Deck 11: Behind the Supply Curve: Inputs and Costs

Question 1

In economics,the short run is defined as:

A)less than 1 year.
B)less than 6 months.
C)the period in which some inputs are considered to be fixed in quantity.
D)the period in which some inputs are fixed,but it cannot exceed 1 year.

Answer 1

the period in which some inputs are considered to be fixed in quantity.

Question 2

Lauren has 11 people working in her tangerine grove.The marginal product of the eleventh worker is 13 bushels of tangerines.If she hires a twelfth worker,the marginal product of that worker will be _____ bushels.

A)14
B)15
C)12
D)The answer cannot be determined with the information available.

Answer 2

The answer cannot be determined with the information available.

Question 3

If two firms are identical in all respects except that one has more of the fixed input capital than another,the total product curve for the firm with more capital:

A)must equal the total product curve for the firm with less capital.
B)will lie above the total product curve for the firm with less capital.
C)will lie below the total product curve for the firm with less capital.
D)will show no diminishing marginal returns.

Answer 3

will lie above the total product curve for the firm with less capital.

Question 4

The term diminishing returns refers to a:

A)falling interest rate that can be expected as one's investment in a single asset increases.
B)reduction in profits caused by increasing output beyond the optimal point.
C)decrease in total output due to the firm hiring uneducated workers.
D)decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

Question 5

The _____ curve shows the absolute quantities of output that can be obtained from different quantities of a variable input,assuming other inputs are fixed.

A)total input
B)marginal input
C)total product
D)average total quantity

Question 6

If two firms are identical in all respects except that one has more of the fixed input capital than another,the marginal product curve for the firm with more capital:

A)must equal the marginal product curve for the firm with less capital.
B)will lie above the marginal product curve for the firm with less capital.
C)will lie below the total marginal curve for the firm with less capital.
D)will show no diminishing marginal returns.

Question 7

Use the following to answer question:
(Figure: Marginal Product of Labor)Use Figure: The Marginal Product of Labor.The total product of labor for eight workers is _____ bushels.

A)40
B)35
C)96
D)75

Question 8

Use the following to answer question:
(Figure: Marginal Product of Labor)Use Figure: The Marginal Product of Labor.The total product for three workers is _____ bushels.

A)51
B)45
C)39
D)15

Question 9

The long run is a planning period:

A)over which a firm can consider all inputs as variable.
B)of at least five years.
C)of more than six months.
D)of six months to five years.

Question 10

In economics,the short run is:

A)less than 1 week.
B)less than 1 month.
C)enough time to vary output but not plant capacity.
D)enough time to change all inputs to production.

Question 11

A fixed input is one:

A)that only exists in nature,and there is only so much of it.
B)that can be used for one thing only.
C)that can never produce more or less in any period.
D)whose quantity cannot be changed in the short run.

Question 12

In the long run:

A)all inputs are fixed.
B)inputs are neither variable nor fixed.
C)at least one input is variable and one input is fixed.
D)all inputs are variable.

Question 13

The idea of diminishing returns to an input in production suggests that,if a local college adds more custodians,the marginal product of labor for the custodial staff will:

A)increase at an increasing rate.
B)increase at a decreasing rate.
C)decrease.
D)not change.

Question 14

The _____ is the increase in output that is produced when a firm hires an additional worker.

A)average product
B)total product
C)marginal product
D)marginal cost

Question 15

A _____ is an organization that produces goods or services for sale.

A)production function
B)firm
C)variable input
D)fixed input

Question 16

Use the following to answer question:
(Figure: Marginal Product of Labor)Use Figure: The Marginal Product of Labor.The total product of labor for five workers is _____ bushels.

A)11
B)45
C)55
D)75

Question 17

An input whose quantity can be changed in the short run is a(n)_____ input.

A)marginal
B)fixed
C)incremental
D)variable

Question 18

In the short run:

A)all inputs are fixed.
B)all inputs are variable.
C)some inputs are fixed and some inputs are variable.
D)all costs are variable.

Question 19

Diminishing returns to an input occur:

A)when all inputs are fixed.
B)when some inputs are fixed and some are variable.
C)when all inputs are variable.
D)only when there are no fixed inputs.

Question 20

An input whose quantity CANNOT be changed in the short run is:

A)marginal.
B)fixed.
C)incremental.
D)variable.

Question 21

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.For hiring labor between zero and L₁,the:

A)marginal product of labor is increasing.
B)marginal product of labor is decreasing.
C)total product is increasing at a diminishing rate.
D)total product is decreasing.

Question 22

You own a deli.Which decision is most likely to be made in the LONG run at your deli?

A)You order more breadsticks.
B)You order more soft drinks for next week.
C)You renovate the second floor of your building to increase the size of the dining room.
D)You advertise for part-time workers.

Question 23

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 60,and when she hires four workers,total product is 65.The slope of the marginal product curve between two and four workers hired is:

A)positive.
B)zero.
C)infinite.
D)negative.

Question 24

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.Between points A and B the marginal product of labor is:

A)increasing.
B)zero.
C)decreasing.
D)infinite.

Question 25

Use the following to answer question:
(Table: Total Product and Marginal Product)Use Table: Total Product and Marginal Product.The marginal product of the fourth worker is _____ units per period.

A)20
B)22.5
C)50
D)90

Question 26

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers.The marginal product of the third worker is _____ bushels.

A)100
B)300
C)1,300
D)2,300

Question 27

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.After hiring L₂ labor and producing at point B on the total product curve,hiring more labor beyond L₂ would cause the:

A)marginal product of labor to rise.
B)marginal product of labor to be negative.
C)total product to be negative.
D)total product to be zero.

Question 28

The marginal product of labor is the:

A)change in labor divided by the change in total product.
B)slope of the total product of labor curve.
C)change in average product divided by the change in the quantity of labor.
D)change in output that occurs when capital increases by one unit.

Question 29

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 48,and when she hires four workers,total product is 45.The marginal product of the third and fourth workers is:

A)increasing and positive.
B)increasing and negative.
C)decreasing and positive.
D)decreasing and negative.

Question 30

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.If the firm hires more than L₂ labor,the total product will _____ because the marginal product of labor is _____.

A)decrease;positive
B)increase;positive
C)decrease;negative
D)increase;negative

Question 31

Use the following to answer question:
(Table: Total Product and Marginal Product)Use Table: Total Product and Marginal Product.The marginal product of the second worker is _____ units per period.

A)10
B)15
C)20
D)30

Question 32

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.Labor added from L₁ and up to L₂ is:

A)subject to diminishing marginal returns.
B)adding to total product at an increasing rate.
C)adding nothing to total product.
D)adding to total product at a constant rate.

Question 33

When an additional unit of a variable input adds less to total product than the previous unit,the firm has:

A)increasing returns.
B)diminishing marginal returns.
C)diminishing total returns.
D)diminishing marginal returns and diminishing total returns.

Question 34

Diminishing marginal returns occur when:

A)each additional unit of a variable factor adds more to total output than the previous unit.
B)each additional unit of a variable factor adds less to total output than the previous unit.
C)the marginal product of a variable factor is increasing at a decreasing rate.
D)total product decreases.

Question 35

A total product curve indicates the relationship between _____ when all other inputs are fixed.

A)a variable input and price
B)a variable input and variable cost
C)a variable input and output
D)output and price

Question 36

When Caroline's dress factory hires two workers,the total product is 50 dresses.When she hires three workers,total product is 60,and when she hires four workers,total product is 75.The slope of the marginal product curve between two and four workers hired is:

A)positive.
B)negative.
C)infinite.
D)zero.

Question 37

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.As labor is hired between L₁ and L₂,the total product is _____ and the marginal product is _____.

A)increasing;positive
B)decreasing;zero
C)increasing;negative
D)increasing;zero

Question 38

Use the following to answer question:
(Figure: The Total Product)Use Figure: The Total Product.When L₂ labor is hired,the total product is at a _____ and the marginal product of labor is _____.

A)minimum;zero
B)maximum;zero
C)maximum;positive
D)minimum;positive but falling

Question 39

Use the following to answer question:
(Table: Total Product and Marginal Product)Use Table: Total Product and Marginal Product.Negative marginal returns begin when the _____ worker is added.

A)fifth
B)sixth
C)seventh
D)eighth

Question 40

You own a deli.Which input of production is MOST likely fixed at your deli?

A)the dining room
B)the bread used to make sandwiches
C)the tomato sauce used to make soups
D)the employees

Question 41

If the marginal cost of the first sports jersey is $21,the marginal cost of the second sports jersey is $40,and the marginal cost of the third jersey is $17,what is the total variable cost of producing three jerseys?

A)$26
B)$78
C)$17
D)$61

Question 42

Marginal cost is the change in _____ cost resulting from a one-unit change in _____.

A)total;a variable input
B)total;output
C)total;average cost
D)average;output

Question 43

A firm's marginal cost is:

A)the ratio of the change in total cost to the change in the quantity of output.
B)the change in total cost divided by the change in labor input.
C)the slope of the average fixed cost curve.
D)total cost divided by output.

Question 44

Ashley Bakery expects its marginal cost curve will eventually slope upward because,as with most production processes,baking has:

A)constant opportunity costs.
B)a maximum output.
C)diminishing marginal returns.
D)decreasing opportunity costs.

Question 45

For Heidi,the marginal cost of producing one additional photograph equals the change in _____ cost divided by the change in the _____ of photographs.

A)total;number
B)marginal;number
C)total;marginal product
D)average;number

Question 46

Which statement is FALSE?

A)When the marginal product of labor is upward sloping,the marginal cost curve is upward sloping.
B)The average fixed cost curve is downward sloping and approaches the horizontal axis as output increases.
C)The marginal cost curve intersects the average variable cost curve at the minimum of average variable cost.
D)When the marginal cost curve is above the average cost curve,the average cost curve is upward sloping.

Question 47

The total cost curve gets steeper as output increases because of:

A)increasing returns to the variable input.
B)decreasing returns to the variable input.
C)increases in fixed cost.
D)decreases in overhead costs.

Question 48

The change in total output resulting from a one-unit increase in the quantity of an input used,holding the quantities of all other inputs constant,is:

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

Question 49

The _____ curve shows the additional cost of producing each additional unit of output.

A)average cost
B)total cost
C)marginal product
D)marginal cost

Question 50

Buford Bus Manufacturing installs a new assembly line.As a result,the output per worker increases.The marginal cost of output at Buford:

A)will increase (the MC curve will shift up).
B)will decrease (the MC curve will shift down).
C)will be unchanged.
D)is at its maximum.

Question 51

Marginal cost CANNOT be calculated as:

A) $\Delta$ TC/ $\Delta$ Q,where TC is total cost and Q is output.
B) $\Delta$ VC/ $\Delta$ Q,where VC is variable cost and Q is output.
C)the slope of the total cost curve.
D) $\Delta$ ATC * $\Delta$ Q,where ATC is average total cost and Q is output.

Question 52

If the marginal cost of producing the seventh sports jersey is $21,then the total cost of seven sports jerseys is:

A)$21.
B)$60.
C)$147.
D)The answer cannot be determined from the information provided.

Question 53

If Marie Marionettes is operating under conditions of diminishing marginal product,the marginal costs will be:

A)equal to average total cost.
B)decreasing.
C)increasing.
D)constant.

Question 54

When a cherry orchard in Oregon adds a worker,the total cost of production increases by $24,000.Adding the worker increases total cherry output by 600 pounds.Therefore,the marginal cost of the last pound of cherries produced is:

A)$40.
B)$19.
C)$4,000.
D)$24,000.

Question 55

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns.

A)increases;decreases
B)decreases;increases
C)is constant;decreases
D)increases;is constant

Question 56

The curve that shows the additional cost of each additional unit of output is called the _____ curve.

A)average cost
B)total cost
C)marginal product
D)marginal cost

Question 57

Once diminishing returns have set in,as output increases,the total cost curve:

A)gets steeper.
B)gets flatter.
C)becomes horizontal.
D)increases at first,and then decreases.

Question 58

The shape of the marginal cost curve is the mirror image of the shape of the _____ curve.

A)total product
B)average product
C)marginal product
D)average total cost

Question 59

Austin's total fixed cost at the bakery is $3,600 a month.Austin employs 20 workers and pays each worker $8 an hour.The marginal product of the twentieth worker is 12 iced cupcakes an hour.What is the marginal cost of the last cupcake produced by the last worker Austin hired?

A)$0.26
B)$0.66
C)$3.81
D)$8.00

Question 60

Marginal cost is the change in:

A)total product resulting from a one-unit change in a variable input.
B)total cost resulting from a one-unit change in quantity of a variable input.
C)total cost divided by the change in output.
D)average cost resulting from a one-unit change in quantity of output.

Question 61

You run a business producing picture frames.This month,your total cost of production is $10,000,your variable cost of production is $6,000,and you produce 3,000 picture frames.It follows that average _____ cost is _____.

A)variable;$2
B)total;$3
C)total;$1
D)fixed;$1

Question 62

Use the following to answer question:
(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing three pairs of boots is approximately:

A)$24.
B)$72.
C)$75.
D)$216.

Question 63

Marginal cost is the:

A)increase in total cost when one more unit of output is produced.
B)reduction in cost from economies of scale.
C)ratio of average total cost to total cost.
D)increase in output from the addition of one unit of labor.

Question 64

For most restaurants,the average total cost curve _____ at _____ levels of output,then _____ at _____ levels.

A)falls;low;rises;high
B)rises;low;falls;high
C)rises;high;rises;low
D)falls;high;falls;low

Question 65

Use the following to answer question:
(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing five pairs of boots is approximately:

A)$408.
B)$82.
C)$108.
D)$17.

Question 66

The _____ cost curve is NOT affected by diminishing returns.

A)average fixed
B)average variable
C)average total
D)marginal

Question 67

A firm's marginal cost is the:

A)ratio of the change in fixed cost to the change in the quantity of output.
B)slope of the total cost curve.
C)slope of the average variable cost curve.
D)ratio of the change in total output to the change in the quantity of labor.

Question 68

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day.Darren shuts down every year during the last week of July and the first week of August (meaning it is open 50 weeks a year).What is his annual fixed cost if he is open six days per week?

A)$18,000
B)$3,000
C)$60
D)The answer cannot be determined with the information available.

Question 69

Average total cost is:

A)the change in cost divided by the change in output.
B)total cost divided by output.
C)the change in output divided by the change in costs.
D)total cost times output.

Question 70

In the short run,the average total cost curve slopes upward because of:

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

Question 71

Use the following to answer question:
(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing 10 pairs of boots is approximately:

A)$13.
B)$54.
C)$131.
D)$1,308.

Question 72

The _____ cost curve continually declines as more output is produced in the short run.

A)marginal
B)average variable
C)average fixed
D)average total

Question 73

The rent for Oscar's sporting goods store is $2,500 per month.Oscar pays his staff $9 per hour,and his monthly electricity bill averages $700,depending on his total hours of operation.Oscar's fixed costs of production equal:

A)$2,500 per month.
B)$3,200 per month.
C)$9 per hour multiplied by total hours of work plus $700.
D)$9 per hour multiplied by total hours of work plus $3,200.

Question 74

The average total cost curve has a shape because the _____ effect is dominant at low levels of output,and the _____ effect is dominant at high levels of output.

A)diminishing returns;spreading
B)spreading;diminishing returns
C)comparative advantage;absolute advantage
D)absolute advantage;comparative advantage

Question 75

Average variable cost does NOT equal:

A)variable cost divided by output.
B)total cost minus fixed cost divided by output.
C)average total cost minus average fixed cost.
D)variable cost times output.

Question 76

The change in total cost resulting from a one-unit change in quantity is _____ cost.

A)average fixed
B)average variable
C)marginal
D)average total

Question 77

Krista's dry-cleaning business incurs $900 per month in fixed costs.Last month her total output was 3,000 pounds of clothes.This month her total output fell to 2,700 pounds.This means her average fixed cost _____ by a little more than _____ cents.

A)fell;3.33
B)increased;3.33
C)fell;2.50
D)increased;2.50

Question 78

The larger the output,the more output over which fixed cost is distributed.Called the _____ effect,this leads to a _____ average _____ cost as output rises.

A)spreading;lower;fixed
B)spreading;higher;fixed
C)diminishing returns;lower;variable
D)diminishing returns;higher;variable

Question 79

The larger the output,the more variable input required to produce additional units.Called the _____ effect,this leads to a _____ average _____ cost as output rises.

A)spreading;lower;fixed
B)spreading;higher;fixed
C)diminishing returns;lower;variable
D)diminishing returns;higher;variable

Question 80

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week.If the fixed cost is $1,200 per week:

A)average fixed cost is $20.
B)total cost is $3,200.
C)variable cost is $2,000.
D)average variable cost is $8.