Question 1

-In a graph showing the short-run cost curves, the one curve which declines continuously as we expand output is called

Accepted Answer

A)  the average fixed cost curve. 
B)  the average variable cost curve. 
C)  the average total cost curve. 
D)  the marginal cost curve. 
A)  the average fixed cost curve. 
B)  the average variable cost curve. 
C)  the average total cost curve. 
D)  the marginal cost curve.

Question 2

-Refer to the above table. What are total variable costs at an output of 3 units?

Accepted Answer

A)  $90 
B)  $120 
C)  $150 
D)  $270 
A)  $90 
B)  $120 
C)  $150 
D)  $270

Question 3

-Refer to the above table. What are total fixed costs at an output of 3 units?

Accepted Answer

A)  $90 
B)  $120 
C)  $150 
D)  $270 
A)  $90 
B)  $120 
C)  $150 
D)  $270

Question 4

Short-run cost relationships for a firm are

Accepted Answer

A)  determined by the law of diminishing marginal product. 
B)  determined by the specific long-run relationships that exist. 
C)  due to the level of wages relative to other input prices. 
D)  due to the normal contractual relations in a market. 
A)  determined by the law of diminishing marginal product. 
B)  determined by the specific long-run relationships that exist. 
C)  due to the level of wages relative to other input prices. 
D)  due to the normal contractual relations in a market.

Question 5

-Refer to the above figure. The curve represents a

Accepted Answer

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

Question 6

Total fixed cost is

Accepted Answer

A)  the cost of buying and installing new machinery. 
B)  the cost that does not change as output changes. 
C)  the expenditure on imported raw materials. 
D)  the wages paid to consultants. 
A)  the cost of buying and installing new machinery. 
B)  the cost that does not change as output changes. 
C)  the expenditure on imported raw materials. 
D)  the wages paid to consultants.

Question 7

Which of the following would be a fixed input for an amusement park?

Accepted Answer

A)  ticket booth workers 
B)  unpopped popcorn 
C)  concession workers 
D)  a roller coaster 
A)  ticket booth workers 
B)  unpopped popcorn 
C)  concession workers 
D)  a roller coaster

Question 8

When El Torito Restaurant is deciding to open a new restaurant location in another town, it is making a ________ decision.

Accepted Answer

A)  labor 
B)  long-run 
C)  short-run 
D)  fixed-input 
A)  labor 
B)  long-run 
C)  short-run 
D)  fixed-input

Question 9

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

Accepted Answer

Disagree. It is True that the average va

Question 10

-Refer to the above figure. The curve reflects

Accepted Answer

A)  the law of diminishing marginal product in labor. 
B)  the law of increasing marginal product in labor. 
C)  the law of diminishing marginal product in capital. 
D)  the law of increasing marginal product in capital. 
A)  the law of diminishing marginal product in labor. 
B)  the law of increasing marginal product in labor. 
C)  the law of diminishing marginal product in capital. 
D)  the law of increasing marginal product in capital.

Question 11

In economics, how long is the long run?

Accepted Answer

A)  more than one year 
B)  24 months or longer 
C)  5 years or more 
D)  whatever time it takes a firm to vary all inputs 
A)  more than one year 
B)  24 months or longer 
C)  5 years or more 
D)  whatever time it takes a firm to vary all inputs

Question 12

For a firm, we define the short run as a period of time during which

Accepted Answer

A)  at least one input cannot be changed. 
B)  all inputs can be changed. 
C)  only the plant size can be changed. 
D)  all inputs cannot be changed. 
A)  at least one input cannot be changed. 
B)  all inputs can be changed. 
C)  only the plant size can be changed. 
D)  all inputs cannot be changed.

Question 13

What is the difference between average variable costs and average total costs?

Accepted Answer

Average total costs equal average variab

Question 14

-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 15

Notice the costs as given in the table below. What is the total fixed cost in the table below?

Accepted Answer

A)  $5 
B)  $0 
C)  $10 
D)  $9 
A)  $5 
B)  $0 
C)  $10 
D)  $9

Question 16

Will's Franks originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Will purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been successful. When Will's Franks expanded to two locations, which of the following did NOT occur?

Accepted Answer

A)  Will's production function changed. 
B)  Production increased. 
C)  The company increased the inputs it employs. 
D)  The firm employed additional capital. 
A)  Will's production function changed. 
B)  Production increased. 
C)  The company increased the inputs it employs. 
D)  The firm employed additional capital.

Question 17

Which of the following statements is FALSE?

Accepted Answer

A)  Included in the firm's short-run production function are both fixed and variable inputs. 
B)  An efficient firm can obtain more output than the production function shows. 
C)  The production function shows the technical relationship between a firm's inputs and outputs. 
D)  The production function presents the technically efficient methods of combining inputs to produce output. 
A)  Included in the firm's short-run production function are both fixed and variable inputs. 
B)  An efficient firm can obtain more output than the production function shows. 
C)  The production function shows the technical relationship between a firm's inputs and outputs. 
D)  The production function presents the technically efficient methods of combining inputs to produce output.

Question 18

Recently Apple Computer developed Apple's new iTunes Music Store, which offers more than 200,000 songs from five major record labels, for use with Apple's iPod and iMac. More than a million songs were downloaded the first week alone! In economic terms, CEO Tim Cook helped convert capital and labor inputs into products consumers use. Any activity that results in the conversion of resources into products that can be used in consumption is

Accepted Answer

A)  not profitable. 
B)  a start up venture. 
C)  demand. 
D)  production. 
A)  not profitable. 
B)  a start up venture. 
C)  demand. 
D)  production.

Question 19

-Refer to the above table. MC is the lowest

Accepted Answer

A)  between 0 and 1 units of output. 
B)  between 1 and 2 units of output. 
C)  between 3 and 4 units of output. 
D)  at 0 units of output. 
A)  between 0 and 1 units of output. 
B)  between 1 and 2 units of output. 
C)  between 3 and 4 units of output. 
D)  at 0 units of output.

Question 20

As long as marginal product of labor exceeds the average product of labor, then average product of labor

Accepted Answer

A)  must fall. 
B)  must rise. 
C)  will stay unchanged. 
D)  will be at its maximum value. 
A)  must fall. 
B)  must rise. 
C)  will stay unchanged. 
D)  will be at its maximum value.

Exam 22: The Firm: Cost and Output Determination

-In a graph showing the short-run cost curves, the one curve which declines continuously as we expand output is called

-Refer to the above table. What are total variable costs at an output of 3 units?

-Refer to the above table. What are total fixed costs at an output of 3 units?

Short-run cost relationships for a firm are

-Refer to the above figure. The curve represents a

Total fixed cost is

Which of the following would be a fixed input for an amusement park?

When El Torito Restaurant is deciding to open a new restaurant location in another town, it is making a ________ decision.

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

-Refer to the above figure. The curve reflects

In economics, how long is the long run?

For a firm, we define the short run as a period of time during which

What is the difference between average variable costs and average total costs?

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

Notice the costs as given in the table below. What is the total fixed cost in the table below?

Which of the following statements is FALSE?

-Refer to the above table. MC is the lowest

As long as marginal product of labor exceeds the average product of labor, then average product of labor

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

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

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