Question 1

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A)  the marginal cost curve.
B)  the average fixed cost curve.
C)  the average product curve.
D)  the firm's production function.

Question 2

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Accepted Answer

A)  $1,000.
B)  $700.
C)  $300.
D)  impossible to determine without additional information.

Question 3

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Accepted Answer

A)  the marginal product of labor.
B)  the division of labor.
C)  the average product of labor.
D)  the average cost of production.

Question 4

Economic costs of production differ from accounting costs in that

Accepted Answer

A)  economic costs include expenditures for hired resources while accounting costs do not.
B)  economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
C)  accounting costs include expenditures for hired resources while economic costs do not.
D)  accounting costs are always larger than economic cost.

Question 5

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Accepted Answer

A)  impossible to determined with the information given.
B)  12,800.
C)  784.
D)  50.

Question 6

Diseconomies of scale occur when

Accepted Answer

A)  long-run average costs rise as a firm increases its output.
B)  long-run average cost fall as a firm expands its plant size.
C)  short-run average costs rise as a firm expands its plant size.
D)  long-run labor costs rise as a firm increases its output.

Question 7

If average total cost is falling marginal cost must also be falling.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an example of positive technological change?

Accepted Answer

A)  A firm offers workers a higher wage to work on weekends and at night.As a result, the firm is able to increase its weekly production of surf boards.
B)  A firm buys an additional machine that it uses to make surf boards.As a result, the firm is able to increase its weekly production of surf boards.
C)  A firm conducts a new advertising campaign.As a result, the demand for the firm's surf boards increases.
D)  A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Question 9

In the long run which of the following is true?

Accepted Answer

A)  Total cost = fixed cost + variable cost.
B)  The size of a firm's physical plant can be changed but the firm cannot adopt new technology.
C)  There are no fixed costs.
D)  The firm can vary its explicit costs but not its implicit costs.

Question 10

Which of the following is an implicit cost of production?

Accepted Answer

A)  interest paid on a loan to a bank
B)  wages paid to labor plus the cost of carrying benefits for workers
C)  the utility bill paid to water, electricity, and natural gas companies
D)  rent that could have been earned on a building owned and used by the firm

Question 11

Figure 8-2
 
-Refer to Figure 8-2.Short run output is maximized at

Accepted Answer

A)  L₁.
B)  L₂.
C)  L₃.
D)  insufficient information to determine

Question 12

When a firm experiences a positive technological change

Accepted Answer

A)  the price of a share of the firm's stock rises.
B)  the firm is able to produce more output using the same inputs, or the same output using fewer inputs.
C)  the value of the firm's assets rises.
D)  the firm will hire additional workers in order to increase production.

Question 13

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Accepted Answer

A)  its labor is more productive in a smaller plant.
B)  its diseconomies of scale are less.
C)  the firm should reduce its plant size even more.
D)  the firm is now profitable.

Question 14

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Accepted Answer

A)  Diminishing returns are the result of changes in explicit costs.Diseconomies of scale are the result of changes in explicit costs and implicit costs.
B)  Diminishing returns refer to production while diseconomies of scale refer to costs.
C)  Diminishing returns cause a firm's marginal cost curve to rise; diseconomies of scale cause a firm's marginal cost curve to fall.
D)  Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run.

Question 15

Figure 8-8
 
-Refer to Figure 8-8 above to answer the following questions.
a.Identify the curves in the diagram.
A ________
B ________
C ________
b.What is the numerical value of fixed cost when the quantity of output=10?
c.What is the numerical value of variable cost when the quantity of output=10?
d.What is the numerical value of total cost when the quantity of output =10?
e.What is the numerical value of average fixed cost when the quantity of output =10?
f.What is the numerical value of average total cost when the quantity of output =10?
g.On the graph identify the area that represents the total variable cost of production when the quantity of output =10.
h.On the graph identify the area that represents the fixed cost of production when the quantity of output =10.

Accepted Answer

a. A=Marginal cost curve; B = ...

Question 16

Which of the following costs will not change as output changes?

Accepted Answer

A)  marginal cost
B)  total variable cost
C)  average variable cost
D)  average fixed cost
E)  total fixed cost

Question 17

Which of the following are implicit costs for a typical firm?

Accepted Answer

A)  opportunity costs of capital owned and used by the firm
B)  the cost of labor hired by the firm
C)  utilities cost
D)  a business licensing fee

Question 18

Which of the following statements is true?

Accepted Answer

A)  The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.
B)  The average product of labor is at its minimum when the average product of labor equals the marginal product of labor.
C)  The average product of labor tells us how much output changes as the quantity of workers hired changes.
D)  Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing.

Question 19

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

Accepted Answer

A) True 
 B)False

Question 20

In the long run

Accepted Answer

A)  the firm's fixed costs are greater than its fixed costs in the short run.
B)  all of the firm's costs are explicit costs; there are no implicit costs of production.
C)  the firm is more profitable than it is in the short run.
D)  all of the firm's costs are variable costs.

Exam 8: Technology, production, and Costs

Economic costs of production differ from accounting costs in that

Correct Answer
verified

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

Correct Answer
verified

The shape of the average total cost curve is determined by the shape of

Correct Answer
verified

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Correct Answer
verified

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Correct Answer
verified

Correct Answer
verified
a. A=Marginal cost curve; B = ...
View Answer

Figure 8-2 -Refer to Figure 8-2.Short run output is maximized at

Correct Answer
verified

Diseconomies of scale occur when

Correct Answer
verified

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Correct Answer
verified

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Correct Answer
verified

Which of the following are implicit costs for a typical firm?

Correct Answer
verified

Which of the following is an example of positive technological change?

Correct Answer
verified

In the long run

Correct Answer
verified

In the long run which of the following is true?

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following costs will not change as output changes?

Correct Answer
verified

When a firm experiences a positive technological change

Correct Answer
verified

If average total cost is falling marginal cost must also be falling.

Correct Answer
verified

Which of the following is an implicit cost of production?

Correct Answer
verified

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Correct Answer
verified

Exam 8: Technology, production, and Costs

Economic costs of production differ from accounting costs in that

Correct AnswerverifiedShow Answer

In the short run,if average product is at its maximum,then average variable cost is at its minimum.

Correct AnswerverifiedShow Answer

The shape of the average total cost curve is determined by the shape of

Correct AnswerverifiedShow Answer

When the average total cost is $16 and the total cost is $800,then the number of units the firm is producing is

Correct AnswerverifiedShow Answer

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

Correct AnswerverifiedShow Answer

Correct Answerverifieda. A=Marginal cost curve; B = ...View AnswerShow Answer

Figure 8-2 -Refer to Figure 8-2.Short run output is maximized at

Correct AnswerverifiedShow Answer

Diseconomies of scale occur when

Correct AnswerverifiedShow Answer

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

Correct AnswerverifiedShow Answer

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Correct AnswerverifiedShow Answer

Which of the following are implicit costs for a typical firm?

Correct AnswerverifiedShow Answer

Which of the following is an example of positive technological change?

Correct AnswerverifiedShow Answer

In the long run

Correct AnswerverifiedShow Answer

In the long run which of the following is true?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following costs will not change as output changes?

Correct AnswerverifiedShow Answer

When a firm experiences a positive technological change

Correct AnswerverifiedShow Answer

If average total cost is falling marginal cost must also be falling.

Correct AnswerverifiedShow Answer

Which of the following is an implicit cost of production?

Correct AnswerverifiedShow Answer

If a firm decreases its plant size and finds that its long-run average costs have decreased,then

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. A=Marginal cost curve; B = ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified