Question 1

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 2

In the long run,the relevant cost is total cost.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is false?

Accepted Answer

A)   An implicit cost is a nonmonetary opportunity cost.
B)   Economic costs include both accounting costs and implicit costs.
C)   An explicit cost is a cost that involves spending money.
D)   Economists consider all costs to be implicit costs.

Question 4

Figure 6.6  Figure 6.6 contains information about the short-run cost structure of a firm.
-Refer to Figure 6.6.In the figure above,which letter represents the average total cost curve?

Accepted Answer

A)   A
B)   B
C)   C
D)   D

Question 5

Which of the following is the implicit cost for a typical firm?

Accepted Answer

A)   The cost of labour
B)   The opportunity cost of capital owned and used by the firm
C)   The cost of energy used in production
D)   A business licensing fee

Question 6

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is _________.

Accepted Answer

A)   a long-run production function
B)   a long-run marginal cost curve
C)   a minimum efficient scale curve
D)   a long-run average total cost curve

Question 7

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that _________.

Accepted Answer

A)   the first workers hired get to use the best equipment
B)   specialisation allows a worker to focus on one task, thereby increasing her proficiency at that task
C)   the best workers are hired first and later hires are not as skilful
D)   beyond some point, a firm has hired too many workers

Question 8

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1 000 per month for interest on the loan.He has 10 employees,each of whom is paid $4 000 per month.Because his business has been successful,next month he will increase employee wages to $5 000.If the revenue from his business remains at its current level,Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

Accepted Answer

A)   The payments Stan makes to his employees are variable costs and explicit costs.
B)   The monthly payment Stan makes for his bank loan is an implicit cost.
C)   The monthly payment Stan makes for his bank loan is a fixed cost.
D)   The time and effort Stan spends on his software design business is an implicit cost.

Question 9

State the law of diminishing marginal returns.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

As more units of a variable in...

Question 10

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Accepted Answer

A)   Average cost increases as more is produced.
B)   Average cost will fall.
C)   Average cost could increase or decrease depending on what happens to variable cost.
D)   Average cost could increase or decrease depending on what happens to fixed cost.

Question 11

The shape of the average total cost curve is determined by the shape of _________.

Accepted Answer

A)   the marginal cost curve
B)   the average fixed cost curve
C)   the average product curve
D)   the firm's production function

Question 12

The definition for the marginal product of labour is ________.

Accepted Answer

A)   the additional sales revenue that results when one more worker is hired
B)   the additional output that results when one more worker is hired, holding all other resources constant
C)   the additional number of workers required to produce one more unit of output
D)   the cost of hiring one more worker

Question 13

All of the following cost curves are U shaped except one.Which curve is not U shaped?

Accepted Answer

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

Question 14

The correct formula for the marginal product of labour is ________.

Accepted Answer

A)   L/Q
B)   ΔL/ΔQ
C)   ΔQ/ΔL
D)   Q/L

Question 15

Which of the following is not a reason why firms experience economies of scale?

Accepted Answer

A)   Technology can make it possible to increase production with a smaller increase in at least one input.
B)   Workers and managers can become more specialised, enabling them to be more productive.
C)   Larger firms may be able to purchase inputs at lower costs than smaller competitors.
D)   As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Question 16

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is ________.

Accepted Answer

A)   60 units
B)   54 units
C)   48 units
D)   5 units

Question 17

Figure 6.2 1 B)  L2 C)  L3 D)  Insufficient information to determine" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6.2.At what point is short run output maximised?

Accepted Answer

A)   L1
B)   L2
C)   L3
D)   Insufficient information to determine

Question 18

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.) to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Accepted Answer

A)   $100
B)   $124.40
C)   $220
D)   $340

Question 19

Figure 6.8 
-Refer to Figure 6.8 above to answer the following questions.
a.Identify the curves in the diagram.
A ________
B ________
C ________
b.What is the numerical value of fixed cost when the quantity of output = 10?
c.What is the numerical value of variable cost when the quantity of output = 10?
d.What is the numerical value of total cost when the quantity of output = 10?
e.What is the numerical value of average fixed cost when the quantity of output = 10?
f.What is the numerical value of average total cost when the quantity of output = 10?
g.On the graph identify the area that represents the total variable cost of production when the quantity of output = 10.
h.On the graph identify the area that represents the fixed cost of production when the quantity of output = 10.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.A=Marginal cost curve; B = A...

Question 20

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

Exam 6: Technology,production and Costs

State the law of diminishing marginal returns. __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
verified
As more units of a variable in...
View Answer

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.) to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Correct Answer
verified

Figure 6.2 -Refer to Figure 6.2.At what point is short run output maximised?

Correct Answer
verified

The shape of the average total cost curve is determined by the shape of _________.

Correct Answer
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A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Correct Answer
verified

The correct formula for the marginal product of labour is ________.

Correct Answer
verified

In the long run,the relevant cost is total cost.

Correct Answer
verified

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is _________.

Correct Answer
verified

Which of the following is the implicit cost for a typical firm?

Correct Answer
verified

Correct Answer
verified
a.A=Marginal cost curve; B = A...
View Answer

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Correct Answer
verified

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

All of the following cost curves are U shaped except one.Which curve is not U shaped?

Correct Answer
verified

Economic costs include implicit costs but not explicit costs.

Correct Answer
verified

Which of the following is not a reason why firms experience economies of scale?

Correct Answer
verified

The definition for the marginal product of labour is ________.

Correct Answer
verified

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that _________.

Correct Answer
verified

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the average total cost curve?

Correct Answer
verified

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is ________.

Correct Answer
verified

Exam 6: Technology,production and Costs

State the law of diminishing marginal returns. __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedAs more units of a variable in...View AnswerShow Answer

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.) to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Correct AnswerverifiedShow Answer

Figure 6.2 -Refer to Figure 6.2.At what point is short run output maximised?

Correct AnswerverifiedShow Answer

The shape of the average total cost curve is determined by the shape of _________.

Correct AnswerverifiedShow Answer

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Correct AnswerverifiedShow Answer

The correct formula for the marginal product of labour is ________.

Correct AnswerverifiedShow Answer

In the long run,the relevant cost is total cost.

Correct AnswerverifiedShow Answer

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is _________.

Correct AnswerverifiedShow Answer

Which of the following is the implicit cost for a typical firm?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.A=Marginal cost curve; B = A...View AnswerShow Answer

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23,what will happen to the average cost of production if the 15th unit is produced?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

All of the following cost curves are U shaped except one.Which curve is not U shaped?

Correct AnswerverifiedShow Answer

Economic costs include implicit costs but not explicit costs.

Correct AnswerverifiedShow Answer

Which of the following is not a reason why firms experience economies of scale?

Correct AnswerverifiedShow Answer

The definition for the marginal product of labour is ________.

Correct AnswerverifiedShow Answer

One reason why,in the short run,the marginal product of labour might increase initially as more workers are hired is that _________.

Correct AnswerverifiedShow Answer

Figure 6.6 Figure 6.6 contains information about the short-run cost structure of a firm. -Refer to Figure 6.6.In the figure above,which letter represents the average total cost curve?

Correct AnswerverifiedShow Answer

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is ________.

Correct AnswerverifiedShow Answer

Correct Answer
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As more units of a variable in...
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a.A=Marginal cost curve; B = A...
View Answer

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