Question 1

The long run is

Accepted Answer

A)   over one year.
B)   over five years.
C)   when all factors of production are fixed.
D)   the time period in which all factors of production can be varied.

Question 2

Graphically, what does the marginal product curve for a labor input look like? Explain in words.

Accepted Answer

Typically, the marginal product of labor...

Question 3

When a firm uses technological improvements to increase output from the same amount of inputs, the result is

Accepted Answer

A)   a new production function.
B)   losses.
C)   guaranteed profits.
D)   diseconomies of scale.

Question 4

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

Accepted Answer

A)   exploiting the economies of scale available to it.
B)   facing constant returns to scale.
C)   facing diseconomies of scale.
D)   not using the available technology efficiently.

Question 5

Suppose that a firm is currently producing 500 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?

Accepted Answer

A)   $1,500
B)   $1,000
C)   $500
D)   $501

Question 6

Changes in production functions are associated with changes in

Accepted Answer

A)   the level of output.
B)   demand.
C)   the levels of costs.
D)   technology.

Question 7

Economists generally define the short run as being

Accepted Answer

A)   that period of time in which at least one of the firm's inputs, usually plant size, is fixed.
B)   that period of time in which all inputs are variable.
C)   any period of time less than one year.
D)   any period of time less than six months.

Question 8

What happens to the marginal cost curve when the marginal physical product of labor is rising?

Accepted Answer

A)   It becomes upward sloping.
B)   It becomes vertical.
C)   It becomes downward sloping.
D)   It becomes horizontal.

Question 9

A decrease in long-run average costs resulting from increases in output is

Accepted Answer

A)   attributed to economies of scale.
B)   attributed to diseconomies to scale.
C)   attributed to constant returns to scale.
D)   attributed to the law of diminishing marginal product.

Question 10

-Using the above table, the total product and average product when 3 workers are employed are

Accepted Answer

A)   36 and 12, respectively.
B)   39 and 13, respectively.
C)   37 and 27, respectively.
D)   40 and 10, respectively.

Question 11

If a farmer buys one-hundred more acres for her flower farm, she is making a

Accepted Answer

A)   long-run decision.
B)   short-run decision.
C)   immediate-run decision.
D)   variable-input decision.

Question 12

-Refer to the above table. When output rises from 2 units to 3 units, marginal costs are

Accepted Answer

A)   $7.
B)   $10.
C)   $22.
D)   $41.

Question 13

The law of diminishing marginal product is a statement

Accepted Answer

A)   that concerns changes in variable input and changes in output.
B)   that concerns the long run.
C)   that concerns changes in profits.
D)   that relates to plant size.

Question 14

-In the above table, the average product for 5 units of labor is

Accepted Answer

A)   20.0.
B)   22.5.
C)   25.0.
D)   15.0.

Question 15

The best way to think of the short run and the long run is as

Accepted Answer

A)   specific periods of time, although the time periods may differ across industries.
B)   planning terms that apply to managers.
C)   concepts that apply to all people who work for a firm.
D)   a concept that only accountants are concerned with.

Question 16

Average variable costs equal

Accepted Answer

A)   total variable costs divided by marginal costs.
B)   total variable costs divided by output.
C)   the change in marginal costs from producing another unit of output.
D)   output divided by the change in total costs.

Question 17

-In the above table, the marginal product of the second worker is

Accepted Answer

A)   68.
B)   98.
C)   38.
D)   It cannot be determined.

Question 18

-In the above table, the marginal product of the fourth worker is

Accepted Answer

A)   30.
B)   25.
C)   20.
D)   15.

Question 19

-Refer to the above figure. Curve (4)  is the

Accepted Answer

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

Question 20

-According to the above table, what is the average product of labor when three laborers are employed?

Accepted Answer

A)   3
B)   4
C)   5
D)   6

Exam 22: The Firm: Cost and Output Determination

Economists generally define the short run as being

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-According to the above table, what is the average product of labor when three laborers are employed?

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-In the above table, the marginal product of the fourth worker is

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Suppose that a firm is currently producing 500 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?

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Graphically, what does the marginal product curve for a labor input look like? Explain in words.

Correct AnswerverifiedTypically, the marginal product of labor...View AnswerShow Answer

-In the above table, the marginal product of the second worker is

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When a firm uses technological improvements to increase output from the same amount of inputs, the result is

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The law of diminishing marginal product is a statement

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The long run is

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-In the above table, the average product for 5 units of labor is

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Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

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The best way to think of the short run and the long run is as

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What happens to the marginal cost curve when the marginal physical product of labor is rising?

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-Refer to the above figure. Curve (4) is the

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-Using the above table, the total product and average product when 3 workers are employed are

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-Refer to the above table. When output rises from 2 units to 3 units, marginal costs are

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If a farmer buys one-hundred more acres for her flower farm, she is making a

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Average variable costs equal

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Changes in production functions are associated with changes in

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A decrease in long-run average costs resulting from increases in output is

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Typically, the marginal product of labor...
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