Question 1

When a firm adds physical capital,its fixed cost will decrease in the short run.

Accepted Answer

A) True 
 B)False

Question 2

Economies and diseconomies of scale are associated with the:

Accepted Answer

A)  long-run average total cost curve and the long run. 
B)  short-run average total cost curve and the short run. 
C)  marginal cost curve and both the long and short run. 
D)  average fixed cost curve and the short run. 
A)  long-run average total cost curve and the long run. 
B)  short-run average total cost curve and the short run. 
C)  marginal cost curve and both the long and short run. 
D)  average fixed cost curve and the short run.

Question 3

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 total cost?

Accepted Answer

A)  $1 010 
B)  $20 
C)  $15 
D)  $10 
A)  $1 010 
B)  $20 
C)  $15 
D)  $10

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.The marginal cost of producing the fourth purse is:

Accepted Answer

A)  $60. 
B)  $50. 
C)  $40. 
D)  $20. 
A)  $60. 
B)  $50. 
C)  $40. 
D)  $20.

Question 5

In the short run,and with non-zero fixed costs,the average total cost curve always lies above the average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 6

In the long run:

Accepted Answer

A)  the firm has time to change the level of all inputs. 
B)  inputs are neither variable nor fixed. 
C)  at least one input is free. 
D)  all inputs are more expensive. 
A)  the firm has time to change the level of all inputs. 
B)  inputs are neither variable nor fixed. 
C)  at least one input is free. 
D)  all inputs are more expensive.

Question 7

A total product curve indicates the relationship between _____ when all other inputs are fixed.

Accepted Answer

A)  a variable input and price 
B)  a variable input and a variable cost 
C)  a variable input and output 
D)  output and price 
A)  a variable input and price 
B)  a variable input and a variable cost 
C)  a variable input and output 
D)  output and price

Question 8

When the long-run average total cost curve is downward sloping as output increases,the firm has diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 9

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 3 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 10

The change in total cost resulting from a one-unit change in quantity is _____ cost.

Accepted Answer

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

Question 11

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Costs of Birthday Cakes }\
\begin{array} { c c } 
\hline \text { Quantity of cakes } & \text { Variable cost, } \boldsymbol { V C } \
\hline 0 & 0 \
1 & 15 \
2 & 25 \
3 & 30 \
4 & 38 \
5 & 50 \
6 & 70 \
\hline
\end{array}
\end{array}$$
-(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average total cost of five cakes?

Accepted Answer

A)  $110 
B)  $60 
C)  $12 
D)  $2 
A)  $110 
B)  $60 
C)  $12 
D)  $2

Question 12

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 3 mixers and bakes 400 cakes per day,what is her average fixed cost?

Accepted Answer

A)  $0.05 
B)  $2.50 
C)  $5.00 
D)  $6.25 
A)  $0.05 
B)  $2.50 
C)  $5.00 
D)  $6.25

Question 13

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production of Bagels }\
\begin{array} { l c } 
\hline \begin{array} { l } 
\text { Number } \
\text { of Workers } \
\text { Per Period }
\end{array} & \begin{array} { c } 
\text { Thousands } \
\text { of Bagels } \
\text { Per Period }
\end{array} \
\hline 0 & 0 \
1 & 5 \
2 & 15 \
3 & 30 \
4 & 42 \
5 & 51 \
6 & 57 \
7 & 60 \
8 & 50 \
9 & \mathbf { 5 7 } \
\hline
\end{array}
\end{array}$$
-(Table: Production of Bagels)Use Table: Production of Bagels.The marginal product of the fifth worker is _____ bagels.

Accepted Answer

A)  5 000 
B)  9 000 
C)  10 000 
D)  12 000 
A)  5 000 
B)  9 000 
C)  10 000 
D)  12 000

Question 14

Average variable cost is:

Accepted Answer

A)  variable cost per unit multiplied by quantity. 
B)  total variable cost divided by quantity. 
C)  the difference between average total cost and total cost. 
D)  the difference between total cost and total fixed cost. 
A)  variable cost per unit multiplied by quantity. 
B)  total variable cost divided by quantity. 
C)  the difference between average total cost and total cost. 
D)  the difference between total cost and total fixed cost.

Question 15

Use the following to answer questions :  
-(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.At 6 units of output,the average total cost is approximately:

Accepted Answer

A)  $100. 
B)  $120. 
C)  $170. 
D)  $250. 
A)  $100. 
B)  $120. 
C)  $170. 
D)  $250.

Question 16

Average variable cost is the ratio of:

Accepted Answer

A)  total cost to the marginal cost. 
B)  variable inputs to fixed inputs. 
C)  variable cost to the quantity of output. 
D)  fixed cost to variable cost. 
A)  total cost to the marginal cost. 
B)  variable inputs to fixed inputs. 
C)  variable cost to the quantity of output. 
D)  fixed cost to variable cost.

Question 17

At quantities less than the long-run minimum cost per unit of output,the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Accepted Answer

A)  tangent to the minimum 
B)  tangent to the maximum 
C)  to the right of the minimum 
D)  to the left of the minimum 
A)  tangent to the minimum 
B)  tangent to the maximum 
C)  to the right of the minimum 
D)  to the left of the minimum

Question 18

Use the following to answer questions : $\text {Table: Bonnie's Production Function for Good Z}$
$\text {The table describes Bonnie's production function for }$
$\text {Good Z. Assume labour is the only variable input that}$
$\text { Bonnie uses to produce Good Z.}$

$ \begin{array}{lr}
\hline \text {Quantity of}&\text {Quantity of}\
\text {Labour Hired}&\text {Good Z Produced}\
\text {(workers)}&\text {(per time period)}\
\hline 0 & 0 \ 1 & 75 \ 2 & 150 \ 3 & 250 \ 4 & 325 \ 5 & 375\end{array} $

-(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Diminishing returns to labour begin to kick in after Bonnie hires the _____ worker.

Accepted Answer

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

Question 19

Lauren has 11 people working in her tangerine grove.The marginal product of the eleventh worker is 13 kilograms of tangerines.If she hires a twelfth worker,the marginal product of that worker will be _____ kilograms.

Accepted Answer

A)  14 
B)  15 
C)  12 
D)  The answer cannot be determined with the information available. 
A)  14 
B)  15 
C)  12 
D)  The answer cannot be determined with the information available.

Question 20

Use the following to answer questions :  
-(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.Curve 1 crosses the average variable cost curve at:

Accepted Answer

A)  3 units of output. 
B)  approximately 5.3 units of output. 
C)  the minimum value of curve 2. 
D)  the level of output at which diminishing marginal returns begin. 
A)  3 units of output. 
B)  approximately 5.3 units of output. 
C)  the minimum value of curve 2. 
D)  the level of output at which diminishing marginal returns begin.

When a firm adds physical capital,its fixed cost will decrease in the short run.

Economies and diseconomies of scale are associated with the:

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 marginal cost of producing the fourth purse is:

In the short run,and with non-zero fixed costs,the average total cost curve always lies above the average variable cost curve.

In the long run:

A total product curve indicates the relationship between _____ when all other inputs are fixed.

When the long-run average total cost curve is downward sloping as output increases,the firm has diseconomies of scale.

The change in total cost resulting from a one-unit change in quantity is _____ cost.

Use the following to answer questions : Table: Costs of Birthday Cakes Quantity of cakes Variable cost, 0 0 1 15 2 25 3 30 4 38 5 50 6 70 -(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average total cost of five cakes?

Use the following to answer questions : Table: Production of Bagels Number of Workers Per Period Thousands of Bagels Per Period 0 0 1 5 2 15 3 30 4 42 5 51 6 57 7 60 8 50 9 -(Table: Production of Bagels)Use Table: Production of Bagels.The marginal product of the fifth worker is _____ bagels.

Average variable cost is:

Use the following to answer questions : -(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.At 6 units of output,the average total cost is approximately:

Average variable cost is the ratio of:

At quantities less than the long-run minimum cost per unit of output,the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Lauren has 11 people working in her tangerine grove.The marginal product of the eleventh worker is 13 kilograms of tangerines.If she hires a twelfth worker,the marginal product of that worker will be _____ kilograms.

Use the following to answer questions : -(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.Curve 1 crosses the average variable cost curve at:

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

When a firm adds physical capital,its fixed cost will decrease in the short run.

Economies and diseconomies of scale are associated with the:

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 marginal cost of producing the fourth purse is:

In the short run,and with non-zero fixed costs,the average total cost curve always lies above the average variable cost curve.

In the long run:

A total product curve indicates the relationship between _____ when all other inputs are fixed.

When the long-run average total cost curve is downward sloping as output increases,the firm has diseconomies of scale.

The change in total cost resulting from a one-unit change in quantity is _____ cost.

Use the following to answer questions : Table: Costs of Birthday Cakes Quantity of cakes Variable cost, 0 0 1 15 2 25 3 30 4 38 5 50 6 70 -(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average total cost of five cakes?

Use the following to answer questions : Table: Production of Bagels Number of Workers Per Period Thousands of Bagels Per Period 0 0 1 5 2 15 3 30 4 42 5 51 6 57 7 60 8 50 9 -(Table: Production of Bagels)Use Table: Production of Bagels.The marginal product of the fifth worker is _____ bagels.

Average variable cost is:

Use the following to answer questions : -(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.At 6 units of output,the average total cost is approximately:

Average variable cost is the ratio of:

At quantities less than the long-run minimum cost per unit of output,the long-run average total cost curve is _____ of the corresponding short-run average total cost curve.

Lauren has 11 people working in her tangerine grove.The marginal product of the eleventh worker is 13 kilograms of tangerines.If she hires a twelfth worker,the marginal product of that worker will be _____ kilograms.

Use the following to answer questions : -(Figure: Short-Run Costs II)Use Figure: Short-Run Costs II.Curve 1 crosses the average variable cost curve at:

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