Question 1

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the marginal product of the 2nd worker?

Accepted Answer

A)   15 cookies
B)   20 cookies
C)   30 cookies
D)   35 cookiesE) All of the above
F) A) and B)

Question 2

A fixed resource is one that

Accepted Answer

A)   is physically tied to a specific location.
B)   costs more than the average daily revenue of the firm.
C)   cannot be varied in the short run.
D)   can be disposed of only if the firm goes out of business.E) A) and B)
F) C) and D)

Question 3

The short run is

Accepted Answer

A)   a year or less.
B)   up to three years.
C)   the period of time in which the firm can vary its rate of output.
D)   the period of time in which the firm cannot change its use of at least one input.E) A) and B)
F) All of the above

Question 4

Economies of scale exist where the long-run average cost curve is

Accepted Answer

A)   horizontal.
B)   downward sloping.
C)   upward sloping.
D)   tangent to the marginal cost curve.E) B) and C)
F) B) and D)

Question 5

Production

Accepted Answer

A)   is a process by which resources are produced.
B)   is a process by which resources are transferred into goods and services.
C)   only applies to manufacturing of goods.
D)   is carried on by corporations, but not by sole proprietorships.E) All of the above
F) B) and C)

Question 6

-Use the above figure. At an output equal to "Q" the total cost for the firm will be the area

Accepted Answer

A)   OQDC.
B)   OQFA.
C)   OQBC.
D)   OQEB.E) None of the above
F) A) and B)

Question 7

An increase in output would result in a rise in long-run average costs when there are

Accepted Answer

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

Question 8

The total cost of the firm

Accepted Answer

A)   includes explicit costs but excludes implicit costs.
B)   includes implicit costs but excludes explicit costs.
C)   includes implicit and explicit costs.
D)   includes implicit and explicit costs but excludes a normal rate of return on investment.E) A) and C)
F) B) and C)

Question 9

A firm has the following production relationship between labor and output, for a fixed capital stock.
 
-According to the above table, at what usage of labor does diminishing marginal product begin?

Accepted Answer

A)   1
B)   2
C)   4
D)   5E) C) and D)
F) None of the above

Question 10

-Refer to the above table. When the quantity of labor equals 2, what does the average product equal?

Accepted Answer

A)   46
B)   23
C)   26
D)   92E) B) and C)
F) A) and B)

Question 11

"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

Accepted Answer

Disagree. It is true that the average va...

Question 12

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.E) All of the above
F) None of the above

Question 13

If total costs are $50,000 when 1000 units are produced, and total costs are $50,100 when 1001 units are produced, we can conclude that

Accepted Answer

A)   average variable costs are $100.
B)   average total costs are $100.
C)   average fixed costs are $100.
D)   marginal costs are $100.E) B) and D)
F) All of the above

Question 14

The marginal productivity of labor will eventually decrease as more workers are employed because

Accepted Answer

A)   average product is increasing.
B)   total product is decreasing.
C)   the amount of capital will also be increasing.
D)   on the average each worker will have fewer inputs to work with.E) A) and B)
F) A) and C)

Question 15

When total product is increasing at a decreasing rate, marginal product is

Accepted Answer

A)   positive and increasing.
B)   positive and decreasing.
C)   constant.
D)   negative.E) All of the above
F) B) and C)

Question 16

An increase in output would result in no change in long-run average costs when there are

Accepted Answer

A)   economies of scale.
B)   diseconomies to scale.
C)   constant returns to scale.
D)   diminishing marginal product.E) B) and C)
F) A) and D)

Question 17

Diseconomies to scale are illustrated by

Accepted Answer

A)   a downward sloping long-run average cost curve.
B)   a horizontal long-run average cost curve.
C)   an upward sloping long-run average cost curve.
D)   a long-run average cost curve that is shaped like an upside down U.E) B) and C)
F) None of the above

Question 18

Which of the following is correct?

Accepted Answer

A)   AFC = TC/Q - TVC/Q
B)   AVC = TVC - AFC
C)   TC = AVC∗Q
D)   MC = TC - TVCE) B) and C)
F) C) and D)

Question 19

Economies to scale are illustrated by

Accepted Answer

A)   a downward sloping long-run average cost curve.
B)   a horizontal long-run average cost curve.
C)   an upward sloping long-run average cost curve.
D)   a long-run average cost curve that is shaped like an upside down U.E) None of the above
F) A) and C)

Question 20

If four laborers were hired and we discovered that we could produce 88 units of production, what is the average physical product of labor?

Accepted Answer

A)   44
B)   352
C)   11
D)   22E) All of the above
F) B) and D)

Exam 22: The Firm: Cost and Output Determination

Diseconomies to scale are illustrated by

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If total costs are $50,000 when 1000 units are produced, and total costs are $50,100 when 1001 units are produced, we can conclude that

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The marginal productivity of labor will eventually decrease as more workers are employed because

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The total cost of the firm

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-Refer to the above table. When the quantity of labor equals 2, what does the average product equal?

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An increase in output would result in no change in long-run average costs when there are

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-Use the above figure. At an output equal to "Q" the total cost for the firm will be the area

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When total product is increasing at a decreasing rate, marginal product is

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The long run is

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An increase in output would result in a rise in long-run average costs when there are

Correct AnswerverifiedShow Answer

Economies of scale exist where the long-run average cost curve is

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"All average costs have a U-shaped curve." Do you agree or disagree? Explain why?

Correct AnswerverifiedDisagree. It is true that the average va...View AnswerShow Answer

Production

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If four laborers were hired and we discovered that we could produce 88 units of production, what is the average physical product of labor?

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The short run is

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A fixed resource is one that

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A firm has the following production relationship between labor and output, for a fixed capital stock. -According to the above table, at what usage of labor does diminishing marginal product begin?

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Which of the following is correct?

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Economies to scale are illustrated by

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Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the marginal product of the 2nd worker?

Correct AnswerverifiedShow Answer

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Disagree. It is true that the average va...
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