Question 1

The long run refers to a time period

Accepted Answer

A)  of one year or less.
B)  in which all factors of production are variable.
C)  in which labour is variable, but plant is fixed.
D)  when there is at least one variable factor of production.
E)  of at least 5 years.

Question 2

Which one of the following is false?

Accepted Answer

A)  The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points.
B)  When marginal cost is greater than average variable cost, average variable cost is increasing.
C)  When marginal cost is greater than average total cost, average total cost is increasing.
D)  The average total cost curve is U-shaped.
E)  The average fixed cost curve is downward sloping.

Question 3

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 4

Use the table below to answer the following questions.
Table 11.2.3
 
-Refer to Table 11.2.3.The maximum value of marginal product occurs where output equals ________, while the maximum value of average product occurs where output equals ________.

Accepted Answer

A)  5; 6
B)  6; 5
C)  7; 14
D)  9; 14
E)  14; 11

Question 5

The short run is a time frame in which

Accepted Answer

A)  the firm is not able to hire more workers.
B)  the amount of output produced is fixed.
C)  there is a shortage of most factors of production.
D)  at least one factor of production is fixed.
E)  there is not enough time to make all of the decisions necessary to maximize profit.

Question 6

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.Marginal product of labour reaches its maximum when the number of workers increases from

Accepted Answer

A)  zero to 1.
B)  1 to 2.
C)  2 to 3.
D)  3 to 4.
E)  4 to 5.

Question 7

Consider a graph that shows the total cost curve and the total variable cost curve.As output increases, the vertical distance between these two curves

Accepted Answer

A)  increases.
B)  decreases.
C)  becomes smaller and then larger.
D)  becomes larger and then smaller.
E)  is constant.

Question 8

Marginal cost

Accepted Answer

A)  is constantly increasing, but as output increases it increases by smaller and smaller amounts.
B)  decreases at low outputs until it reaches its minimum value, then remains constant.
C)  decreases at low outputs and increases at high outputs.
D)  increases at low outputs until it reaches its maximum value, then remains constant.
E)  is constantly decreasing, but as output increases it decreases by smaller and smaller amounts.

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

The average product of energy equals

Accepted Answer

A)  the increase in total product divided by the increase in energy used.
B)  total product divided by the quantity of energy used.
C)  the slope of the total product curve.
D)  the slope of the marginal product curve.
E)  the difference between the total product and the marginal product of energy.

Question 11

Marginal cost is the amount that

Accepted Answer

A)  total cost increases when one more labourer is hired.
B)  fixed cost increases when one more labourer is hired.
C)  variable cost increases when one more labourer is hired.
D)  total cost increases when one more unit of output is produced.
E)  fixed cost increases when one more unit of output is produced.

Question 12

The ATC curve shifts upward if

Accepted Answer

A)  factor prices rise.
B)  a new technology is introduced.
C)  more workers are hired.
D)  all of the above
E)  none of the above

Question 13

Use the figure below to answer the following questions.
  
Figure 11.4.2
-Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

Accepted Answer

A)  ATCA
B)  ATCB
C)  ATCC
D)  ATCD
E)  either ATCC or ATCD

Question 14

The marginal product of capital is the

Accepted Answer

A)  change in total product resulting from a 1-unit increase in the quantity of labour employed, holding the quantity of the capital constant.
B)  change in total product resulting from a 1-unit increase in the quantity of capital employed, holding the quantity of the labour constant.
C)  total product divided by the total quantity of capital employed, holding the quantity of the labour constant.
D)  total product divided by the total quantity of labour employed, holding the quantity of the capital constant.
E)  change in the quantity of capital used resulting from a 1-unit increase in total product, holding constant the quantity of labour.

Question 15

Table 11.2.1
 
-Refer to Table 11.2.1 which gives Tania's total product schedule.Marginal product of labour reaches its maximum when the number of workers increases from

Accepted Answer

A)  0 to 1.
B)  1 to 2.
C)  2 to 3.
D)  3 to 4.
E)  4 to 5

Question 16

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 17

The steeper the slope of the total product curve,

Accepted Answer

A)  the smaller the average product.
B)  the smaller the marginal product.
C)  the greater the total cost.
D)  the more efficient the technology employed.
E)  the greater the marginal product.

Question 18

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 19

A cost that has been incurred and cannot be recovered is a

Accepted Answer

A)  marginal cost.
B)  sunk cost.
C)  variable cost.
D)  business cost.
E)  significant cost.

Question 20

Use the figure below to answer the following questions.
  
Figure 11.4.1
-Refer to Figure 11.4.1, which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the

Accepted Answer

A)  price of the inputs.
B)  price of the output.
C)  law of diminishing marginal returns.
D)  law of economies of scale.
E)  fact that capital and labour cannot be substituted for each other.

Exam 11: Output and Costs

Marginal cost

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The long run refers to a time period

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A cost that has been incurred and cannot be recovered is a

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Consider a graph that shows the total cost curve and the total variable cost curve.As output increases, the vertical distance between these two curves

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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.Marginal product of labour reaches its maximum when the number of workers increases from

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The short run is a time frame in which

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In the long run, a firm can vary

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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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Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1, which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the

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Table 11.2.1 -Refer to Table 11.2.1 which gives Tania's total product schedule.Marginal product of labour reaches its maximum when the number of workers increases from

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Marginal cost is the amount that

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The ATC curve shifts upward if

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The average product of energy equals

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Use the figure below to answer the following questions. Figure 11.4.2 -Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four different plant sizes.Which curve represents the average total cost for the largest of the four plant sizes?

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The marginal product of capital is the

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If ATC is rising then MC must be

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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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The steeper the slope of the total product curve,

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Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3.The maximum value of marginal product occurs where output equals ________, while the maximum value of average product occurs where output equals ________.

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Which one of the following is false?

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Use the table below to answer the following questions. Table 11.2.3 -Refer to Table 11.2.3.The maximum value of marginal product occurs where output equals , while the maximum value of average product occurs where output equals .

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