Question 1

The long run is a time frame in which

Accepted Answer

A)  the firm can hire all the workers it wants to employ, but it does not have sufficient time to buy more equipment.
B)  the firm is able to maximize revenue.
C)  the firm may want to build a bigger plant, but cannot do so.
D)  economic efficiency is achieved.
E)  the quantities of all factors of production can be varied.

Question 2

Total cost is $20 at 4 units of output and $36 at 6 units of output. Between 4 and 6 units of output, marginal cost

Accepted Answer

A)  is less than average total cost.
B)  is equal to average total cost.
C)  is equal to average variable cost.
D)  is greater than average total cost.
E)  equals average fixed cost.

Question 3

Choose the correct statement.

Accepted Answer

A)  When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing.
B)  When total product is increasing average product of labour and marginal product of labour are both increasing.
C)  When marginal product of labour is greater than or equal to average product of labour, average product of labour is increasing.
D)  When marginal product of labour is increasing, average product of labour is greater than marginal product of labour.
E)  When total product is increasing, average product of labour is decreasing and marginal product of labour is increasing.

Question 4

If energy (E) is the only input used to produce output (Q) , what is the formula for marginal product of energy?

Accepted Answer

A)  Q ∗ E
B)  Q/E
C)  ΔQ/ΔE
D)  ΔE/ΔQ
E)  E/Q

Question 5

Suppose the marginal product of energy equals the average product of energy. This implies that

Accepted Answer

A)  marginal product is negative.
B)  average product is at its maximum value.
C)  marginal product is at its maximum value.
D)  the marginal product curve is upward sloping.
E)  average product is at its minimum value.

Question 6

If the total product of four workers is 156 units, calculate the average product of each worker.

Accepted Answer

A)  39 units
B)  19.5 units
C)  78 units
D)  152 units
E)  624 units

Question 7

At that amount of output where diminishing marginal returns first sets in,

Accepted Answer

A)  average product begins to decrease.
B)  total product begins to decrease.
C)  marginal cost begins to decrease.
D)  marginal product begins to decrease.
E)  average product is at its maximum.

Question 8

Use the table below to answer the following questions.
Table 11.2.3
 
-Refer to Table 11.2.3. The value of A is

Accepted Answer

A)  1.75.
B)  2.
C)  3.
D)  7.
E)  4.

Question 9

In the long run, a firm can vary

Accepted Answer

A)  all of its factors of production.
B)  labour but not capital.
C)  capital but not labour.
D)  labour and capital but not land.
E)  labour, capital and entrepreneurship but not land.

Question 10

If capital is a variable input in a production process, the law of diminishing marginal returns implies that

Accepted Answer

A)  total product is minimized.
B)  capital's marginal product is positive and less than one.
C)  total product is maximized.
D)  marginal product of capital eventually decreases.
E)  marginal product of capital is constant.

Question 11

Suppose Honda can triple its production of Civics by tripling its production facility for those cars. This indicates the presence of

Accepted Answer

A)  constant returns to scale.
B)  economies of scale.
C)  diseconomies of scale.
D)  the law of diminishing returns.
E)  minimum efficient scale.

Question 12

The minimum efficient scale is the smallest quantity of output at which

Accepted Answer

A)  the long-run average cost curve reaches its lowest level.
B)  the average total cost curve reaches its lowest level.
C)  the average fixed cost curve reaches its lowest level.
D)  economies of scale begin.
E)  diminishing returns begin.

Question 13

Use the figure below to answer the following questions.
  
Figure 11.2.1
-Refer to Figure 11.2.1 which illustrates Tania's total product curve. Which one of the following statements is true?

Accepted Answer

A)  The points above the curve are attainable and inefficient.
B)  The points below the curve are attainable and inefficient.
C)  The points below the curve are inefficient and unattainable.
D)  The points on the curve are efficient and unattainable.
E)  Marginal product is equal at every point on the total product curve.

Question 14

Which of the following quotes best illustrates the idea of total product?

Accepted Answer

A)  "If I have 10 workers on my assembly line, I can produce 13 tables a day."
B)  "If I add an 11th worker, I can produce 1 extra table a day."
C)  "Each worker produces 2 tables a day."
D)  "I find if I add an extra shift at night, table production only rises by 80 percent because I need more maintenance time on the assembly line."
E)  "If I double workers and double the assembly line, I can make 120 percent more tables."

Question 15

An increase in the cost of labour shifts the

Accepted Answer

A)  total, average, and marginal product curves upward and total, average, and marginal cost curves upward.
B)  total, average, and marginal product curves upward and total, average, and marginal cost curves downward.
C)  total, average, and marginal product curves downward and total, average, and marginal cost curves upward.
D)  total, average, and marginal product curves downward and total, average, and marginal cost curves downward.
E)  none of the above

Question 16

The average variable cost curve will shift upward if

Accepted Answer

A)  there is an increase in fixed cost.
B)  there is a technological advance.
C)  the price of the variable input decreases.
D)  the price of the variable input increases.
E)  the price of output increases.

Question 17

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's average variable cost?

Accepted Answer

A)  $400
B)  $8
C)  $2
D)  $2,400
E)  $1,600

Question 18

If AFC is falling then MC must be

Accepted Answer

A)  rising.
B)  falling.
C)  above AFC.
D)  below AFC.
E)  none of the above

Question 19

If ATC is rising then MC must be

Accepted Answer

A)  rising.
B)  falling.
C)  equal to ATC.
D)  above ATC.
E)  both A and D

Question 20

The marginal cost (MC) curve intersects the

Accepted Answer

A)  ATC, AVC, and AFC curves at their minimum points.
B)  ATC and AFC curves at their minimum points.
C)  AVC and AFC curves at their minimum points.
D)  ATC and AVC curves at their minimum points.
E)  TC and TVC curves at their minimum points.

Exam 11: Output and Costs

The marginal cost (MC) curve intersects the

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If capital is a variable input in a production process, the law of diminishing marginal returns implies that

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If the total product of four workers is 156 units, calculate the average product of each worker.

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Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3. The value of A is

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An increase in the cost of labour shifts the

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Use the figure below to answer the following questions. Figure 11.2.1 -Refer to Figure 11.2.1 which illustrates Tania's total product curve. Which one of the following statements is true?

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If ATC is rising then MC must be

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The long run is a time frame in which

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If AFC is falling then MC must be

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Suppose Honda can triple its production of Civics by tripling its production facility for those cars. This indicates the presence of

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Choose the correct statement.

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Suppose the marginal product of energy equals the average product of energy. This implies that

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The minimum efficient scale is the smallest quantity of output at which

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The average variable cost curve will shift upward if

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If energy (E) is the only input used to produce output (Q) , what is the formula for marginal product of energy?

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At that amount of output where diminishing marginal returns first sets in,

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Total cost is $20 at 4 units of output and $36 at 6 units of output. Between 4 and 6 units of output, marginal cost

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In the long run, a firm can vary

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Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's average variable cost?

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Which of the following quotes best illustrates the idea of total product?

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