Question 1

Use the table below to answer the following questions.
Table 11.4.1
Swanky's output levels
 
-Refer to Table 11.4.1, which represents Swanky's production possibilities as the firm varies the quantities of knitting machines and workers per day. If Swanky increases the number of knitting machines from 2 to 3 and increases the number of workers employed from 2 to 3, the factory experiences

Accepted Answer

A)  economies of scale.
B)  constant returns to scale.
C)  diseconomies of scale.
D)  constant marginal product.
E)  minimum efficient scale.

Question 2

One reason for diseconomies of scale is that as output becomes larger and larger,

Accepted Answer

A)  costs per unit decrease.
B)  management systems become more efficient.
C)  the number of workers increases.
D)  management systems can become more complex and inefficient.
E)  workers become more efficient.

Question 3

After constructing a new factory, the cost of building the factor is a

Accepted Answer

A)  past cost.
B)  variable cost.
C)  significant cost.
D)  taxable cost.
E)  sunk cost.

Question 4

When the demand for electricity peaks during the hottest days of summer, Hydro One can generate more electricity by using more fuel and increasing the working hours of many of its employees. The company cannot, however, increase electric power production by building additional generating capacity. This means that the company is operating in the

Accepted Answer

A)  market run.
B)  intermediate run.
C)  long run.
D)  immediate run.
E)  short run.

Question 5

The law of diminishing marginal returns refers to the tendency for the ________ to eventually decrease as more labour is employed, everything else remaining the same.

Accepted Answer

A)  average total cost
B)  marginal cost
C)  total product
D)  marginal product of labour
E)  average product of labour

Question 6

The short run refers to a time period

Accepted Answer

A)  of one year or less.
B)  in which all factors of production are variable.
C)  in which all factors of production are fixed.
D)  in which some factors of production are variable, but at least one factor of production is fixed.
E)  in which all factors of production are variable, but the technology is fixed.

Question 7

Use the table below to answer the following questions.
Table 11.3.1
 
-Refer to Table 11.3.1, which gives Tania's total cost schedule. The average fixed cost of producing 9 teapots per day is

Accepted Answer

A)  $2.22.
B)  $1.25.
C)  $10.00.
D)  $1.11.
E)  $1.54.

Question 8

Choose the correct equation.

Accepted Answer

A)  TFC = TC/Q
B)  TFC = TC - AVC
C)  TFC = TC - TVC
D)  TFC = TVC/Q
E)  TFC = TVC - TC

Question 9

Marginal cost ________ as the quantity produced increases.

Accepted Answer

A)  initially decreases and then decreases
B)  always decreases
C)  always increases
D)  initially increases and then decreases
E)  becomes negative

Question 10

Marginal product

Accepted Answer

A)  is always negative.
B)  equals the slope of the total product curve.
C)  is always zero.
D)  lies between zero and one.
E)  equals average product minus total product.

Question 11

A firm's total product curve describes

Accepted Answer

A)  the minimum cost of producing a given amount of output.
B)  the maximum output that a given quantity of labour can produce.
C)  how the maximum attainable output varies as the size of the firm's plant varies, given the quantity of labour employed.
D)  how the management of the firm makes decisions over the short run.
E)  how the amount of labour varies as the amount of output varies.

Question 12

Marginal cost is equal to

Accepted Answer

A)  total cost divided by output.
B)  the increase in total cost divided by the increase in output.
C)  the increase in total cost divided by the increase in labour input, given the amount of capital.
D)  total variable cost minus total fixed cost.
E)  the increase in total cost divided by the increase in variable cost.

Question 13

The steeper the slope of the total product curve,

Accepted Answer

A)  the smaller the average product.
B)  the smaller the marginal product.
C)  the greater the total cost.
D)  the more efficient the technology employed.
E)  the greater the marginal product.

Question 14

The average product of labour equals

Accepted Answer

A)  the slope of the total product curve.
B)  the slope of the marginal product curve.
C)  the increase in total product divided by the increase in labour employed.
D)  total product divided by the quantity of labour employed.
E)  the difference between the total product and the marginal product of labour.

Question 15

The ATC curve shifts upward if

Accepted Answer

A)  factor prices rise.
B)  a new technology is introduced.
C)  more workers are hired.
D)  all of the above
E)  none of the above

Question 16

Which of the following factors are fixed in the long run?

Accepted Answer

A)  labour
B)  capital
C)  land
D)  entrepreneurship
E)  No factors of production are fixed in the long run.

Question 17

Which one of the following statements is false?

Accepted Answer

A)  Average total cost is total cost per unit of output.
B)  Average fixed cost plus average variable cost equals average total cost.
C)  Marginal cost is the increase in total cost resulting from a one-unit increase in output.
D)  Total cost equals fixed cost plus average cost.
E)  Marginal cost depends on the amount of labour hired.

Question 18

Use the figure below to answer the following questions.
  
Figure 11.4.1
-Refer to Figure 11.4.1, which illustrates the total product curves for four different plant sizes. One of the fundamental technological facts reflected in the shape of each of the total product curves is the

Accepted Answer

A)  price of the inputs.
B)  price of the output.
C)  law of diminishing marginal returns.
D)  law of economies of scale.
E)  fact that capital and labour cannot be substituted for each other.

Question 19

Which one of the following statements is true?

Accepted Answer

A)  The highest value of average product occurs where average product is greater than marginal product.
B)  When the average product curve is rising, marginal product is less than average product.
C)  When the average product curve is falling, marginal product is greater than average product.
D)  The maximum total product occurs at minimum marginal product.
E)  The highest value of average product occurs where average product equals marginal product.

Question 20

In the long run, a firm has no factors of production that are

Accepted Answer

A)  variable.
B)  marginal.
C)  significant.
D)  taxable.
E)  fixed.

Exam 11: Output and Costs

Choose the correct equation.

Correct Answer
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In the long run, a firm has no factors of production that are

Correct Answer
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After constructing a new factory, the cost of building the factor is a

Correct Answer
verified

A firm's total product curve describes

Correct Answer
verified

Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1, which illustrates the total product curves for four different plant sizes. One of the fundamental technological facts reflected in the shape of each of the total product curves is the

Correct Answer
verified

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule. The average fixed cost of producing 9 teapots per day is

Correct Answer
verified

Marginal cost ________ as the quantity produced increases.

Correct Answer
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The short run refers to a time period

Correct Answer
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The ATC curve shifts upward if

Correct Answer
verified

Which of the following factors are fixed in the long run?

Correct Answer
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Which one of the following statements is false?

Correct Answer
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Which one of the following statements is true?

Correct Answer
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The law of diminishing marginal returns refers to the tendency for the ________ to eventually decrease as more labour is employed, everything else remaining the same.

Correct Answer
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The average product of labour equals

Correct Answer
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Correct Answer
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Marginal product

Correct Answer
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One reason for diseconomies of scale is that as output becomes larger and larger,

Correct Answer
verified

Marginal cost is equal to

Correct Answer
verified

The steeper the slope of the total product curve,

Correct Answer
verified

Exam 11: Output and Costs

Choose the correct equation.

Correct AnswerverifiedShow Answer

In the long run, a firm has no factors of production that are

Correct AnswerverifiedShow Answer

After constructing a new factory, the cost of building the factor is a

Correct AnswerverifiedShow Answer

A firm's total product curve describes

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 11.4.1 -Refer to Figure 11.4.1, which illustrates the total product curves for four different plant sizes. One of the fundamental technological facts reflected in the shape of each of the total product curves is the

Correct AnswerverifiedShow Answer

Use the table below to answer the following questions. Table 11.3.1 -Refer to Table 11.3.1, which gives Tania's total cost schedule. The average fixed cost of producing 9 teapots per day is

Correct AnswerverifiedShow Answer

Marginal cost ________ as the quantity produced increases.

Correct AnswerverifiedShow Answer

The short run refers to a time period

Correct AnswerverifiedShow Answer

The ATC curve shifts upward if

Correct AnswerverifiedShow Answer

Which of the following factors are fixed in the long run?

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns refers to the tendency for the ________ to eventually decrease as more labour is employed, everything else remaining the same.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The average product of labour equals

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal product

Correct AnswerverifiedShow Answer

One reason for diseconomies of scale is that as output becomes larger and larger,

Correct AnswerverifiedShow Answer

Marginal cost is equal to

Correct AnswerverifiedShow Answer

The steeper the slope of the total product curve,

Correct AnswerverifiedShow Answer

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