Question 1

Scale is the size of a firm's operations.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 1 mixer and bakes 100 cakes per day,what is her average fixed cost?

Accepted Answer

A)  $10 000 
B)  $1 000 
C)  $15 
D)  $10 
A)  $10 000 
B)  $1 000 
C)  $15 
D)  $10

Question 3

When long-run average total cost is constant as output increases,the firm has constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions : $\text {Table: Lindsay's Farm}$
$\text {The table provides information about the production}$
$\text { function for Lindsay's Farm, which uses labour and land}$
$\text { to produce its produce. The price of labour is $\$ 50$ per}$
 $\text {worker per week and the price of land is $\$ 20$ per hectare.}$
$\begin{array}{lcc}
\begin{array}{l}
\text { Quantity } \
\text { of Land } \
\text { (hectares) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { of Labour } \
\text { (workers) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { of Produce } \
\text { (bushels) }
\end{array} \
\hline 10 & 0 & 0 \
10 & 1 & 50 \
10 & 2 & 100 \
10 & 3 & 140 \
10 & 4 & 170 \
10 & 5 & 190
\end{array}$ 
-(Table: Lindsay's Farm)Use Table: Lindsay's Farm.Lindsay's variable costs of production:

Accepted Answer

A)  stay constant. 
B)  are equal to 10. 
C)  are zero when she produces no crops. 
D)  fall as soon as she starts producing. 
A)  stay constant. 
B)  are equal to 10. 
C)  are zero when she produces no crops. 
D)  fall as soon as she starts producing.

Question 5

The total product curve:

Accepted Answer

A)  shows the relation between the output and the quantity of a variable input for varying levels of the fixed input. 
B)  will become flatter as the output increases if there are diminishing returns to the variable input. 
C)  will be downward sloping if there are diminishing returns to the variable input. 
D)  will become horizontal when the marginal product of the variable input is constant. 
A)  shows the relation between the output and the quantity of a variable input for varying levels of the fixed input. 
B)  will become flatter as the output increases if there are diminishing returns to the variable input. 
C)  will be downward sloping if there are diminishing returns to the variable input. 
D)  will become horizontal when the marginal product of the variable input is constant.

Question 6

Use the following to answer questions :  
-(Figure: A Firm's Cost Curves)Use Figure: A Firm's Cost Curves.The curve labeled V represents the firm's _____ cost curve.

Accepted Answer

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

Question 7

Use the following to answer questions :  
-(Table: Output and Costs)Use Table: Output and Costs.When output is 4,total variable cost equals:

Accepted Answer

A)  $48. 
B)  $38. 
C)  $58. 
D)  $28. 
A)  $48. 
B)  $38. 
C)  $58. 
D)  $28.

Question 8

If a firm builds a larger plant and increases output and if its long-run average total cost does not change,the firm has constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Workers and Output }\
\begin{array} { l c } 
\hline \begin{array} { l } 
\text { No. of } \
\text { Workers }
\end{array} & \text { Output } \
\hline 1 & 10 \
2 & 25 \
3 & 35 \
4 & 43 \
5 & 48 \
\hline
\end{array}
\end{array}$$
-(Table: Workers and Output)Use Table: Workers and Output.After graduation,you achieve your dream of opening an art shop that specializes in selling mud statues.You pay $10 per day on a loan from your uncle,regardless of how much you produce.You also pay $10 per day to each of the workers who you hire to make the mud statues.The total cost of producing 48 statues is:

Accepted Answer

A)  $240. 
B)  $60. 
C)  $50. 
D)  $10. 
A)  $240. 
B)  $60. 
C)  $50. 
D)  $10.

Question 10

The long run refers to the time period when:

Accepted Answer

A)  a fixed input exists. 
B)  all inputs are variable. 
C)  marginal costs are decreasing. 
D)  diminishing returns raise marginal cost. 
A)  a fixed input exists. 
B)  all inputs are variable. 
C)  marginal costs are decreasing. 
D)  diminishing returns raise marginal cost.

Question 11

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 1 mixer,her average fixed cost _____ in the range of output between 100 and 400 cakes.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated 
A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated

Question 12

Joan adds one more employee to her construction company.The additional output produced by this employee represents the average product of this employee.

Accepted Answer

A) True 
 B)False

Question 13

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The total cost of producing 10 pairs of eyeglasses is:

Accepted Answer

A)  $35. 
B)  $50. 
C)  $300. 
D)  $350. 
A)  $35. 
B)  $50. 
C)  $300. 
D)  $350.

Question 14

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

Accepted Answer

A) True 
 B)False

Question 15

Ashley Bakery expects its marginal cost curve will eventually slope upward because,as with most production processes,baking has:

Accepted Answer

A)  constant opportunity costs. 
B)  a maximum output. 
C)  diminishing marginal returns. 
D)  decreasing opportunity costs. 
A)  constant opportunity costs. 
B)  a maximum output. 
C)  diminishing marginal returns. 
D)  decreasing opportunity costs.

Question 16

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,the total product is 48,and when she hires four workers,the total product is 45.The marginal product of the third and fourth workers is:

Accepted Answer

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

Question 17

An input whose quantity CANNOT be changed in the short run is:

Accepted Answer

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

Question 18

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers,her average fixed cost _____ in the range of output between 100 and 400 cakes.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated 
A)  increases 
B)  decreases 
C)  remains the same 
D)  can't be calculated

Question 19

Scott operates a business that takes people on boat tours at the Land O' Lakes Lodge in Clarendon,Ontario.The amount of fuel Scott uses each day is a variable input.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers and bakes 100 cakes per day,what is her average fixed cost?

Accepted Answer

A)  $10 000 
B)  $1 000 
C)  $15 
D)  $10 
A)  $10 000 
B)  $1 000 
C)  $15 
D)  $10

Scale is the size of a firm's operations.

When long-run average total cost is constant as output increases,the firm has constant returns to scale.

The total product curve:

Use the following to answer questions : -(Figure: A Firm's Cost Curves)Use Figure: A Firm's Cost Curves.The curve labeled V represents the firm's _____ cost curve.

Use the following to answer questions : -(Table: Output and Costs)Use Table: Output and Costs.When output is 4,total variable cost equals:

If a firm builds a larger plant and increases output and if its long-run average total cost does not change,the firm has constant returns to scale.

The long run refers to the time period when:

Joan adds one more employee to her construction company.The additional output produced by this employee represents the average product of this employee.

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The total cost of producing 10 pairs of eyeglasses is:

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

Ashley Bakery expects its marginal cost curve will eventually slope upward because,as with most production processes,baking has:

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,the total product is 48,and when she hires four workers,the total product is 45.The marginal product of the third and fourth workers is:

An input whose quantity CANNOT be changed in the short run is:

Scott operates a business that takes people on boat tours at the Land O^' Lakes Lodge in Clarendon,Ontario.The amount of fuel Scott uses each day is a variable input.

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

Scale is the size of a firm's operations.

When long-run average total cost is constant as output increases,the firm has constant returns to scale.

The total product curve:

Use the following to answer questions : -(Figure: A Firm's Cost Curves)Use Figure: A Firm's Cost Curves.The curve labeled V represents the firm's _____ cost curve.

Use the following to answer questions : -(Table: Output and Costs)Use Table: Output and Costs.When output is 4,total variable cost equals:

If a firm builds a larger plant and increases output and if its long-run average total cost does not change,the firm has constant returns to scale.

The long run refers to the time period when:

Joan adds one more employee to her construction company.The additional output produced by this employee represents the average product of this employee.

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The total cost of producing 10 pairs of eyeglasses is:

Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.

Ashley Bakery expects its marginal cost curve will eventually slope upward because,as with most production processes,baking has:

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,the total product is 48,and when she hires four workers,the total product is 45.The marginal product of the third and fourth workers is:

An input whose quantity CANNOT be changed in the short run is:

Scott operates a business that takes people on boat tours at the Land O' Lakes Lodge in Clarendon,Ontario.The amount of fuel Scott uses each day is a variable input.

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

Scott operates a business that takes people on boat tours at the Land O^' Lakes Lodge in Clarendon,Ontario.The amount of fuel Scott uses each day is a variable input.