Question 1

Refer to the following graph.The price of capital r)is $20.   What is the lowest possible cost of producing 5,000 units of output?

Accepted Answer

A) $1,800 
B) $2,400 
C) $2,600 
D) $1,400 
E) $3,000 
A) $1,800 
B) $2,400 
C) $2,600 
D) $1,400 
E) $3,000

Question 2

Refer to the following graph.The price of labor is $3 per unit: What is the price per unit of capital?

Accepted Answer

A) $1.50 
B) $2.00 
C) $2.10 
D) $5.00 
A) $1.50 
B) $2.00 
C) $2.10 
D) $5.00

Question 3

Refer to the following graph.The price of capital r)is $20.   What is the lowest possible cost at which 14,000 units of output can be produced?

Accepted Answer

A) $8,600 
B) $2,400 
C) $3,600 
D) $4,200 
E) none of the above 
A) $8,600 
B) $2,400 
C) $3,600 
D) $4,200 
E) none of the above

Question 4

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.In equilibrium,

Accepted Answer

A) MPL will be less than 20. 
B) MPK will be more than 20. 
C) MPL will be 5 times MPK. 
D) a and b 
E) none of the above 
A) MPL will be less than 20. 
B) MPK will be more than 20. 
C) MPL will be 5 times MPK. 
D) a and b 
E) none of the above

Question 5

In the graph below,the price of capital is $500 per unit.When output is 10,000 units,what is long-run average cost?

Accepted Answer

A) $0.20 
B) $5 
C) $20 
D) $500 
E) none of the above 
A) $0.20 
B) $5 
C) $20 
D) $500 
E) none of the above

Question 6

In the following graph,the price of labor is $15 per unit.The minimum cost of producing 1,000 units of output is:

Accepted Answer

A) $ 150   
B) $ 450 
C) $ 600 
D) $1,800 
E) none of the above 
A) $ 150   
B) $ 450 
C) $ 600 
D) $1,800 
E) none of the above

Question 7

A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output.The price of labor is $200 per unit and the price of capital is $100 per unit.At these input levels,another unit of labor adds 400 units to output and another unit of capital adds 600 units to output.The firm

Accepted Answer

A) is minimizing the cost of producing 2,000 units of output. 
B) could produce 6 more units of output at the same cost by switching $1 from labor to capital. 
C) could produce 4 more units of output at the same cost by switching $1 from labor to capital. 
D) could keep output constant and reduce cost by using more capital and less labor. 
E) both c and d 
A) is minimizing the cost of producing 2,000 units of output. 
B) could produce 6 more units of output at the same cost by switching $1 from labor to capital. 
C) could produce 4 more units of output at the same cost by switching $1 from labor to capital. 
D) could keep output constant and reduce cost by using more capital and less labor. 
E) both c and d

Question 8

Given the above graph,the marginal rate of technical substitution at point A is

Accepted Answer

A) less than 0.25. 
B) less than 4.0. 
C) greater than 0.25. 
D) greater than 4.0. 
A) less than 0.25. 
B) less than 4.0. 
C) greater than 0.25. 
D) greater than 4.0.

Question 9

Refer to the following figure.The price of capital is $50 per unit:   What is the price per unit of labor?

Accepted Answer

A) $25 
B) $20 
C) $10 
D) $ 2 
A) $25 
B) $20 
C) $10 
D) $ 2

Question 10

Long-run total cost

Accepted Answer

A) represents the lowest possible cost of producing a given level of output. 
B) is always equal to or greater than short-run total cost. 
C) is tangent to short-run total cost when short-run total cost is at its minimum point. 
D) both a and b 
E) all of the above 
A) represents the lowest possible cost of producing a given level of output. 
B) is always equal to or greater than short-run total cost. 
C) is tangent to short-run total cost when short-run total cost is at its minimum point. 
D) both a and b 
E) all of the above

Question 11

You read a story in the newspaper about the "economies of mass production." This means that

Accepted Answer

A) total cost is less at larger levels of production. 
B) long-run average cost is less at larger levels of production. 
C) marginal cost is less at larger levels of production. 
D) fixed cost is less at larger levels of production. 
A) total cost is less at larger levels of production. 
B) long-run average cost is less at larger levels of production. 
C) marginal cost is less at larger levels of production. 
D) fixed cost is less at larger levels of production.

Question 12

In the following graph,the price of capital is $100 per unit.What is the marginal rate of technical substitution at point C?

Accepted Answer

A) 0.14   
B) 0.4 
C) 1.4 
D) 4 
E) none of the above 
A) 0.14   
B) 0.4 
C) 1.4 
D) 4 
E) none of the above

Question 13

Which of the following are characteristics of a typical isoquant?

Accepted Answer

A) All input combinations on the isoquant will produce the same level of output. 
B) The marginal rate of technical substitution decreases as more labor is substituted for less capital. 
C) A change in input prices shifts the isoquant map. 
D) both a and b 
E) none of the above 
A) All input combinations on the isoquant will produce the same level of output. 
B) The marginal rate of technical substitution decreases as more labor is substituted for less capital. 
C) A change in input prices shifts the isoquant map. 
D) both a and b 
E) none of the above

Question 14

Refer to the following graph.The price of capital r)is $20.   Why wouldn't the firm choose to produce 5,000 units of output with the combination at B?

Accepted Answer

A) At B,MRTS K / r > MPL / w. 
C) At B,MPL K. 
D) both a and b 
E) none of the above 
A) At B,MRTS K / r > MPL / w. 
C) At B,MPL K. 
D) both a and b 
E) none of the above

Question 15

A dry cleaner currently has 10 workers and 4 machines.The workers' wage rate is $300 per worker and the rental rate for a machine is $500.The last worker added 600 units to total output
And the last machine also added 600 units to total output,and the last machine also added 600 units to total output.If the dry cleaner uses 11 workers and 3 machines instead,then

Accepted Answer

A) cost will be unchanged and output will increase by 300 units. 
B) cost will be unchanged and output will decrease by 200 units. 
C) output will be unchanged and cost will decrease by $500. 
D) output will be unchanged and cost will decrease by $200. 
E) none of the above 
A) cost will be unchanged and output will increase by 300 units. 
B) cost will be unchanged and output will decrease by 200 units. 
C) output will be unchanged and cost will decrease by $500. 
D) output will be unchanged and cost will decrease by $200. 
E) none of the above

Question 16

If there are no fixed costs in the long run,how can it be said that economies of scale arise from spreading fixed costs over more units of output?

Accepted Answer

A) Economies of scale is a short run phenomenon,and so diminishing returns is the root cause of scale economies. 
B) Costs of quasi-fixed inputs get spread over more units of output whichdrives down average cost in the long run. 
C) Average fixed costs decline continuously as output rises. 
D) Long-run average cost falls because all fixed costs are sunk. 
A) Economies of scale is a short run phenomenon,and so diminishing returns is the root cause of scale economies. 
B) Costs of quasi-fixed inputs get spread over more units of output whichdrives down average cost in the long run. 
C) Average fixed costs decline continuously as output rises. 
D) Long-run average cost falls because all fixed costs are sunk.

Question 17

The expansion path

Accepted Answer

A) shows how the cost-minimizing input choices change as the firm's output level changes. 
B) shifts if the input price ratio changes. 
C) is the collection of all input combinations at which the marginal rate of technical substitution equals the input price ratio. 
D) both a and c 
E) all of the above 
A) shows how the cost-minimizing input choices change as the firm's output level changes. 
B) shifts if the input price ratio changes. 
C) is the collection of all input combinations at which the marginal rate of technical substitution equals the input price ratio. 
D) both a and c 
E) all of the above

Question 18

Refer to the following graph.The price of labor is $3 per unit:   How many units of labor should a firm use in order to produce 100 units of output at the least cost?

Accepted Answer

A) 5 units of labor 
B) 10 units of labor 
C) 15 units of labor 
D) 20 units of labor 
A) 5 units of labor 
B) 10 units of labor 
C) 15 units of labor 
D) 20 units of labor

Question 19

In the following graph,the price of capital is $12 per unit.If the price of labor increases to $40 per unit and total cost is unchanged,what is the maximum amount of output the firm can produce?

Accepted Answer

A) 100 units of output 
B) 200 units of output 
C) 300 units of output 
D) 400 units of output 
E) none of the above 
A) 100 units of output 
B) 200 units of output 
C) 300 units of output 
D) 400 units of output 
E) none of the above

Question 20

In the long run

Accepted Answer

A) all inputs are fixed. 
B) a firm is making the optimal input choice when the marginal rate of technical substitution is equal to the input price ratio. 
C) the expansion path shows how the input marginal products change as the firm's output level changes. 
D) both a and b 
E) none of the above 
A) all inputs are fixed. 
B) a firm is making the optimal input choice when the marginal rate of technical substitution is equal to the input price ratio. 
C) the expansion path shows how the input marginal products change as the firm's output level changes. 
D) both a and b 
E) none of the above

Refer to the following graph.The price of capital r)is $20. What is the lowest possible cost of producing 5,000 units of output?

Refer to the following graph.The price of labor is $3 per unit: What is the price per unit of capital?

Refer to the following graph.The price of capital r)is $20. What is the lowest possible cost at which 14,000 units of output can be produced?

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.In equilibrium,

In the graph below,the price of capital is $500 per unit.When output is 10,000 units,what is long-run average cost?

In the following graph,the price of labor is $15 per unit.The minimum cost of producing 1,000 units of output is:

A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output.The price of labor is $200 per unit and the price of capital is $100 per unit.At these input levels,another unit of labor adds 400 units to output and another unit of capital adds 600 units to output.The firm

Given the above graph,the marginal rate of technical substitution at point A is

Refer to the following figure.The price of capital is $50 per unit: What is the price per unit of labor?

Long-run total cost

You read a story in the newspaper about the "economies of mass production." This means that

In the following graph,the price of capital is $100 per unit.What is the marginal rate of technical substitution at point C?

Which of the following are characteristics of a typical isoquant?

Refer to the following graph.The price of capital r)is $20. Why wouldn't the firm choose to produce 5,000 units of output with the combination at B?

If there are no fixed costs in the long run,how can it be said that economies of scale arise from spreading fixed costs over more units of output?

The expansion path

Refer to the following graph.The price of labor is $3 per unit: How many units of labor should a firm use in order to produce 100 units of output at the least cost?

In the following graph,the price of capital is $12 per unit.If the price of labor increases to $40 per unit and total cost is unchanged,what is the maximum amount of output the firm can produce?

In the long run

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 9: Production and Cost in the Long Run

Refer to the following graph.The price of capital r)is $20. What is the lowest possible cost of producing 5,000 units of output?

Refer to the following graph.The price of labor is $3 per unit: What is the price per unit of capital?

Refer to the following graph.The price of capital r)is $20. What is the lowest possible cost at which 14,000 units of output can be produced?

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.In equilibrium,

In the graph below,the price of capital is $500 per unit.When output is 10,000 units,what is long-run average cost?

In the following graph,the price of labor is $15 per unit.The minimum cost of producing 1,000 units of output is:

Given the above graph,the marginal rate of technical substitution at point A is

Refer to the following figure.The price of capital is $50 per unit: What is the price per unit of labor?

Long-run total cost

You read a story in the newspaper about the "economies of mass production." This means that

In the following graph,the price of capital is $100 per unit.What is the marginal rate of technical substitution at point C?

Which of the following are characteristics of a typical isoquant?

Refer to the following graph.The price of capital r)is $20. Why wouldn't the firm choose to produce 5,000 units of output with the combination at B?

If there are no fixed costs in the long run,how can it be said that economies of scale arise from spreading fixed costs over more units of output?

The expansion path

Refer to the following graph.The price of labor is $3 per unit: How many units of labor should a firm use in order to produce 100 units of output at the least cost?

In the following graph,the price of capital is $12 per unit.If the price of labor increases to $40 per unit and total cost is unchanged,what is the maximum amount of output the firm can produce?

In the long run

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters