Question 1

Figure: The Total Product
(Figure: The Total Product) Look at the figure The Total Product.After hiring L2 labor and producing at point B on the total product curve, hiring more labor beyond L2 would result in which of the following statements being true of the total product curve?

Accepted Answer

A) The marginal product of labor is rising. 
B) The marginal product of labor is negative. 
C) The total product is negative. 
D) The total product is zero.

Question 2

Figure and Table: Variable, Fixed, and Total Costs   (Figure and Table: Variable, Fixed, and Total Costs) Look at the figure and table Variable, Fixed, and Total Costs.In the figure, when 51 bushels of wheat is produced, the average fixed cost is ,
Average variable cost is ________, and average total cost is _.

Accepted Answer

A) $7.84; $11.76; $19.60 
B) $133.33; $200; $333.33 
C) $400; $600; $1,000 
D) $5.33; $13.33; $18.67

Question 3

In the long run, every input available to a television manufacturer is a fixed input.True

Accepted Answer

A) True 
 B)False

Question 4

The level of inputs will determine a firm's:

Accepted Answer

A) ability to produce output. 
B) profitability. 
C) stock price. 
D) location of production.

Question 5

As defined in the text, the long run is a planning period:

Accepted Answer

A) in which a firm can adjust all resources. 
B) that is at least 5 years in length. 
C) during which the firm must experience an increase in sales in order to stay in business. 
D) in which variable resources become fixed

Question 6

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

Accepted Answer

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

Question 7

Suppose a short-run production function always increases at a constant rate of three units of output for every additional worker added.What does this imply about the marginal product of labor? Is this realistic? Explain.

Accepted Answer

The answer of Suppose a short-run production function always increases...

Question 8

Think about running a restaurant.For this restaurant:

Accepted Answer

A) cooks and hosts would be variable resources. 
B) a building would be a variable resource in the short run. 
C) cheese and other wholesale food items would be fixed resources in the short run. 
D) valet parking staff would be fixed resources in the long run

Question 9

The marginal cost curve intersects the average variable cost curve at:

Accepted Answer

A) its lowest point. 
B) its maximum. 
C) its end point. 
D) no point; the curves don't intersect.

Question 10

(Table: Production of Cabinets) Look at the table The Production of Cabinets.If each cabinetmaker could be hired at no cost, how many workers would your firm employ?

Accepted Answer

A) two 
B) six 
C) seven 
D) eight

Question 11

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

Accepted Answer

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

Question 12

Figure: The Average Total Cost Curve
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing three pairs of boots is approximately:

Accepted Answer

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

Question 13

If marginal cost is greater than average total cost, then:

Accepted Answer

A) average total cost is at its maximum. 
B) average total cost is at its minimum. 
C) average total cost is increasing. 
D) average total cost is decreasing.

Question 14

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

Accepted Answer

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

Question 15

(Table: Costs for Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes.Assume that her fixed costs are $10.The minimum average variable cost occurs at what output?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

A) a marginal input. 
B) a fixed input. 
C) an incremental input. 
D) a variable input.

Question 18

In the long run:

Accepted Answer

A) the firm has time to change the level of all inputs. 
B) inputs are neither variable nor fixed. 
C) at least one input is free. 
D) all inputs are more expensive.

Question 19

(Table: Costs for Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes.Assume that her fixed costs are $10.What is the average variable cost of 5 cakes?

Accepted Answer

A) $300 
B) $250 
C) $50 
D) $10

Question 20

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

Accepted Answer

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

Exam 11: Behind the Supply Curve: Inputs and Costs

Figure: The Total Product (Figure: The Total Product) Look at the figure The Total Product.After hiring L2 labor and producing at point B on the total product curve, hiring more labor beyond L2 would result in which of the following statements being true of the total product curve?