Question 1

Figure 7.1 th worker? A) 66. B) 9) 43. C) 2)  D) -2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7.1.What is the marginal product of the 7th worker?

Accepted Answer

A)  66.
B)  9) 43.
C)  2) 
D)  -2.

Question 2

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

Accepted Answer

A)  minimum efficient scale.
B)  more than minimum efficient scale.
C)  less than minimum efficient scale.
D)  minimum capacity.

Question 3

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Accepted Answer

A)  opportunity cost of inputs.
B)  marginal rate of technical substitution.
C)  input trade-off rate.
D)  isoquant substitution rate.

Question 4

Figure 7.13 
-Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

Accepted Answer

A)  The movement from CE to BF
B)  The movement from CE to AF
C)  The movement from BD to AF
D)  The movement from BD to CE

Question 5

The marginal cost curve has a U shape because

Accepted Answer

A)  Initially, the marginal product of labour falls, then rises.
B)  Initially, the average product of labour rises, then falls.
C)  Initially, the marginal product of labour rises, then falls.
D)  Initially, the average cost of production rises, then falls.

Question 6

All of the following statements are true of the minimum efficient scale except one.Which one?

Accepted Answer

A)  All possible economies of scale have been exhausted.
B)  The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point.
C)  Any increase in the scale of operation will encounter diseconomies of scale.
D)  An increase in the output level will increase profit.

Question 7

If production displays constant returns to scale, then all economies of scale have been exhausted.

Accepted Answer

A) True 
 B)False  True

Question 8

Assume that you observe the long-run average cost curve of a local Bookstores, a national chain.Starting from the point on the curve where output is zero and moving to the right, which of the following lists the behaviour of long-run average costs in the correct sequence (that is, which will be observed first, second, etc.) ?

Accepted Answer

A)  Minimum efficient scale; economies of scale; constant returns to scale; diseconomies of scale
B)  Economies of scale; constant returns to scale; diseconomies of scale; minimum efficient scale
C)  Constant returns to scale; economies of scale; minimum efficient scale; diseconomies of scale
D)  Economies of scale; minimum efficient scale; constant returns to scale; diseconomies of scale

Question 9

Figure 7.7  Figure 7.7 shows the cost structure for a firm.
-Refer to Figure 7.7.If output is 100 units, fixed cost of production is

Accepted Answer

A)  $8
B)  $800
C)  $1000
D)  This cannot be determined from the diagram. B

Question 10

Figure 7.2 2 because A) the marginal product of labour is below the average product of labour. B) the marginal product of labour is falling. C) the marginal product of labour is negative. D) the marginal product of labour is positive." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7.2.The average product of labour declines after L2 because

Accepted Answer

A)  the marginal product of labour is below the average product of labour.
B)  the marginal product of labour is falling.
C)  the marginal product of labour is negative.
D)  the marginal product of labour is positive.

Question 11

When a firm produces 50 000 units of output, its total cost equals $6.5 million.When it increases its production to 70 000 units of output, its total cost increases to $9.4 million.Within this range, the marginal cost of an additional unit of output is

Accepted Answer

A)  $41.43.
B)  $134.29.
C)  $135.
D)  $145.

Question 12

Economies of scale exist as a firm increases its size in the long run because of all of the following except

Accepted Answer

A)  the firm can afford more sophisticated technology in production.
B)  labour and management can specialise even further in their tasks.
C)  as a larger input buyer, the firm can purchase inputs at a lower per unit cost.
D)  as a firm expands its production, its profit margin per unit of output increases.

Question 13

Figure 7.13 
-Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, then along the isocost AF, the total cost

Accepted Answer

A)  is $500.
B)  is $750.
C)  is $1250.
D)  cannot be determined without the price of capital.

Question 14

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The relationship between marginal and av...

Question 15

What happens when the marginal product of labour rises?

Accepted Answer

A)  the marginal cost of production will exceed the average total cost.
B)  the marginal cost of production also rises.
C)  the marginal cost of production falls.
D)  the average total cost of production also rises.

Question 16

Which of the following would be categorised as an opportunity cost? 
a.not being able to spend your $10 000 savings if you sink the money into your business
b.the cost of purchasing supplies for your house-cleaning business
c.the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A)  a only
B)  a and c only
C)  b and c only
D)  all of the above

Question 17

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following equations is correct?

Accepted Answer

A)  AVC - ATC = AFC
B)  AVC + ATC = AFC
C)  AFC + AVC = ATC
D)  ATC + AVC = AFC

Question 19

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. D

Question 20

Figure 7.2 1. B) after L2. C) after L3. D) immediately." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7.2.Diminishing returns to labour set in

Accepted Answer

A)  after L1.
B)  after L2.
C)  after L3.
D)  immediately.

Exam 7: Technology Production and Costs

Figure 7.1 -Refer to Figure 7.1.What is the marginal product of the 7^th worker?

Correct Answer
verified

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

Correct Answer
verified

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Correct Answer
verified

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

Correct Answer
verified

The marginal cost curve has a U shape because

Correct Answer
verified

All of the following statements are true of the minimum efficient scale except one.Which one?

Correct Answer
verified

If production displays constant returns to scale, then all economies of scale have been exhausted.

Correct Answer
verified
True

Correct Answer
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Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.If output is 100 units, fixed cost of production is

Correct Answer
verified
B

Figure 7.2 -Refer to Figure 7.2.The average product of labour declines after L₂ because

Correct Answer
verified

When a firm produces 50 000 units of output, its total cost equals $6.5 million.When it increases its production to 70 000 units of output, its total cost increases to $9.4 million.Within this range, the marginal cost of an additional unit of output is

Correct Answer
verified

Economies of scale exist as a firm increases its size in the long run because of all of the following except

Correct Answer
verified

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, then along the isocost AF, the total cost

Correct Answer
verified

Correct Answer
verified
The relationship between marginal and av...
View Answer

What happens when the marginal product of labour rises?

Correct Answer
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Correct Answer
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The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
verified

Which of the following statements is false?

Correct Answer
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D

Figure 7.2 -Refer to Figure 7.2.Diminishing returns to labour set in

Correct Answer
verified

Exam 7: Technology Production and Costs

Figure 7.1 -Refer to Figure 7.1.What is the marginal product of the 7th worker?

Correct AnswerverifiedShow Answer

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

Correct AnswerverifiedShow Answer

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

Correct AnswerverifiedShow Answer

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

Correct AnswerverifiedShow Answer

The marginal cost curve has a U shape because

Correct AnswerverifiedShow Answer

All of the following statements are true of the minimum efficient scale except one.Which one?

Correct AnswerverifiedShow Answer

If production displays constant returns to scale, then all economies of scale have been exhausted.

Correct AnswerverifiedTrue

Correct AnswerverifiedShow Answer

Figure 7.7 Figure 7.7 shows the cost structure for a firm. -Refer to Figure 7.7.If output is 100 units, fixed cost of production is

Correct AnswerverifiedB

Figure 7.2 -Refer to Figure 7.2.The average product of labour declines after L2 because

Correct AnswerverifiedShow Answer

When a firm produces 50 000 units of output, its total cost equals $6.5 million.When it increases its production to 70 000 units of output, its total cost increases to $9.4 million.Within this range, the marginal cost of an additional unit of output is

Correct AnswerverifiedShow Answer

Economies of scale exist as a firm increases its size in the long run because of all of the following except

Correct AnswerverifiedShow Answer

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, then along the isocost AF, the total cost

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe relationship between marginal and av...View AnswerShow Answer

What happens when the marginal product of labour rises?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedD

Figure 7.2 -Refer to Figure 7.2.Diminishing returns to labour set in

Correct AnswerverifiedShow Answer

Figure 7.1 -Refer to Figure 7.1.What is the marginal product of the 7^th worker?

Correct Answer
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Correct Answer
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Correct Answer
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True

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B

Figure 7.2 -Refer to Figure 7.2.The average product of labour declines after L₂ because

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The relationship between marginal and av...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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D

Correct Answer
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