Question 1

A firm's long-run average cost curve is

Accepted Answer

A)   the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted.
B)   the locus of points made up of the minimum point on each short-run average total cost curve when only one input may be adjusted.
C)   the envelope of the firm's variable cost curves.
D)   identical to the lowest short-run average cost curve the firm has.E) A) and B)
F) A) and C)

Question 2

Total fixed cost is

Accepted Answer

A)   the cost of buying and installing new machinery.
B)   the cost that does not change as output changes.
C)   the expenditure on imported raw materials.
D)   the wages paid to consultants.E) A) and C)
F) A) and B)

Question 3

In economics, a fixed cost is a cost that

Accepted Answer

A)   is present only in the short run.
B)   goes up as the level of output goes up.
C)   goes down as the level of output goes up.
D)   does not vary with the level of output.E) None of the above
F) A) and C)

Question 4

-In the above table, what is the average total cost to produce 3 units of output?

Accepted Answer

A)   $33.33
B)   $53.33
C)   $55
D)   $20E) All of the above
F) B) and C)

Question 5

-Refer to the above figure. Average total costs are represented by curve

Accepted Answer

A)   1.
B)   2.
C)   3.
D)   4.E) A) and C)
F) A) and B)

Question 6

-In the above table, diminishing marginal product occurs after employing the

Accepted Answer

A)   first worker.
B)   second worker.
C)   third worker.
D)   fourth worker.E) All of the above
F) A) and B)

Question 7

-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

Accepted Answer

A)   $20, $2.50, and $15, respectively.
B)   $35, $2.50, and $30, respectively.
C)   $30, $2.50, and $40, respectively.
D)   $35, $2.50, and $20, respectively.E) A) and B)
F) B) and D)

Question 8

-Refer to the above table. What are total variable costs at an output of 2 units?

Accepted Answer

A)   $50
B)   $100
C)   $150
D)   $200E) A) and B)
F) A) and C)

Question 9

What factors generate economies of scale?

Accepted Answer

Economies of scale can be generated by s...

Question 10

The amount of calendar time associated with the long run

Accepted Answer

A)   is less than five years.
B)   is greater than one year.
C)   is between one and five years.
D)   varies by industry.E) B) and C)
F) C) and D)

Question 11

Which of the following statement is correct?

Accepted Answer

A)   When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing.
B)   When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing.
C)   When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product.
D)   When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate.E) All of the above
F) B) and C)

Question 12

-In the above figure, the long-run cost curve between points C and D illustrates

Accepted Answer

A)   diseconomies of scale.
B)   diminishing marginal product.
C)   constant returns to scale.
D)   economies of scale.E) B) and D)
F) None of the above

Question 13

The physical output that is due to the addition of one more unit of a variable factor of production is

Accepted Answer

A)   average total cost.
B)   marginal cost.
C)   average physical product.
D)   marginal physical product.E) All of the above
F) None of the above

Question 14

-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Accepted Answer

A)   $19.
B)   $10.
C)   $22.
D)   $31.E) B) and D)
F) A) and D)

Question 15

Notice the costs as given in the table below. What is the total fixed cost in the table below?

Accepted Answer

A)   $5
B)   $0
C)   $10
D)   $9E) A) and B)
F) A) and D)

Question 16

The time period during at least one input cannot be changed is the

Accepted Answer

A)   production time.
B)   calendar year.
C)   long run.
D)   short run.E) A) and C)
F) A) and D)

Question 17

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

Accepted Answer

A)   diminishing marginal product.
B)   diminishing marginal utility.
C)   diminishing marginal workforce.
D)   diminishing marginal inputs.E) B) and C)
F) None of the above

Question 18

Which of the following statements is FALSE?

Accepted Answer

A)   Included in the firm's short-run production function are both fixed and variable inputs.
B)   An efficient firm can obtain more output than the production function shows.
C)   The production function shows the technical relationship between a firm's inputs and outputs.
D)   The production function presents the technically efficient methods of combining inputs to produce output.E) A) and D)
F) B) and D)

Question 19

The minimum possible short-run average costs are equal to long-run average costs when

Accepted Answer

A)   the plant is producing at its short-run minimum point.
B)   short-run and long-run costs are declining.
C)   the long-run curve is at a minimum point.
D)   production is at any point on the LAC curve.E) A) and B)
F) A) and C)

Question 20

Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

Accepted Answer

The production function is the relations...

Exam 22: The Firm: Cost and Output Determination

A firm's long-run average cost curve is

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Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.

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-In the above table, what is the average total cost to produce 3 units of output?

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The physical output that is due to the addition of one more unit of a variable factor of production is

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The minimum possible short-run average costs are equal to long-run average costs when

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What factors generate economies of scale?

Correct AnswerverifiedEconomies of scale can be generated by s...View AnswerShow Answer

-In the above table, diminishing marginal product occurs after employing the

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Which of the following statements is FALSE?

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The amount of calendar time associated with the long run

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-In the above figure, the long-run cost curve between points C and D illustrates

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Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

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-Refer to the above table. What are total variable costs at an output of 2 units?

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Total fixed cost is

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-Using the above table, the TC, the AFC, and the TVC when output is 2 units are

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Notice the costs as given in the table below. What is the total fixed cost in the table below?

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Which of the following statement is correct?

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The time period during at least one input cannot be changed is the

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-Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

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In economics, a fixed cost is a cost that

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-Refer to the above figure. Average total costs are represented by curve

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The production function is the relations...
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Economies of scale can be generated by s...
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