Question 1

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory.The average variable cost of producing 4 purses is:

Accepted Answer

A) $190 
B) $140 
C) $47.50 
D) $35

Question 2

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

Accepted Answer

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

Question 3

As more labor is added to a fixed amount of capital, eventually the marginal product of labor decreases.False

Accepted Answer

A) True 
 B)False

Question 4

(Total Product and Marginal Product) Look at the table Total Product and Marginal Product.The marginal product of the second worker is:

Accepted Answer

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

Question 5

With one input fixed, a firm will find that as it attempts to produce more, the total product curve will increase at a decreasing rate and its marginal product curve will be:

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) constant and horizontal at the marginal product axis. 
D) constant and vertical at the quantity axis.

Question 6

Figure: The Unknown Curve   (Figure: The Unknown Curve) Look at the figure The Unknown Curve.You are a cabinetmaker who employs several workers to produce kitchen and bathroom cabinets.Your summer intern has created a graph showing a relationship between the number of cabinetmakers you employ and the number of cabinets produced.Unfortunately, your intern has failed to identify this curve.It is likely to be the
________ curve:

Accepted Answer

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

Question 7

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

Accepted Answer

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 8

Diminishing returns to an input occur:

Accepted Answer

A) when all inputs are fixed. 
B) when some inputs are fixed and some are variable. 
C) when all inputs are variable. 
D) only in the long run.

Question 9

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory.The average variable cost of producing 2 purses is:

Accepted Answer

A) $190 
B) $70 
C) $50 
D) $35

Question 10

(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 point of diminishing returns occurs at what output?

Accepted Answer

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

Question 11

Table: Linda's Copy Shop Production
(Table: Linda's Copy Shop Production) Look at the table Linda's Copy Shop Production.Linda's production runs into diminishing returns to her variable inputs when she employs the unit.

Accepted Answer

A) second . 
B) third 
C) fourth . 
D) fifth

Question 12

In the short run:

Accepted Answer

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 13

The is the increase in output that is produced when hiring an additional worker.

Accepted Answer

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

Question 14

(Table: Workers and Output) After graduation you achieve your dream of opening your own art shop that specializes in selling mud statues.You pay $10 per day on a loan from your uncle, and you pay $10 per day to each of your workers (who make the mud statues).After careful study, you determine the production information in the table.The variable cost of producing 48 statues is

Accepted Answer

A) $50 
B) $48 
C) $20 
D) $10

Question 15

If Jakob, who runs a sports jersey assembly factory, knows the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is:

Accepted Answer

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

Question 16

At quantities greater than the long-run least cost per unit of output, the long-run average total cost curve is of the corresponding short-run average total cost curve.

Accepted Answer

A) tangent to the minimum . 
B) tangent to the maximum 
C) to the right of the minimum . 
D) to the left of the minimum

Question 17

Farmers in the United States grow about three times as much wheat per acre as do farmers in Western Europe.True

Accepted Answer

A) True 
 B)False

Question 18

Which of the following curves is not affected by the existence of diminishing returns?

Accepted Answer

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

Question 19

(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels.The marginal cost of producing the second bagel is:

Accepted Answer

A) $0.05. 
B) $0.10. 
C) $0.30. 
D) $0.40.

Question 20

If ATC is equal to MC, then the firm is operating:

Accepted Answer

A) at the minimum point of ATC. 
B) on the downward-sloping portion of ATC. 
C) on the upward-sloping portion of ATC. 
D) at an increasing returns to scale.

Exam 11: Behind the Supply Curve: Inputs and Costs