Question 1

-Refer to the above table. What does total product equal when 3 units of labor are used?

Accepted Answer

A)  336 
B)  1008 
C)  338 
D)  3 
A)  336 
B)  1008 
C)  338 
D)  3

Question 2

"If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain.

Accepted Answer

Disagree. If the minimum efficient scale

Question 3

When long-run average costs rise as output increases, the firm is experiencing

Accepted Answer

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

Question 4

Fixed costs are

Accepted Answer

A)  costs that never change. 
B)  costs that a firm incurs even when output is zero. 
C)  not actually costs since they do not affect the decisions of a firm. 
D)  costs that increase at a constant rate when output increases. 
A)  costs that never change. 
B)  costs that a firm incurs even when output is zero. 
C)  not actually costs since they do not affect the decisions of a firm. 
D)  costs that increase at a constant rate when output increases.

Question 5

Ajax Corporation has recently finished building a new factory. They moved into the factory a month ago and found that it is the perfect size given the amount they want to produce. Ajax is now operating in the

Accepted Answer

A)  production time. 
B)  corporation time. 
C)  long run. 
D)  short run. 
A)  production time. 
B)  corporation time. 
C)  long run. 
D)  short run.

Question 6

-In the above table, which two workers have the same marginal product?

Accepted Answer

A)  1 and 2 
B)  2 and 4 
C)  1 and 3 
D)  1 and 4 
A)  1 and 2 
B)  2 and 4 
C)  1 and 3 
D)  1 and 4

Question 7

Notice the costs as given in the table below. What is the marginal cost when total cost is $23?

Accepted Answer

A)  $5 
B)  $3 
C)  $2 
D)  $1 
A)  $5 
B)  $3 
C)  $2 
D)  $1

Question 8

In the short run, the additional output that results from hiring an additional unit of a variable input is the

Accepted Answer

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

Question 9

The change in total variable cost which accompanies one extra unit of output is

Accepted Answer

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

Question 10

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that

Accepted Answer

A)  the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at the 190th worker. 
B)  the total output curve is increasing at an increasing rate from workers 1-89, then increases at a decreasing rate until the 190th worker, after which it decreases. 
C)  the total output curve is increasing throughout, although at an increasing rate for the first 190 workers and at a decreasing rate after the 190th worker. 
D)  diminishing marginal product sets in with the 190th worker. 
A)  the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at the 190th worker. 
B)  the total output curve is increasing at an increasing rate from workers 1-89, then increases at a decreasing rate until the 190th worker, after which it decreases. 
C)  the total output curve is increasing throughout, although at an increasing rate for the first 190 workers and at a decreasing rate after the 190th worker. 
D)  diminishing marginal product sets in with the 190th worker.

Question 11

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Accepted Answer

A)  $19. 
B)  $10. 
C)  $22. 
D)  $31. 
A)  $19. 
B)  $10. 
C)  $22. 
D)  $31.

Question 12

Which equation is used by a manager when considering total cost?

Accepted Answer

A)  total costs (T
C)  = consumption (
C)  + investment (I) + government (G) 
B)  total costs (T
C)  = average fixed costs (AF
C)  + number of workers 
C)  total costs (T
C)  = average total costs (AT
C)  
D)  total costs (T
C)  = total fixed costs (TF
C)  + total variable costs (TV
C)  
A)  total costs (T
C)  = consumption (
C)  + investment (I) + government (G) 
B)  total costs (T
C)  = average fixed costs (AF
C)  + number of workers 
C)  total costs (T
C)  = average total costs (AT
C)  
D)  total costs (T
C)  = total fixed costs (TF
C)  + total variable costs (TV
C)

Question 13

-Refer to the above table. What does the marginal product equal when the quantity of labor goes from 3 to 4?

Accepted Answer

A)  9 
B)  18 
C)  72 
D)  216 
A)  9 
B)  18 
C)  72 
D)  216

Question 14

The law of diminishing marginal product is responsible for

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  none of the long-run relationships. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  none of the long-run relationships.

Question 15

-According to the above table, what is the average product of labor when five laborers are employed?

Accepted Answer

A)  3 
B)  5.2 
C)  5.75 
D)  6 
A)  3 
B)  5.2 
C)  5.75 
D)  6

Question 16

-In the above figure, the long-run cost curve between points A and B illustrates

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 17

The marginal cost curve intersects

Accepted Answer

A)  the average fixed cost curve at its minimum. 
B)  the average total cost curve at its maximum. 
C)  the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D)  the minimum of the average variable cost and average total cost curves. 
A)  the average fixed cost curve at its minimum. 
B)  the average total cost curve at its maximum. 
C)  the minimum of the average fixed cost, average variable cost and the average total cost curves. 
D)  the minimum of the average variable cost and average total cost curves.

Question 18

The average product of labor is equal to

Accepted Answer

A)  total product divided by quantity of labor. 
B)  change in total product divided by quantity of labor. 
C)  total product divided by change in quantity of labor. 
D)  change in total product divided by change in quantity of labor. 
A)  total product divided by quantity of labor. 
B)  change in total product divided by quantity of labor. 
C)  total product divided by change in quantity of labor. 
D)  change in total product divided by change in quantity of labor.

Question 19

-In the above table, the marginal cost of the seventh unit is

Accepted Answer

A)  $4.00. 
B)  $5.00. 
C)  $3.00. 
D)  $33.00. 
A)  $4.00. 
B)  $5.00. 
C)  $3.00. 
D)  $33.00.

Question 20

Marginal product and average product are measured in

Accepted Answer

A)  dollars. 
B)  profit terms. 
C)  units of production. 
D)  the same units as marginal cost and average total cost. 
A)  dollars. 
B)  profit terms. 
C)  units of production. 
D)  the same units as marginal cost and average total cost.

Exam 22: The Firm: Cost and Output Determination

-Refer to the above table. What does total product equal when 3 units of labor are used?

"If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain.

When long-run average costs rise as output increases, the firm is experiencing

Fixed costs are

Ajax Corporation has recently finished building a new factory. They moved into the factory a month ago and found that it is the perfect size given the amount they want to produce. Ajax is now operating in the

-In the above table, which two workers have the same marginal product?

Notice the costs as given in the table below. What is the marginal cost when total cost is $23?

In the short run, the additional output that results from hiring an additional unit of a variable input is the

The change in total variable cost which accompanies one extra unit of output is

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Which equation is used by a manager when considering total cost?

-Refer to the above table. What does the marginal product equal when the quantity of labor goes from 3 to 4?

The law of diminishing marginal product is responsible for

-According to the above table, what is the average product of labor when five laborers are employed?

-In the above figure, the long-run cost curve between points A and B illustrates

The marginal cost curve intersects

The average product of labor is equal to

-In the above table, the marginal cost of the seventh unit is

Marginal product and average product are measured in

The Nature of Economics

Scarcity and the World of Trade-Offs

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Extensions of Demand and Supply Analysis

Public Spending and Public Choice

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The Macroeconomy: Unemployment, Inflation, and Deflation

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Global Economic Growth and Development

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Consumer Choice

Rents, Profits, and the Financial Environment of Business

Perfect Competition

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Regulation and Antitrust Policy in a Globalized Economy

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Environmental Economics

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