Question 1

Another term for the total quantity of output is

Accepted Answer

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

Question 2

Which of the following is correct?

Accepted Answer

A)  TC = TFC + TVC 
B)  TC = TFC - TVC 
C)  TC = TFC * TVC 
D)  TC = TFC / TVC 
A)  TC = TFC + TVC 
B)  TC = TFC - TVC 
C)  TC = TFC * TVC 
D)  TC = TFC / TVC

Question 3

Which of the following statements is correct?

Accepted Answer

A)  TC = TFC + TVC 
B)  TC = average product + marginal product 
C)  TC = TFC - TVC 
D)  TC = average physical product - marginal physical product 
A)  TC = TFC + TVC 
B)  TC = average product + marginal product 
C)  TC = TFC - TVC 
D)  TC = average physical product - marginal physical product

Question 4

If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker was

Accepted Answer

A)  -1 bushel of wheat. 
B)  5 bushels of wheat. 
C)  79 bushels of wheat. 
D)  99 bushels of wheat. 
A)  -1 bushel of wheat. 
B)  5 bushels of wheat. 
C)  79 bushels of wheat. 
D)  99 bushels of wheat.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  Average variable costs always exceed average total costs. 
B)  Average fixed costs are constant. 
C)  Average variable cost reaches its minimum when average product equals its maximum. 
D)  Average fixed costs are always less than average variable costs. 
A)  Average variable costs always exceed average total costs. 
B)  Average fixed costs are constant. 
C)  Average variable cost reaches its minimum when average product equals its maximum. 
D)  Average fixed costs are always less than average variable costs.

Question 6

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average variable costs of $50. The firm's total fixed costs are

Accepted Answer

A)  $50. 
B)  $5,000. 
C)  $150. 
D)  $15,000. 
A)  $50. 
B)  $5,000. 
C)  $150. 
D)  $15,000.

Question 7

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

Accepted Answer

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

Question 8

When the marginal physical product is rising

Accepted Answer

A)  total cost is falling. 
B)  average total cost is increasing. 
C)  marginal cost is falling. 
D)  marginal cost is rising. 
A)  total cost is falling. 
B)  average total cost is increasing. 
C)  marginal cost is falling. 
D)  marginal cost is rising.

Question 9

Explain how the long-run average cost curve is constructed graphically.

Accepted Answer

The long-run average cost curv

Question 10

-Using the above table, the marginal product of the 2nd worker is

Accepted Answer

A)  12. 
B)  14. 
C)  15. 
D)  13. 
A)  12. 
B)  14. 
C)  15. 
D)  13.

Question 11

-Use the above figure. At an output equal to "Q" the total cost for the firm will be the area

Accepted Answer

A)  OQDC. 
B)  OQFA. 
C)  OQBC. 
D)  OQEB. 
A)  OQDC. 
B)  OQFA. 
C)  OQBC. 
D)  OQEB.

Question 12

-According to the above table, at what usage of labor does diminishing marginal product begin?

Accepted Answer

A)  1 
B)  2 
C)  4 
D)  5 
A)  1 
B)  2 
C)  4 
D)  5

Question 13

What is the relationship between marginal cost and marginal physical product?

Accepted Answer

Assuming labor is the only variable inpu

Question 14

Which of the following would be a fixed input to an automobile firm?

Accepted Answer

A)  steel 
B)  a plant in California 
C)  car batteries 
D)  engineers 
A)  steel 
B)  a plant in California 
C)  car batteries 
D)  engineers

Question 15

Short-run total cost is defined as

Accepted Answer

A)  the sum of marginal cost and total variable cost. 
B)  price of labor per unit multiplied by the number of labor units. 
C)  total fixed cost plus total variable cost. 
D)  total capital cost only. 
A)  the sum of marginal cost and total variable cost. 
B)  price of labor per unit multiplied by the number of labor units. 
C)  total fixed cost plus total variable cost. 
D)  total capital cost only.

Question 16

What is the law of diminishing marginal product? Is it a realistic concept for describing the real world? Explain.

Accepted Answer

The law of diminishing marginal product

Question 17

If average total cost is decreasing as more and more units are produced, then marginal cost must be

Accepted Answer

A)  rising. 
B)  constant. 
C)  below average total cost. 
D)  negative. 
A)  rising. 
B)  constant. 
C)  below average total cost. 
D)  negative.

Question 18

A production function is a(n)

Accepted Answer

A)  cost relationship. 
B)  economic relationship. 
C)  accounting relationship. 
D)  technological relationship. 
A)  cost relationship. 
B)  economic relationship. 
C)  accounting relationship. 
D)  technological relationship.

Question 19

-According to the above table, what is the marginal product of the 4th unit of labor?

Accepted Answer

A)  3 
B)  5 
C)  6 
D)  7 
A)  3 
B)  5 
C)  6 
D)  7

Question 20

The observation that after some point, successive equal size increases in a variable factor of production, such as labor, added to fixed factors of production, will result in smaller increases in output is the

Accepted Answer

A)  law of diminishing marginal product. 
B)  streamlining production function. 
C)  consumer equilibrium. 
D)  theory of increasing marginal utility. 
A)  law of diminishing marginal product. 
B)  streamlining production function. 
C)  consumer equilibrium. 
D)  theory of increasing marginal utility.

Exam 22: The Firm: Cost and Output Determination

Another term for the total quantity of output is

Which of the following is correct?

Which of the following statements is correct?

If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker was

Which of the following statements is correct?

Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average variable costs of $50. The firm's total fixed costs are

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

When the marginal physical product is rising

Explain how the long-run average cost curve is constructed graphically.

-Using the above table, the marginal product of the 2nd worker is

-Use the above figure. At an output equal to "Q" the total cost for the firm will be the area

-According to the above table, at what usage of labor does diminishing marginal product begin?

What is the relationship between marginal cost and marginal physical product?

Which of the following would be a fixed input to an automobile firm?

Short-run total cost is defined as

What is the law of diminishing marginal product? Is it a realistic concept for describing the real world? Explain.

If average total cost is decreasing as more and more units are produced, then marginal cost must be

A production function is a(n)

-According to the above table, what is the marginal product of the 4th unit of labor?

The observation that after some point, successive equal size increases in a variable factor of production, such as labor, added to fixed factors of production, will result in smaller increases in output is the

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