Question 1

-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) A) and B)
F) B) and C)

Question 2

-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) B) and C)

Question 3

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

Accepted Answer

A)  plant-size
B)  long-run
C)  short-run
D)  fixed-inputE) A) and B)
F) A) and C)

Question 4

With a given plant size, an increase in output will NOT result in an increase in

Accepted Answer

A)  total cost.
B)  average fixed cost.
C)  total fixed cost.
D)  average variable cost.E) A) and B)
F) B) and C)

Question 5

-Use the above figure. The AVC at output 5 is

Accepted Answer

A)  $35.00.
B)  $2.00.
C)  $3.00.
D)  $5.00.E) All of the above
F) A) and D)

Question 6

The short run is

Accepted Answer

A)  a period of time during which at least one input cannot be changed.
B)  a period of time during which no inputs can be changed.
C)  a period of time during which all inputs can be changed.
D)  a period of time shorter than one year.E) B) and C)
F) A) and D)

Question 7

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) B) and C)
F) C) and D)

Question 8

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.E) B) and C)
F) A) and B)

Question 9

What is the difference between average variable costs and average total costs?

Accepted Answer

Average total costs equal average variab...

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) All of the above
F) A) and B)

Question 11

Which of the following would be an example of a fixed cost?

Accepted Answer

A)  the electric and gas bills
B)  wages paid to temporary workers
C)  property insurance premiums
D)  expenditures on imported raw materialsE) B) and C)
F) A) and D)

Question 12

In economics, how long is the long run?

Accepted Answer

A)  More than 12 months
B)  24 months or longer
C)  5 years or more
D)  Whatever time it takes a firm to vary all inputsE) None of the above
F) B) and C)

Question 13

Minimum efficient scale

Accepted Answer

A)  is the point at which economies of scale begin for a particular firm.
B)  is the lowest rate of output per unit of time at which long-run average costs reach a minimum for a particular firm.
C)  applies only to firms with U-shaped long-run average cost curves.
D)  is the point at which diseconomies of scale begin for a particular firm.E) C) and D)
F) A) and C)

Question 14

Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

Accepted Answer

Given the information on total physical ...

Question 15

Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size?

Accepted Answer

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

Question 16

The typical cost curves are U-shaped due to the

Accepted Answer

A)  law of diminishing marginal utility.
B)  law of supply.
C)  law of demand.
D)  law of diminishing marginal product.E) A) and B)
F) All of the above

Question 17

Which of the following statements about a firm's short-run variable costs is correct?

Accepted Answer

A)  They increase as the level of output decreases.
B)  They typically include the cost of workers' wages.
C)  They include the costs of plant and equipment.
D)  They are always a greater expense than are fixed costs.E) B) and C)
F) B) and D)

Question 18

-If marginal product is zero, we know that

Accepted Answer

A)  total product is also zero.
B)  average product is also zero.
C)  total output is maximized.
D)  average product is constant.E) B) and C)
F) C) and D)

Question 19

Marginal costs will begin to rise at the point where

Accepted Answer

A)  fixed costs increase.
B)  variable costs increase.
C)  average variable costs increase.
D)  diminishing marginal product begins.E) A) and D)
F) A) and C)

Question 20

The relationship between inputs and outputs is known as

Accepted Answer

A)  business.
B)  manufacturing.
C)  a production function.
D)  marginal product.E) C) and D)
F) A) and D)

Exam 22: The Firm: Cost and Output Determination

With a given plant size, an increase in output will NOT result in an increase in

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What is the difference between average variable costs and average total costs?

Correct AnswerverifiedAverage total costs equal average variab...View AnswerShow Answer

The short run is

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The amount of calendar time associated with the long run

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Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.

Correct AnswerverifiedGiven the information on total physical ...View AnswerShow Answer

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

Correct AnswerverifiedShow Answer

Economies to scale are illustrated by

Correct AnswerverifiedShow Answer

Which of the following would be an example of a fixed cost?

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Economists generally define the short run as being

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Marginal costs will begin to rise at the point where

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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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In economics, how long is the long run?

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The typical cost curves are U-shaped due to the

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

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Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size?

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Which of the following statements about a firm's short-run variable costs is correct?

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-Use the above figure. The AVC at output 5 is

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Minimum efficient scale

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-If marginal product is zero, we know that

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The relationship between inputs and outputs is known as

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Average total costs equal average variab...
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Given the information on total physical ...
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