Question 1

-Using the above table, the TVC, the TC, and MC when output is 3 units are

Accepted Answer

A)  $45, $50, and $15, respectively. 
B)  $15, $20, and $15, respectively. 
C)  $45, $18, and $15, respectively. 
D)  $15, $45, and $15, respectively. 
A)  $45, $50, and $15, respectively. 
B)  $15, $20, and $15, respectively. 
C)  $45, $18, and $15, respectively. 
D)  $15, $45, and $15, respectively.

Question 2

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

Accepted Answer

A)  21 
B)  17 
C)  63 
D)  189 
A)  21 
B)  17 
C)  63 
D)  189

Question 3

Increases in long-run average cost that result from output increases is

Accepted Answer

A)  the law of diminishing marginal product. 
B)  economies of scale. 
C)  constant returns to scale. 
D)  diseconomies of scale. 
A)  the law of diminishing marginal product. 
B)  economies of scale. 
C)  constant returns to scale. 
D)  diseconomies of scale.

Question 4

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

Accepted Answer

A)  is zero. 
B)  is at its minimum. 
C)  is at its maximum. 
D)  has a vertical slope. 
A)  is zero. 
B)  is at its minimum. 
C)  is at its maximum. 
D)  has a vertical slope.

Question 5

-Refer to the above table. What are total fixed costs at an output of 2 units?

Accepted Answer

A)  $50 
B)  $100 
C)  $150 
D)  $200 
A)  $50 
B)  $100 
C)  $150 
D)  $200

Question 6

Which of the following would NOT be considered a fixed cost of production?

Accepted Answer

A)  wages paid to labor 
B)  the opportunity cost of capital 
C)  interest payments on a loan 
D)  insurance payments on plant and equipment 
A)  wages paid to labor 
B)  the opportunity cost of capital 
C)  interest payments on a loan 
D)  insurance payments on plant and equipment

Question 7

The law of diminishing marginal product is NOT responsible for the shape of

Accepted Answer

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

Question 8

The relationship between inputs and outputs is known as

Accepted Answer

A)  business. 
B)  manufacturing. 
C)  a production function. 
D)  marginal product. 
A)  business. 
B)  manufacturing. 
C)  a production function. 
D)  marginal product.

Question 9

All of the following are most likely to be fixed costs EXCEPT the cost relating to

Accepted Answer

A)  insurance. 
B)  taxes. 
C)  rent. 
D)  packaging. 
A)  insurance. 
B)  taxes. 
C)  rent. 
D)  packaging.

Question 10

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?

Accepted Answer

A)  20 cookies 
B)  25 cookies 
C)  35 cookies 
D)  40 cookies 
A)  20 cookies 
B)  25 cookies 
C)  35 cookies 
D)  40 cookies

Question 11

When total product is rising

Accepted Answer

A)  fixed cost must be rising. 
B)  marginal product must be positive. 
C)  variable cost must be declining. 
D)  marginal product must be negative. 
A)  fixed cost must be rising. 
B)  marginal product must be positive. 
C)  variable cost must be declining. 
D)  marginal product must be negative.

Question 12

Which of the following statements is TRUE about the planning horizon?

Accepted Answer

A)  All inputs are fixed. 
B)  All inputs are variable. 
C)  There are fixed and variable inputs. 
D)  Costs do not exist. 
A)  All inputs are fixed. 
B)  All inputs are variable. 
C)  There are fixed and variable inputs. 
D)  Costs do not exist.

Question 13

The typical shape of the long-run average cost curve is like

Accepted Answer

A)  the letter "C." 
B)  the letter "U." 
C)  an inverse of the letter "V." 
D)  a circle. 
A)  the letter "C." 
B)  the letter "U." 
C)  an inverse of the letter "V." 
D)  a circle.

Question 14

The long run for a business is a period of time

Accepted Answer

A)  longer than a year. 
B)  when most inputs are variable. 
C)  when all inputs can change. 
D)  when labor is the only input used by the business. 
A)  longer than a year. 
B)  when most inputs are variable. 
C)  when all inputs can change. 
D)  when labor is the only input used by the business.

Question 15

-Refer to the above table. What are total variable costs at an output of 2 units?

Accepted Answer

A)  $50 
B)  $100 
C)  $150 
D)  $200 
A)  $50 
B)  $100 
C)  $150 
D)  $200

Question 16

The production function does NOT provide information about

Accepted Answer

A)  the technology used in the production process. 
B)  the types of inputs used in the production process. 
C)  the relationship between changes in quantity of inputs and changes in the quantity of output. 
D)  the profits of producing a good. 
A)  the technology used in the production process. 
B)  the types of inputs used in the production process. 
C)  the relationship between changes in quantity of inputs and changes in the quantity of output. 
D)  the profits of producing a good.

Question 17

If marginal product is zero, we know that

Accepted Answer

A)  total product is also zero. 
B)  average product is also zero. 
C)  total output is maximized. 
D)  average product is constant. 
A)  total product is also zero. 
B)  average product is also zero. 
C)  total output is maximized. 
D)  average product is constant.

Question 18

The change in output caused by a one-unit change in labor is referred to as the

Accepted Answer

A)  compounded physical product of labor. 
B)  average product of labor. 
C)  marginal product of labor. 
D)  total product of labor. 
A)  compounded physical product of labor. 
B)  average product of labor. 
C)  marginal product of labor. 
D)  total product of labor.

Question 19

-In the above table, the law of diminishing marginal product sets in after the ________ worker.

Accepted Answer

A)  first 
B)  sixth 
C)  third 
D)  fourth 
A)  first 
B)  sixth 
C)  third 
D)  fourth

Question 20

When a company produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is that company average fixed cost?

Accepted Answer

A)  $75,000 
B)  $30 
C)  $225,000 
D)  $15 
A)  $75,000 
B)  $30 
C)  $225,000 
D)  $15

Exam 22: The Firm: Cost and Output Determination

-Using the above table, the TVC, the TC, and MC when output is 3 units are

-Refer to the above table. When the quantity of labor equals 3, what does the average product equal?

Increases in long-run average cost that result from output increases is

The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curve

-Refer to the above table. What are total fixed costs at an output of 2 units?

Which of the following would NOT be considered a fixed cost of production?

The law of diminishing marginal product is NOT responsible for the shape of

The relationship between inputs and outputs is known as

All of the following are most likely to be fixed costs EXCEPT the cost relating to

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?

When total product is rising

Which of the following statements is TRUE about the planning horizon?

The typical shape of the long-run average cost curve is like

The long run for a business is a period of time

-Refer to the above table. What are total variable costs at an output of 2 units?

The production function does NOT provide information about

If marginal product is zero, we know that

The change in output caused by a one-unit change in labor is referred to as the

-In the above table, the law of diminishing marginal product sets in after the ________ worker.

When a company produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is that company average fixed cost?

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

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