Question 1

Figure: Short-Run Costs II   (Figure: Short-Run Costs II) Look at the figure Short-Run Costs II.Curve 1 crosses the average variable cost curve at:

Accepted Answer

A) 3 units of output. 
B) approximately 5.3 units of output. 
C) the minimum value of curve 2. 
D) the level of output at which diminishing marginal returns begin.

Question 2

(Table: Bonnie's Production Function for Good Z) Look at the table Bonnie's Production Function for good Z.The marginal product of labor of the second worker is units of good Z.

Accepted Answer

A) 150 
B) 225 
C) 75 
D) 250

Question 3

Which of the following cost concepts is correctly defined?

Accepted Answer

A) MC = ∆TC / ∆FC 
B) ATC = VC + FC 
C) ATC = AVC + AFC 
D) TC = AVC + AFC

Question 4

The short-run average total cost curve is U-shaped because at low output levels the spreading effect of falling average fixed costs dominates the diminishing returns effect, while at high output levels the reverse is true.False

Accepted Answer

A) True 
 B)False

Question 5

(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 total cost of producing 48 statues is

Accepted Answer

A) $240 
B) $60 
C) $50 
D) $10

Question 6

(Table: Production Function for Soybeans) The table shows a production function for soybeans.Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of
$150 per day.The cost of labor is $100 per worker per day.The variable cost of producing 45 bushels of soybeans is:

Accepted Answer

A) $100 
B) $200 
C) $350 
D) $4500

Question 7

(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 43 statues is

Accepted Answer

A) $10 
B) $20 
C) $40 
D) $43

Question 8

In economics, the short run is defined as:

Accepted Answer

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

Question 9

(Figure and Table: Variable, Fixed, and Total Costs) Look at the figure and table Variable, Fixed, and Total Costs.In the figure, the marginal cost when increasing production from 51 to 64 bushels of wheat is:

Accepted Answer

A) $16. 
B) $15.38. 
C) $12.50. 
D) $18.75.

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.What is the average total cost of 5 cakes?

Accepted Answer

A) $110 
B) $60 
C) $12 
D) $2

Question 11

Marginal cost is the change in:

Accepted Answer

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 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 five pairs of boots is approximately:

Accepted Answer

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

Question 13

(Table: Bonnie's Production Function for Good Z) Look at the table Bonnie's Production Function for good Z.Suppose Bonnie spends $300 per month to rent the building, $100 per month to pay for insurance for her business, and $100 per worker per month for every worker she hires.Given this information, Bonnie's fixed costs equal:

Accepted Answer

A) $400. 
B) $300. 
C) $500. 
D) $100.

Question 14

Average variable cost is the ratio of:

Accepted Answer

A) total cost to the marginal cost. 
B) total cost to the amount of variable input. 
C) variable cost to the quantity of output. 
D) marginal cost to the quantity of output.

Question 15

Joan adds one more employee to her construction company.The additional output produced by this employee represents the average product of this employee.True

Accepted Answer

A) True 
 B)False

Question 16

The marginal product of labor is all of the following except:

Accepted Answer

A) the change in output resulting from a one-unit change in labor. 
B) the slope of the total product curve. 
C) positive at some levels of input and possibly negative at others. 
D) total product divided by total labor.

Question 17

(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 total cost of producing 43 statues is

Accepted Answer

A) $10 
B) $20 
C) $40 
D) $50

Question 18

A fixed cost:

Accepted Answer

A) will exist only in the long run. 
B) depends on the level of output. 
C) can be positive, even if the firm doesn't produce any output in the short run. 
D) decreases until the point of diminishing returns is reached.

Question 19

(Table: Long-Run Total Cost) Look at the table Long-Run Total Cost.Over what range of output does this soybean grower experience constant returns to scale?

Accepted Answer

A) the first and second bushels . 
B) the third and fourth bushels . 
C) the fourth and fifth bushels . 
D) the fifth and sixth bushels

Question 20

Marginal cost can be calculated as:

Accepted Answer

A) ∆TC/∆Q, where TC is total cost and Q is output. 
B) ∆VC/∆Q, where VC is variable cost and Q is output. 
C) the slope of the total cost curve. 
D) ∆TC/∆Q, where TC is total cost and Q is output; ∆VC/∆Q, where VC is variable cost and Q is output; and as the slope of the total cost curve.

Exam 11: Behind the Supply Curve: Inputs and Costs

Figure: Short-Run Costs II (Figure: Short-Run Costs II) Look at the figure Short-Run Costs II.Curve 1 crosses the average variable cost curve at: