Question 1

The long-run average cost curve:

Accepted Answer

A)  will rise once the law of diminishing marginal returns begins to apply
B)  will fall once the law of diminishing marginal returns begins to apply
C)  will rise if increasing returns to scale apply
D)  will be vertical if constant returns to scale apply
E)  is based on the assumption that all resources are variableF) B) and E)
G) A) and E)

Question 2

For the following output data, assume that the amounts of all nonlabour resources are fixed

ABCDEFG Number of Workers 0123456 Outputs (units)  04090126150165174\begin{array} { | l | c | c | c | c | c | c | c | } \hline & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } & \mathrm { E } & \mathrm { F } & \mathrm { G } \\hline 	ext { Number of Workers } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\hline 	ext { Outputs (units)  } & 0 & 40 & 90 & 126 & 150 & 165 & 174 \\hline\end{array} Number of Workers  Outputs (units)  ​A00​B140​C290​D3126​E4150​F5165​G6174​​ 
-The marginal product of the sixth worker is:

Accepted Answer

A)  174 units of output
B)  29 units of output
C)  9 units of output
D)  15 units of output
E)  negative F) A) and D)
G) A) and B)

Question 3

Kline Shirts employs labour at $5 per hour and uses capital equipment that costs $80 per day to produce women's cotton shirts.The company's total cost,given 100 hours of labour,is:

Accepted Answer

A)  $480
B)  $500
C)  $80
D)  $580
E)  $800F) B) and D)
G) B) and C)

Question 4

When decreasing returns to scale occur:

Accepted Answer

A)  the long-run average cost curve falls
B)  marginal cost intersects average cost
C)  the long-run average cost curve rises
D)  average fixed cost will rise
E)  average variable cost will fallF) C) and D)
G) B) and D)

Question 5

0Q: A) marginal product is falling B) marginal product is rising C) marginal product is negative D) marginal product is constant E) one cannot determine whether marginal product is falling, rising, or staying constant" class="answers-bank-image d-inline" rel="preload" >
-At output level 0Q:

Accepted Answer

A)  marginal product is falling
B)  marginal product is rising
C)  marginal product is negative
D)  marginal product is constant
E)  one cannot determine whether marginal product is falling, rising, or staying constantF) B) and E)
G) C) and D)

Question 6

Marginal product is the:

Accepted Answer

A)  increase in average product attributable to the employment of one more worker
B)  increase in total revenue attributable to the employment of one more worker
C)  increase in total cost attributable to the employment of one more worker
D)  total product divided by the number of the workers employed
E)  increase in total output attributable to the employment of one more workerF) All of the above
G) A) and B)

Question 7

Marginal product:

Accepted Answer

A)  diminishes at all levels of production
B)  may initially increase, then diminishes, but never becomes negative
C)  may initially increase, then diminishes, and ultimately becomes negative
D)  is always less than average product
E)  is always greater than average productF) None of the above
G) A) and B)

Question 8

0Q,average fixed cost: A) is equal to EF B) is equal to QE C) is equal to QF D) is equal to QD E) must be increasing" class="answers-bank-image d-inline" rel="preload" >
-At output level 0Q,average fixed cost:

Accepted Answer

A)  is equal to EF
B)  is equal to QE
C)  is equal to QF
D)  is equal to QD
E)  must be increasingF) A) and D)
G) D) and E)

Question 9

Increasing returns to scale in an industry:

Accepted Answer

A)  give all businesses a competitive advantage
B)  increase a business's chance of becoming larger in size
C)  generally means that businesses are relatively small
D)  lead to an increase in small business entries within the industry
E)  are more common in resource-based industriesF) A) and D)
G) A) and C)

Question 10

Which of the following statements is correct?

Accepted Answer

A)  Average variable cost intersects marginal cost at the latter's minimum point.
B)  Marginal cost intersects average cost at the latter's minimum point.
C)  Average fixed cost intersects marginal cost at the latter's minimum point.
D)  Marginal cost intersects average fixed cost at the latter's minimum point.
E)  Average variable cost intersects average fixed cost at the latter's minimum pointF) A) and C)
G) All of the above

Question 11

Marginal cost:

Accepted Answer

A)  intersects both the average variable cost and the average cost curves at their minimum points
B)  is defined as the difference between total cost and variable cost
C)  rises for a time, but then begins to decline once the law of diminishing marginal returns begins to apply
D)  declines so long as output increases
E)  intersects the average fixed cost curve at its minimum pointF) A) and B)
G) A) and C)

Question 12

Marginal cost may be defined as the:

Accepted Answer

A)  rate of change in fixed costs that results from producing one more unit of output
B)  change in total cost that results from producing one more unit of output
C)  change in average variable cost that results from producing one more unit of output
D)  change in average cost that results from producing one more unit of output
E)  change in average fixed cost that results from producing one more unit of outputF) A) and C)
G) B) and C)

Question 13

For the following output data, assume that the amounts of all nonlabour resources are fixed

ABCDEFG Number of Workers 0123456 Outputs (units)  04090126150165174\begin{array} { | l | c | c | c | c | c | c | c | } \hline & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } & \mathrm { E } & \mathrm { F } & \mathrm { G } \\hline 	ext { Number of Workers } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\hline 	ext { Outputs (units)  } & 0 & 40 & 90 & 126 & 150 & 165 & 174 \\hline\end{array} Number of Workers  Outputs (units)  ​A00​B140​C290​D3126​E4150​F5165​G6174​​ 
-The law of diminishing marginal returns becomes evident with the addition of the:

Accepted Answer

A)  fifth worker
B)  fourth worker
C)  third worker
D)  second worker
E)  first worker F) A) and D)
G) D) and E)

Question 14

The operation of all businesses and industries typically fall into these three sectors of production:

Accepted Answer

A)  primary, secondary, and capital-intensive
B)  manufacturing, service, and telecommunications
C)  mining, forestry, and fishing
D)  agriculture, manufacturing, and service
E)  the cultivation of nature resources, the processing and fabrication of goods, and the provision of servicesF) A) and E)
G) B) and D)

Question 15

If total cost is $30 at 10 units of output and $32 at 11 units of output,in this range of output,marginal cost is:

Accepted Answer

A)  $2
B)  $31
C)  $32
D)  $1
E)  zeroF) B) and E)
G) C) and E)

Question 16

Which of the following is a variable input?

Accepted Answer

A)  production plants
B)  machinery
C)  land available for cultivation
D)  labour
E)  office buildingsF) A) and B)
G) A) and E)

Question 17

The first,second,and third workers employed by a firm add 24,18,and 9 units to total product,respectively.On the basis of this information,we can say that:

Accepted Answer

A)  the marginal product of the third worker is 9
B)  the total product of the three workers is 9
C)  the average product of the three workers is 3
D)  the law of diminishing marginal returns becomes evident with the addition of the third worker
E)  the law of diminishing marginal returns is not evident in this exampleF) A) and D)
G) B) and E)

Question 18

Consider the following cost data:

Output 0123456 Total Cost ($)  24334148546169\begin{array} { | l | c | c | c | c | c | c | c | } \hline 	ext { Output } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\hline 	ext { Total Cost (\$)  } & 24 & 33 & 41 & 48 & 54 & 61 & 69 \\hline\end{array} Output  Total Cost ($)  ​024​133​241​348​454​561​669​​ 
-The variable cost of producing 5 units of output is:

Accepted Answer

A)  $61
B)  $48
C)  $37
D)  $24
E)  $5 F) A) and B)
G) D) and E)

Question 19

Marginal cost:

Accepted Answer

A)  is the total cost of producing each unit of output
B)  is the change in total cost divided by the change in average product
C)  rises as long as marginal product continues to fall
D)  is average product divided by the change in total cost
E)  is marginal product divided by the change in total costF) B) and E)
G) B) and C)

Exam 4: Costs of Production

Which of the following is a variable input?

Correct Answer
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The operation of all businesses and industries typically fall into these three sectors of production:

Correct Answer
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Marginal cost may be defined as the:

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Which of the following statements is correct?

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When decreasing returns to scale occur:

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Marginal product is the:

Correct Answer
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Increasing returns to scale in an industry:

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Marginal cost:

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The long-run average cost curve:

Correct Answer
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The first,second,and third workers employed by a firm add 24,18,and 9 units to total product,respectively.On the basis of this information,we can say that:

Correct Answer
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Marginal product:

Correct Answer
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Marginal cost:

Correct Answer
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Kline Shirts employs labour at $5 per hour and uses capital equipment that costs $80 per day to produce women's cotton shirts.The company's total cost,given 100 hours of labour,is:

Correct Answer
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Correct Answer
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-At output level ₀Q,average fixed cost:

Correct Answer
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-At output level ₀Q:

Correct Answer
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If total cost is $30 at 10 units of output and $32 at 11 units of output,in this range of output,marginal cost is:

Correct Answer
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Consider the following cost data: $\begin{array} { | l | c | c | c | c | c | c | c | } \hline \text { Output } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline \text { Total Cost (\$) } & 24 & 33 & 41 & 48 & 54 & 61 & 69 \\\hline\end{array}$ -The variable cost of producing 5 units of output is:

Correct Answer
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Exam 4: Costs of Production

Which of the following is a variable input?

Correct AnswerverifiedShow Answer

The operation of all businesses and industries typically fall into these three sectors of production:

Correct AnswerverifiedShow Answer

Marginal cost may be defined as the:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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When decreasing returns to scale occur:

Correct AnswerverifiedShow Answer

Marginal product is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Increasing returns to scale in an industry:

Correct AnswerverifiedShow Answer

Marginal cost:

Correct AnswerverifiedShow Answer

The long-run average cost curve:

Correct AnswerverifiedShow Answer

The first,second,and third workers employed by a firm add 24,18,and 9 units to total product,respectively.On the basis of this information,we can say that:

Correct AnswerverifiedShow Answer

Marginal product:

Correct AnswerverifiedShow Answer

Marginal cost:

Correct AnswerverifiedShow Answer

Kline Shirts employs labour at $5 per hour and uses capital equipment that costs $80 per day to produce women's cotton shirts.The company's total cost,given 100 hours of labour,is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-At output level 0Q,average fixed cost:

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-At output level 0Q:

Correct AnswerverifiedShow Answer

If total cost is $30 at 10 units of output and $32 at 11 units of output,in this range of output,marginal cost is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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-At output level ₀Q,average fixed cost:

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-At output level ₀Q:

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