Question 1

Exhibit 7-2
 
-Given the information in Exhibit 7-2,what is the marginal product of the third unit of labor?

Accepted Answer

A)   45 pairs of shoes
B)   25 pairs of shoes
C)   15 pairs of shoes
D)   $45
E)   $25F) A) and B)
G) A) and C)

Question 2

As output rises,marginal product eventually diminishes and

Accepted Answer

A)   marginal cost increases
B)   average cost falls
C)   total cost falls
D)   fixed cost is increasing
E)   average product is negativeF) B) and E)
G) A) and D)

Question 3

The short-run average variable cost curve

Accepted Answer

A)   is always downward-sloping
B)   starts at the origin and always slopes upward
C)   starts above the origin and always slopes upward
D)   is a horizontal line intersecting the vertical axis
E)   slopes downward at low rates of output,then slopes upward at higher rates of outputF) A) and B)
G) A) and C)

Question 4

The marginal cost curve intersects the average variable cost curve (AVC)

Accepted Answer

A)   only when the AVC is rising
B)   at the AVC curve's maximum point
C)   at the AVC curve's minimum point
D)   only when the AVC is sloping downward
E)   when the AVC intersects the fixed cost curveF) B) and D)
G) A) and E)

Question 5

Suppose Ernie gives up his job as financial advisor for P.E.T.S. ,at which he earned $30,000 per year,to open up a store selling spot remover to Dalmatians.He invested $10,000 in the store,which had been in savings earning 5 percent interest.This year's revenues in the new business were $50,000,and explicit costs were $10,000.Calculate Ernie's accounting profit.

Accepted Answer

A)   $10,000
B)   $50,000
C)   $20,000
D)   $40,000
E)   $9,500F) D) and E)
G) None of the above

Question 6

If a firm is experiencing diminishing marginal returns,its marginal product is negative.

Accepted Answer

A) True 
 B)False

Question 7

What is true of marginal cost when marginal returns are decreasing?

Accepted Answer

A)   It is negative and increasing.
B)   It is negative and decreasing.
C)   It is positive and increasing.
D)   It is positive and decreasing.
E)   It is positive and has a constant slope.F) A) and E)
G) All of the above

Question 8

Exhibit 7-12
 
-Given the information in Exhibit 7-12,the production of T-shirts exhibits increasing marginal returns to labor for:

Accepted Answer

A)   The first worker only
B)   The first two workers
C)   The first three workers
D)   The first four workers
E)   The first five workersF) B) and C)
G) A) and C)

Question 9

With respect to the average cost curves,the marginal cost curve

Accepted Answer

A)   intersects average total cost,average fixed cost,and average variable cost at their minimum points
B)   intersects average total cost,average fixed cost,and average variable cost at their maximum points
C)   intersects both average total cost and average variable cost at their minimum points
D)   intersects average total cost where it is increasing and average variable cost where it is decreasing
E)   intersects only average total cost at its minimum pointF) B) and D)
G) All of the above

Question 10

Exhibit 7-6
 
-In Exhibit 7-6,the average total cost of producing 20 units is

Accepted Answer

A)   $2
B)   $20
C)   $30
D)   $100
E)   $1,100F) A) and B)
G) B) and C)

Question 11

The relationship between average and marginal variables can be stated as follows: if the marginal is greater than the average,

Accepted Answer

A)   the average is increasing
B)   the average is decreasing
C)   the marginal is increasing
D)   the marginal is decreasing
E)   the total is decreasingF) A) and E)
G) A) and D)

Question 12

Exhibit 7-12
 
-Given the information in Exhibit 7-12,at what point do negative marginal returns set in?

Accepted Answer

A)   Between the first and the second worker
B)   Between the second and the third worker
C)   Between the third and the fourth worker
D)   Between the fourth and the fifth worker
E)   Between the fifth and the sixth workerF) None of the above
G) B) and E)

Question 13

When marginal product is negative,the slope of the total product curve must be negative.

Accepted Answer

A) True 
 B)False

Question 14

Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make lace doilies.If his revenue from the sale of these doilies is $50,000 and his materials cost $20,000,then his economic profit is

Accepted Answer

A)   $5,000
B)   $25,000
C)   $30,000
D)   $50,000
E)   $80,000F) D) and E)
G) A) and E)

Question 15

Which of the following is most likely to be a fixed resource for the Speedy Word Processing and Résumé Company?

Accepted Answer

A)   floppy disks
B)   typists
C)   computer terminals
D)   electricity
E)   paperF) A) and D)
G) None of the above

Question 16

Which of the following is most likely to be a fixed cost for any firm?

Accepted Answer

A)   the monthly electric bill
B)   sales taxes
C)   shipping and postage costs
D)   rent on office space
E)   charitable donationsF) A) and D)
G) C) and D)

Question 17

Suppose Ernie gives up his job as financial advisor for P.E.T.S. ,at which he earned $30,000 per year,to open up a store selling spot remover to Dalmatians.He invested $10,000 in the store,which had been in savings earning 5 percent interest.This year's revenues in the new business were $50,000,and explicit costs were $10,000.Calculate Ernie's economic profit.

Accepted Answer

A)   $10,000
B)   $50,000
C)   $20,000
D)   $40,000
E)   $9,500F) A) and B)
G) A) and E)

Question 18

Exhibit 7-3
 
-In Exhibit 7-3,diminishing marginal returns set in with the addition of the

Accepted Answer

A)   first worker
B)   third worker
C)   fourth worker
D)   fifth worker
E)   seventh workerF) C) and D)
G) B) and D)

Question 19

To a firm facing constant input prices,increasing marginal returns

Accepted Answer

A)   means that each additional unit of output costs more to produce than the previous unit
B)   means that the marginal product of the variable input decreases as more of the input is used
C)   can occur due to specialization and division of labor
D)   usually occur at very high rates of output
E)   can never occurF) None of the above
G) A) and D)

Question 20

Exhibit 7-8
 
-In Exhibit 7-8,curve B represents

Accepted Answer

A)   marginal cost
B)   average total cost
C)   average variable cost
D)   average fixed cost
E)   average marginal costF) B) and D)
G) None of the above

Exam 7: Production and Cost in the Firm

Exhibit 7-2 -Given the information in Exhibit 7-2,what is the marginal product of the third unit of labor?

Correct Answer
verified

Which of the following is most likely to be a fixed cost for any firm?

Correct Answer
verified

To a firm facing constant input prices,increasing marginal returns

Correct Answer
verified

The short-run average variable cost curve

Correct Answer
verified

Exhibit 7-12 -Given the information in Exhibit 7-12,at what point do negative marginal returns set in?

Correct Answer
verified

What is true of marginal cost when marginal returns are decreasing?

Correct Answer
verified

Exhibit 7-8 -In Exhibit 7-8,curve B represents

Correct Answer
verified

Exhibit 7-12 -Given the information in Exhibit 7-12,the production of T-shirts exhibits increasing marginal returns to labor for:

Correct Answer
verified

The relationship between average and marginal variables can be stated as follows: if the marginal is greater than the average,

Correct Answer
verified

When marginal product is negative,the slope of the total product curve must be negative.

Correct Answer
verified

Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make lace doilies.If his revenue from the sale of these doilies is $50,000 and his materials cost $20,000,then his economic profit is

Correct Answer
verified

The marginal cost curve intersects the average variable cost curve (AVC)

Correct Answer
verified

Exhibit 7-6 -In Exhibit 7-6,the average total cost of producing 20 units is

Correct Answer
verified

With respect to the average cost curves,the marginal cost curve

Correct Answer
verified

Exhibit 7-3 -In Exhibit 7-3,diminishing marginal returns set in with the addition of the

Correct Answer
verified

Which of the following is most likely to be a fixed resource for the Speedy Word Processing and Résumé Company?

Correct Answer
verified

Correct Answer
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Correct Answer
verified

As output rises,marginal product eventually diminishes and

Correct Answer
verified

If a firm is experiencing diminishing marginal returns,its marginal product is negative.

Correct Answer
verified

Exam 7: Production and Cost in the Firm

Exhibit 7-2 -Given the information in Exhibit 7-2,what is the marginal product of the third unit of labor?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a fixed cost for any firm?

Correct AnswerverifiedShow Answer

To a firm facing constant input prices,increasing marginal returns

Correct AnswerverifiedShow Answer

The short-run average variable cost curve

Correct AnswerverifiedShow Answer

Exhibit 7-12 -Given the information in Exhibit 7-12,at what point do negative marginal returns set in?

Correct AnswerverifiedShow Answer

What is true of marginal cost when marginal returns are decreasing?

Correct AnswerverifiedShow Answer

Exhibit 7-8 -In Exhibit 7-8,curve B represents

Correct AnswerverifiedShow Answer

Exhibit 7-12 -Given the information in Exhibit 7-12,the production of T-shirts exhibits increasing marginal returns to labor for:

Correct AnswerverifiedShow Answer

The relationship between average and marginal variables can be stated as follows: if the marginal is greater than the average,

Correct AnswerverifiedShow Answer

When marginal product is negative,the slope of the total product curve must be negative.

Correct AnswerverifiedShow Answer

Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make lace doilies.If his revenue from the sale of these doilies is $50,000 and his materials cost $20,000,then his economic profit is

Correct AnswerverifiedShow Answer

The marginal cost curve intersects the average variable cost curve (AVC)

Correct AnswerverifiedShow Answer

Exhibit 7-6 -In Exhibit 7-6,the average total cost of producing 20 units is

Correct AnswerverifiedShow Answer

With respect to the average cost curves,the marginal cost curve

Correct AnswerverifiedShow Answer

Exhibit 7-3 -In Exhibit 7-3,diminishing marginal returns set in with the addition of the

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a fixed resource for the Speedy Word Processing and Résumé Company?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As output rises,marginal product eventually diminishes and

Correct AnswerverifiedShow Answer

If a firm is experiencing diminishing marginal returns,its marginal product is negative.

Correct AnswerverifiedShow Answer

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