Question 1

When output is 100 units, the firm's total fixed cost is $50. What will this firm's total fixed cost be if output doubles to 200 units?

Accepted Answer

A)  $1,000 
B)  $50 
C)  $100 
D)  Can't tell from the information provided. 
A)  $1,000 
B)  $50 
C)  $100 
D)  Can't tell from the information provided.

Question 2

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first two workers?

Accepted Answer

A)  15 cookies 
B)  20 cookies 
C)  17.5 cookies 
D)  35 cookies 
A)  15 cookies 
B)  20 cookies 
C)  17.5 cookies 
D)  35 cookies

Question 3

-In the above table, what is the average total cost to produce 5 units of output?

Accepted Answer

A)  $80 
B)  $55 
C)  $40 
D)  $60 
A)  $80 
B)  $55 
C)  $40 
D)  $60

Question 4

The law of diminishing marginal product shows the relationship

Accepted Answer

A)  between accounting and economic profits. 
B)  between short-run and long-run outputs of a firm. 
C)  between inputs and outputs for a firm in the short run. 
D)  between inputs and outputs for a firm in the long run. 
A)  between accounting and economic profits. 
B)  between short-run and long-run outputs of a firm. 
C)  between inputs and outputs for a firm in the short run. 
D)  between inputs and outputs for a firm in the long run.

Question 5

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

Accepted Answer

A)  the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B)  the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C)  long-run average total cost is lowest at that rate of output. 
D)  total fixed cots are minimized at that rate of output. 
A)  the short-run marginal cost curve crosses the short-run average total cost curve at that rate of output. 
B)  the long-run marginal cost curve crosses the long-run average fixed cost curve at that rate of output. 
C)  long-run average total cost is lowest at that rate of output. 
D)  total fixed cots are minimized at that rate of output.

Question 6

Which one of the following statements is FALSE?

Accepted Answer

A)  TC = TFC + TVC 
B)  ATC = AFC + AVC 
C)  AFC = TFC divided by Q 
D)  MC = TC divided by Q 
A)  TC = TFC + TVC 
B)  ATC = AFC + AVC 
C)  AFC = TFC divided by Q 
D)  MC = TC divided by Q

Question 7

What is minimum efficient scale? Why is it important?

Accepted Answer

Minimum efficient scale (MES) is the low

Question 8

-Using the above table, the average product and marginal product when 4 workers are employed are

Accepted Answer

A)  13 and 13, respectively. 
B)  13 and 14, respectively. 
C)  13 and 9, respectively. 
D)  14 and 13, respectively. 
A)  13 and 13, respectively. 
B)  13 and 14, respectively. 
C)  13 and 9, respectively. 
D)  14 and 13, respectively.

Question 9

The law of diminishing marginal product indicates that

Accepted Answer

A)  average product will eventually decrease. 
B)  marginal product will eventually decrease. 
C)  total product will eventually decrease. 
D)  resources are inefficient. 
A)  average product will eventually decrease. 
B)  marginal product will eventually decrease. 
C)  total product will eventually decrease. 
D)  resources are inefficient.

Question 10

The difference between the short run and the long run is

Accepted Answer

A)  economic profits are negative in the short run and positive in the long run. 
B)  economic and accounting profits are not equal in the short run but are equal in the long run. 
C)  that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D)  the short run is a period less than a year while the long run is a period greater than a year. 
A)  economic profits are negative in the short run and positive in the long run. 
B)  economic and accounting profits are not equal in the short run but are equal in the long run. 
C)  that in the short run at least one factor of production cannot be varied while in the long run all factors of production can be varied. 
D)  the short run is a period less than a year while the long run is a period greater than a year.

Question 11

-Use the above figure. The ATC at output 10 is

Accepted Answer

A)  $30.00. 
B)  $2.67. 
C)  $2.00. 
D)  $3.00. 
A)  $30.00. 
B)  $2.67. 
C)  $2.00. 
D)  $3.00.

Question 12

-In the above figure, for any output level larger than Q3, this firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  decreasing long run average costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant economies of scale. 
D)  decreasing long run average costs.

Question 13

-In the above table, when output is 8 units, average variable costs are

Accepted Answer

A)  $4.75. 
B)  $3.50. 
C)  $1.25. 
D)  $4.50. 
A)  $4.75. 
B)  $3.50. 
C)  $1.25. 
D)  $4.50.

Question 14

During the short run, a firm cannot

Accepted Answer

A)  increase its use of labor. 
B)  change its plant size. 
C)  purchase more raw materials. 
D)  change its variable costs. 
A)  increase its use of labor. 
B)  change its plant size. 
C)  purchase more raw materials. 
D)  change its variable costs.

Question 15

At Phil's Pretzel Stand, we found the following: 4 laborers produced 66 pretzels
5 laborers produced 76 pretzels
6 laborers produced 85 pretzels
7 laborers produced 88 pretzels
What was the marginal product of the sixth laborer?

Accepted Answer

A)  10 pretzels 
B)  9 pretzels 
C)  6 pretzels 
D)  3 pretzels 
A)  10 pretzels 
B)  9 pretzels 
C)  6 pretzels 
D)  3 pretzels

Question 16

If Dell, a computer company, is determining whether to build a new plant in Texas or in New Mexico, it is making a(n) ________ decision.

Accepted Answer

A)  immediate-run 
B)  long-run 
C)  short-run 
D)  variable-input 
A)  immediate-run 
B)  long-run 
C)  short-run 
D)  variable-input

Question 17

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

Accepted Answer

A)  OF. 
B)  OE. 
C)  OC. 
D)  OD. 
A)  OF. 
B)  OE. 
C)  OC. 
D)  OD.

Question 18

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

Accepted Answer

When average costs continue to decline a

Question 19

Marginal cost begins to rise when

Accepted Answer

A)  diminishing marginal product begins. 
B)  diminishing marginal product ends. 
C)  average total cost falls. 
D)  fixed cost falls. 
A)  diminishing marginal product begins. 
B)  diminishing marginal product ends. 
C)  average total cost falls. 
D)  fixed cost falls.

Question 20

If four workers were hired and we discovered that we could produce 88 units of production, what is the average physical product of labor?

Accepted Answer

A)  44 
B)  352 
C)  11 
D)  22 
A)  44 
B)  352 
C)  11 
D)  22

Exam 22: The Firm: Cost and Output Determination

When output is 100 units, the firm's total fixed cost is $50. What will this firm's total fixed cost be if output doubles to 200 units?

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first two workers?

-In the above table, what is the average total cost to produce 5 units of output?

The law of diminishing marginal product shows the relationship

A single-plant firm trying to select the rate of output consistent with an overall plant size that yields the minimum efficient scale will choose a rate of output for which

Which one of the following statements is FALSE?

What is minimum efficient scale? Why is it important?

-Using the above table, the average product and marginal product when 4 workers are employed are

The law of diminishing marginal product indicates that

The difference between the short run and the long run is

-Use the above figure. The ATC at output 10 is

-In the above figure, for any output level larger than Q3, this firm experiences

-In the above table, when output is 8 units, average variable costs are

During the short run, a firm cannot

At Phil's Pretzel Stand, we found the following: 4 laborers produced 66 pretzels 5 laborers produced 76 pretzels 6 laborers produced 85 pretzels 7 laborers produced 88 pretzels What was the marginal product of the sixth laborer?

If Dell, a computer company, is determining whether to build a new plant in Texas or in New Mexico, it is making a(n) ________ decision.

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

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

Marginal cost begins to rise when

If four workers were hired and we discovered that we could produce 88 units of production, what is the average physical 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

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