Question 1

-The marginal cost of the second unit of output is:

Accepted Answer

A)   $400.
B)   $600.
C)   $1,000.
D)   $1,400.E) C) and D)
F) B) and C)

Question 2

The production time frame in which some factors of production are variable in amount and some are fixed is referred to as the long run.

Accepted Answer

A) True 
 B)False

Question 3

To an economist, the short run refers to a time period:

Accepted Answer

A)   of less than one year.
B)   during which all factors of production are variable.
C)   during which production takes place using only fixed factors of production.
D)   during which production takes place using some variable and some fixed factors of production.E) A) and B)
F) B) and C)

Question 4

A firm has a fixed cost of $1,000, a total cost of $1,050 when one unit of output is produced, and a total variable cost of $80 when two units of output are produced.
-At one unit of output this firm has a total variable cost of:

Accepted Answer

A)   $50.
B)   $75.
C)   $100.
D)   $150.E) A) and C)
F) B) and C)

Question 5

Which average cost would never decrease and then increase as the level of output increased?

Accepted Answer

A)   Average total cost.
B)   Average fixed cost.
C)   Average variable cost.
D)   All of the above.E) A) and B)
F) None of the above

Question 6

The concept that new, technologically advanced processes and machinery cause the disuse and ultimate disappearance of old processes and machinery is called:

Accepted Answer

A)   industrial unrest.
B)   capital switching.
C)   creative destruction.
D)   capital-intensive production.E) B) and C)
F) All of the above

Question 7

Technology:

Accepted Answer

A)   is a net benefit maximizing rule.
B)   is the body of knowledge that exists about production and its processes.
C)   is the body of knowledge covering general truths and the operation of general laws.
D)   shows the type and amount of output that can be attained from a set of inputs when those inputs are combined in a specific way.E) All of the above
F) A) and B)

Question 8

In the short run, even if a firm reduces output to zero units, it will still incur __________ costs.

Accepted Answer

The answer of In the short run, even if a...

Question 9

In terms of the amount of output produced, the largest sector in the U.S. economy is currently the:

Accepted Answer

A)   services sector.
B)   retail trade sector.
C)   manufacturing sector.
D)   agriculture, forestry, and fishing sector.E) C) and D)
F) A) and B)

Question 10

If marginal cost is greater than average variable cost but less than average total cost, then as one more unit of output is produced you should expect average variable cost:

Accepted Answer

A)   and average total cost to both increase.
B)   and average total cost to both decrease.
C)   to increase and average total cost to decrease.
D)   to decrease and average total cost to increase.E) B) and C)
F) A) and B)

Question 11

A firm has a fixed cost of $1,000, a total cost of $1,050 when one unit of output is produced, and a total variable cost of $80 when two units of output are produced.
-This firm:

Accepted Answer

A)   is producing in the long run.
B)   has a total cost of $0 when its output is zero.
C)   has a total cost of $1,000 when its output is zero.
D)   none of the above.E) A) and B)
F) C) and D)

Question 12

As a firm grows and becomes more complex, it may be impossible to manage effectively causing the costs per unit of output to increase. This firm would be experiencing ________________ of scale.

Accepted Answer

The answer of As a firm grows and becomes more...

Question 13

The behaviors of short-run marginal cost, average variable cost, and average total cost are caused primarily by the:

Accepted Answer

A)   Law of Supply.
B)   behavior of total costs.
C)   Law of Diminishing Returns.
D)   behavior of average fixed cost.E) All of the above
F) B) and C)

Question 14

You would expect two firms to be in the same industry if they:

Accepted Answer

A)   were chartered in the same state.
B)   belonged in the same producing sector.
C)   acquired their resources from the same source.
D)   produced similar products or used similar processes.E) B) and C)
F) A) and D)

Question 15

The total cost of producing 9 units is $185 and the average total cost for producing 10 units is $20. The marginal cost of producing the 10th unit is:

Accepted Answer

A)   $205.
B)   $165.
C)   $15.
D)   $29.E) B) and D)
F) C) and D)

Question 16

-If marginal cost were shown in this figure, it would equal average variable cost and average total cost at:

Accepted Answer

A)   output C.
B)   outputs A and B, respectively.
C)   outputs B and D, respectively.
D)   outputs C and E, respectively.E) A) and B)
F) A) and C)

Question 17

-Short-run total fixed cost is best illustrated in these figures by line:

Accepted Answer

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

Question 18

Creative destruction occurs on an international level when:

Accepted Answer

A)   war and sabotage destroy another country's capital base.
B)   industrial espionage is used to take another country's technical know-how.
C)   technological advances adopted by firms in one country adversely affect competing firms in another country.
D)   countries ignore patents and copyrights and exploit intellectual property without paying royalties.E) None of the above
F) A) and D)

Question 19

Over the short run, total cost tends to increase rapidly at first, and then slowly as large levels of output are reached.

Accepted Answer

A) True 
 B)False

Question 20

-Which of the figures illustrates a firm experiencing some constant returns to scale?

Accepted Answer

A)   Figure A.
B)   Figure B.
C)   Figures C and D.
D)   Figures A and B.E) A) and B)
F) A) and C)

Exam 12: Production and the Costs of Production

A firm has a fixed cost of $1,000, a total cost of $1,050 when one unit of output is produced, and a total variable cost of $80 when two units of output are produced. -At one unit of output this firm has a total variable cost of:

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If marginal cost is greater than average variable cost but less than average total cost, then as one more unit of output is produced you should expect average variable cost:

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Which average cost would never decrease and then increase as the level of output increased?

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Over the short run, total cost tends to increase rapidly at first, and then slowly as large levels of output are reached.

Correct AnswerverifiedShow Answer

-The marginal cost of the second unit of output is:

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Creative destruction occurs on an international level when:

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-If marginal cost were shown in this figure, it would equal average variable cost and average total cost at:

Correct AnswerverifiedShow Answer

The production time frame in which some factors of production are variable in amount and some are fixed is referred to as the long run.

Correct AnswerverifiedShow Answer

The behaviors of short-run marginal cost, average variable cost, and average total cost are caused primarily by the:

Correct AnswerverifiedShow Answer

A firm has a fixed cost of $1,000, a total cost of $1,050 when one unit of output is produced, and a total variable cost of $80 when two units of output are produced. -This firm:

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To an economist, the short run refers to a time period:

Correct AnswerverifiedShow Answer

Technology:

Correct AnswerverifiedShow Answer

-Which of the figures illustrates a firm experiencing some constant returns to scale?

Correct AnswerverifiedShow Answer

The concept that new, technologically advanced processes and machinery cause the disuse and ultimate disappearance of old processes and machinery is called:

Correct AnswerverifiedShow Answer

In the short run, even if a firm reduces output to zero units, it will still incur __________ costs.

Correct AnswerverifiedShow Answer

You would expect two firms to be in the same industry if they:

Correct AnswerverifiedShow Answer

In terms of the amount of output produced, the largest sector in the U.S. economy is currently the:

Correct AnswerverifiedShow Answer

-Short-run total fixed cost is best illustrated in these figures by line:

Correct AnswerverifiedShow Answer

The total cost of producing 9 units is $185 and the average total cost for producing 10 units is $20. The marginal cost of producing the 10th unit is:

Correct AnswerverifiedShow Answer

As a firm grows and becomes more complex, it may be impossible to manage effectively causing the costs per unit of output to increase. This firm would be experiencing ________________ of scale.

Correct AnswerverifiedShow Answer

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