Question 1

Which of the following statements is not true?

Accepted Answer

A)  TC = TFC * Q.
B)  AVC = TVC/Q.
C)  TFC = AFC * Q.
D)  MC =ATC /Q.E) A) and B)
F) All of the above

Question 2

As output increases:

Accepted Answer

A)  ATC rises at first and then falls.
B)  AFC falls at first and then rises.
C)  AVC cuts ATC when MC is at its minimum.
D)  AFC declines and the gap between ATC and AVC declines.E) A) and D)
F) None of the above

Question 3

Which of the following statements is possible?

Accepted Answer

A)  AVC can be falling when ATC is rising.
B)  ATC can be falling when AVC is rising.
C)  ATC cuts AVC at its minimum.
D)  AVC falls when ATC falls, and rises when ATC rises.
E)  When MC is falling, ATC is rising.F) B) and D)
G) B) and E)

Question 4

Marginal product can be:

Accepted Answer

A)  positive, zero or negative
B)  only positive
C)  only negative
D)  positive or zeroE) C) and D)
F) A) and B)

Question 5

In the long run,total fixed cost:

Accepted Answer

A)  falls.
B)  does not exist.
C)  is constant.
D)  increases.E) A) and B)
F) A) and C)

Question 6

Suppose the cost to produce an additional unit of output is $20.What is the change in total variable cost?

Accepted Answer

A)  $10.
B)  $20.
C)  $30.
D)  $40.E) A) and B)
F) A) and C)

Question 7

The marginal cost:

Accepted Answer

A)  always rises in the short run.
B)  always falls in the long run.
C)  rises when the law of diminishing returns is being experienced.
D)  falls when the law of diminishing returns is being experienced.E) All of the above
F) None of the above

Question 8

Costs that do not vary as output varies and that must be paid even if output is zero are called total fixed costs.

Accepted Answer

A) True 
 B)False

Question 9

Average total cost is:

Accepted Answer

A)  average fixed cost added to average total cost.
B)  total fixed cost divided by wages.
C)  total variable cost divided by quantity.
D)  average fixed cost added to average variable cost.E) None of the above
F) A) and B)

Question 10

One season is a short run because:

Accepted Answer

A)  production occurs within one short season.
B)  a firm's plant size can be changed.
C)  a firm uses at least one fixed input.
D)  one season is less than three seasons.E) A) and D)
F) A) and C)

Question 11

Exhibit 6-3 A marginal product curve
 
-As shown in Exhibit 6-3,the law of diminishing returns applies where there are:

Accepted Answer

A)  more than 5 workers per day.
B)  more than 4 workers per day.
C)  more than 3 workers per day.
D)  between zero and 5 workers per day.E) A) and C)
F) A) and B)

Question 12

Which of the following statements is true?

Accepted Answer

A)  Due to fixed resources, an additional unit of labour always adds more to production.
B)  The marginal product of labour always increases when an additional unit of labour is employed.
C)  Diminishing returns is a rare situation that occurs only when all inputs are not fixed.
D)  The law of diminishing returns indicates that addition of an extra unit of a variable factor will decrease the marginal product.E) A) and C)
F) B) and C)

Question 13

Exhibit 6-6 Cost schedule for firm X
 
-As shown in Exhibit 6-6,the marginal cost of producing the fourth unit is:

Accepted Answer

A)  $0.
B)  $19.
C)  $27.
D)  $100.E) A) and B)
F) All of the above

Question 14

Exhibit 6-8 Cost schedule for producing pizzas
 
-By filling in the blanks in Exhibit 6-8,the ATC of 3 pizzas is shown to be equal to:

Accepted Answer

A)  $9.00.
B)  $10.00.
C)  $13.33.
D)  $22.33.
E)  $40.00.F) C) and E)
G) A) and B)

Question 15

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20 000 a year,and take over a store building that he owns and currently rents to his brother for $6000 a year.His expenses at the sushi bar would be $50 000 for food and $2000 for gas and electricity.What are his explicit costs?

Accepted Answer

A)  $26 000.
B)  $66 000.
C)  $78 000.
D)  $52 000.
E)  $72 000.F) A) and C)
G) None of the above

Question 16

If ATC = $10,AVC = $6,AFC = $3 and MC = $5,then if output increased by one unit:

Accepted Answer

A)  MC will increase.
B)  MC will decrease.
C)  ATC will increase.
D)  MC may be increasing or decreasing.
E)  AFC will increase.F) B) and D)
G) All of the above

Question 17

Exhibit 6-8 Cost schedule for producing pizzas
 
-By filling in the blanks in Exhibit 6-8,the AVC of 4 pizzas is shown to be equal to:

Accepted Answer

A)  $9.50.
B)  $10.00.
C)  $19.50.
D)  $40.00.
E)  $78.00.F) D) and E)
G) All of the above

Question 18

The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

Accepted Answer

A)  law of demand
B)  law of diminishing supply
C)  law of diminishing returns
D)  law of returns to scaleE) B) and C)
F) A) and B)

Question 19

Different scales of production
Exhibit 6-9 Cost curves
 
-In Exhibit 6-9,economies of scale only exist for output levels up to:

Accepted Answer

A)  1000.
B)  2000.
C)  3000.
D)  4000.
E)  greater than 4000.F) A) and E)
G) C) and E)

Question 20

Exhibit 6-2 Production of pizza data
 
-Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the labour input begins to fall with the employment of the _____ worker.

Accepted Answer

A)  first
B)  second
C)  third
D)  fourth
E)  fifthF) A) and E)
G) None of the above

Exam 6: Production costs

In the long run,total fixed cost:

Correct Answer
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Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,the law of diminishing returns applies where there are:

Correct Answer
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Which of the following statements is not true?

Correct Answer
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Average total cost is:

Correct Answer
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As output increases:

Correct Answer
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The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

Correct Answer
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The marginal cost:

Correct Answer
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Costs that do not vary as output varies and that must be paid even if output is zero are called total fixed costs.

Correct Answer
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Correct Answer
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Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the ATC of 3 pizzas is shown to be equal to:

Correct Answer
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If ATC = $10,AVC = $6,AFC = $3 and MC = $5,then if output increased by one unit:

Correct Answer
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Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AVC of 4 pizzas is shown to be equal to:

Correct Answer
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Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the marginal cost of producing the fourth unit is:

Correct Answer
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Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the labour input begins to fall with the employment of the _____ worker.

Correct Answer
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Which of the following statements is possible?

Correct Answer
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Which of the following statements is true?

Correct Answer
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One season is a short run because:

Correct Answer
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Suppose the cost to produce an additional unit of output is $20.What is the change in total variable cost?

Correct Answer
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Marginal product can be:

Correct Answer
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Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,economies of scale only exist for output levels up to:

Correct Answer
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Exam 6: Production costs

In the long run,total fixed cost:

Correct AnswerverifiedShow Answer

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,the law of diminishing returns applies where there are:

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

Average total cost is:

Correct AnswerverifiedShow Answer

As output increases:

Correct AnswerverifiedShow Answer

The _____ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

Correct AnswerverifiedShow Answer

The marginal cost:

Correct AnswerverifiedShow Answer

Costs that do not vary as output varies and that must be paid even if output is zero are called total fixed costs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the ATC of 3 pizzas is shown to be equal to:

Correct AnswerverifiedShow Answer

If ATC = $10,AVC = $6,AFC = $3 and MC = $5,then if output increased by one unit:

Correct AnswerverifiedShow Answer

Exhibit 6-8 Cost schedule for producing pizzas -By filling in the blanks in Exhibit 6-8,the AVC of 4 pizzas is shown to be equal to:

Correct AnswerverifiedShow Answer

Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the marginal cost of producing the fourth unit is:

Correct AnswerverifiedShow Answer

Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the labour input begins to fall with the employment of the _____ worker.

Correct AnswerverifiedShow Answer

Which of the following statements is possible?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

One season is a short run because:

Correct AnswerverifiedShow Answer

Suppose the cost to produce an additional unit of output is $20.What is the change in total variable cost?

Correct AnswerverifiedShow Answer

Marginal product can be:

Correct AnswerverifiedShow Answer

Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,economies of scale only exist for output levels up to:

Correct AnswerverifiedShow Answer

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