Question 1

-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.

Question 2

-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)   $20

Question 3

-Refer to the above table. At an output of 5 units, average total costs are

Accepted Answer

A)   $18.
B)   $19.
C)   $37.
D)   $185.

Question 4

The firm's short-run costs contain

Accepted Answer

A)   only variable costs.
B)   only fixed costs.
C)   both variable and fixed costs.
D)   only opportunity costs.

Question 5

Average total cost equals

Accepted Answer

A)   TC/Q.
B)   TVC/Q.
C)   TFC/Q.
D)   change in total cost/change in output.

Question 6

-In the above figure, the firm experiences constant returns to scale between output levels of

Accepted Answer

A)   zero and Q1.
B)   Q2 and Q3.
C)   Q3 and Q4.
D)   any level greater than Q4.

Question 7

An increase in long-run average costs resulting from decreases in output is

Accepted Answer

A)   attributed to the law of diminishing marginal product.
B)   attributed to constant returns to scale.
C)   attributed to economies of scale.
D)   attributed to diseconomies to scale.

Question 8

-MC = AVC and MC = ATC at points at which

Accepted Answer

A)   the AVC and ATC curves are at their respective maximums.
B)   the AVC and ATC curves are at their respective minimums.
C)   the distance between the ATC and AVC curves is at its minimum.
D)   the distance between the ATC and AVC curves is at its maximum.

Question 9

Production

Accepted Answer

A)   is a process by which resources are produced.
B)   is a process by which resources are transferred into goods and services.
C)   only applies to manufacturing of goods.
D)   is carried on by corporations, but not by sole proprietorships.

Question 10

In economics, the short run means a time period

Accepted Answer

A)   during which new firms are prohibited from entering the industry.
B)   during which firms are not allowed to change the amount of imported resources they use.
C)   that is between one and five years.
D)   during which the firm is unable to change its plant size.

Question 11

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 product.
D)   marginal product.

Question 12

The law of diminishing marginal product states that

Accepted Answer

A)   output will continue to increase indefinitely if more variable factors of production are added to an existing stock of fixed factors.
B)   successive equal-sized increases in labor, when added to fixed factors of production, will result in smaller increases of output.
C)   a doubling all inputs will double output.
D)   variable costs tend to decrease with output.

Question 13

At an output at which ATC is greater than MC

Accepted Answer

A)   the ATC curve is downward sloping.
B)   the ATC curve is upward sloping.
C)   the AFC curve is upward sloping.
D)   the AVC curve is upward sloping.

Question 14

When marginal costs are rising

Accepted Answer

A)   marginal physical product is also rising.
B)   marginal physical product is falling.
C)   average physical product is rising.
D)   average physical product is falling.

Question 15

-Using the above table, the TVC, the TC, and the MC when output is 4 units are

Accepted Answer

A)   $67, $72, and $22, respectively.
B)   $16.75, $21.75, and $22, respectively.
C)   $16.75, $21.75, and $30, respectively.
D)   $67, $62, and $22, respectively.

Question 16

Which of the following is a short-run decision for a firm?

Accepted Answer

A)   downsizing the firm's manufacturing plant
B)   expanding the firm's distribution network of long-haul freight trucks and smaller delivery trucks
C)   firing workers
D)   investing in a new addition to the firm's manufacturing plant

Question 17

-In the above table, the average physical product of 2 workers and the marginal product of the 2nd worker is

Accepted Answer

A)   2; 2.
B)   4; 1.
C)   3.5; 3.5.
D)   3.5; 4.

Question 18

The planning horizon is the

Accepted Answer

A)   long run.
B)   short run.
C)   point where production begins.
D)   point where diminishing marginal product starts.

Question 19

Graphically, 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.

Question 20

"In economics, the short run commonly refers to a period within one year and the long run is a period longer than one year." Do you agree or disagree? Explain your answer.

Accepted Answer

Disagree. The time period of the short r...

Exam 22: The Firm: Cost and Output Determination

In economics, the short run means a time period

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

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-Refer to the above table. At an output of 5 units, average total costs are

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Which of the following is a short-run decision for a firm?

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The law of diminishing marginal product states that

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When marginal costs are rising

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-MC = AVC and MC = ATC at points at which

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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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-Using the above table, the TVC, the TC, and the MC when output is 4 units are

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The firm's short-run costs contain

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-In the above figure, the firm experiences constant returns to scale between output levels of

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"In economics, the short run commonly refers to a period within one year and the long run is a period longer than one year." Do you agree or disagree? Explain your answer.

Correct AnswerverifiedDisagree. The time period of the short r...View AnswerShow Answer

An increase in long-run average costs resulting from decreases in output is

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Production

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Average total cost equals

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

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Graphically, economies to scale are illustrated by

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The planning horizon is the

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-In the above table, the average physical product of 2 workers and the marginal product of the 2nd worker is

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At an output at which ATC is greater than MC

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Disagree. The time period of the short r...
View Answer

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