adds physical capital,in the short run fixed costs will:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average fixed cost of producing five purses is:

Total cost divided by the quantity of output produced is:

Average total cost is:

The level of inputs a firm employs will determine a firm's:

You own a deli.Which input of production is MOST likely fixed at your deli?

The _____ cost curve is NOT affected by diminishing returns.

In the short run,the costs associated with variable inputs are _____,and the costs associated with _____ inputs are _____.

The shape of the marginal cost curve is the mirror image of the shape of the _____ curve.

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average total cost of producing two purses is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

In the short run,the costs associated with variable inputs are ___,and the costs associated with _ inputs are ___.