Question 1

Cost schedule 
-In the above table, the total cost of producing 9 units of output is

Accepted Answer

A)   $20.
B)   $30.
C)   $50.
D)   $70.E) All of the above
F) A) and C)

Question 2

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

Accepted Answer

A)   past cost.
B)   sunk cost.
C)   variable cost.
D)   None of the above answers are correct.E) A) and C)
F) B) and C)

Question 3

If total fixed cost increases, then the average total cost curve ________ and the marginal cost curve ________.

Accepted Answer

A)   does not shift; shifts upward
B)   shifts upward; shifts upward
C)   does not shift; does not shift
D)   shifts upward; does not shiftE) C) and D)
F) A) and D)

Question 4

Marginal cost eventually increases because

Accepted Answer

A)   of the law of diminishing returns.
B)   eventually each additional worker produces a successively smaller addition to output.
C)   the marginal product of the variable input eventually falls.
D)   All of the above answers are correct.E) None of the above
F) A) and C)

Question 5

When long-run average costs increase as output increases, there are

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   constant marginal costs.E) All of the above
F) B) and D)

Question 6

When a firm is experiencing economies of scale,

Accepted Answer

A)   the MP curve slopes upward.
B)   the LRAC curve slopes downward.
C)   diminishing returns to labor have been suspended.
D)   the MC curve slopes downward.E) B) and D)
F) A) and B)

Question 7

When the marginal product curve is downward sloping, the average product curve

Accepted Answer

A)   must also be downward sloping.
B)   might be either upward or downward sloping.
C)   must be upward sloping.
D)   must be horizontal.E) C) and D)
F) A) and B)

Question 8

Cost schedule 
-Using the data in the above table, when output increases from 4 to 9 units, the marginal cost of one of those 5 units is

Accepted Answer

A)   $4.00.
B)   $4.25.
C)   $5.00.
D)   $6.25.E) None of the above
F) A) and D)

Question 9

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so, carefully explain these reasons. If not, explain why each curve is U-shaped.

Accepted Answer

The curves are U-shaped for quite differ...

Question 10

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is

Accepted Answer

A)   $50.
B)   $200.
C)   $250.
D)   More information is needed to answer the question.E) A) and D)
F) A) and C)

Question 11

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect. When output ...

Question 12

When marginal cost is greater than average total cost, the

Accepted Answer

A)   marginal cost decreases as output increases.
B)   marginal cost does not change as output increases.
C)   average total cost increases as output increases.
D)   average total cost decreases as output increases.E) A) and C)
F) B) and C)

Question 13

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

Accepted Answer

A)   decreasing marginal returns.
B)   diseconomies of scale.
C)   increasing marginal returns.
D)   economies of scale.E) All of the above
F) B) and C)

Question 14

Pizza Hut 
-Using the data in the above table, what is the average product of three employees?

Accepted Answer

A)   2 pizzas per hour
B)   3 pizzas per hour
C)   4 pizzas per hour
D)   12 pizzas per hourE) A) and C)
F) B) and C)

Question 15

-In the above figure, which of the following statements is FALSE?

Accepted Answer

A)   The total fixed cost curve is curve C.
B)   Total variable cost and total cost both increase as output increases.
C)   Marginal cost is equal to the slope of curve A.
D)   The vertical gap between curves A and B is equal to average fixed cost.E) A) and D)
F) A) and C)

Question 16

If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

Accepted Answer

A)   short-run average total cost curve shifts upward because all inputs have increased.
B)   firm moves along its short-run average total cost curve.
C)   firm experiences economies of scale.
D)   long-run average cost curve shifts downward.E) A) and B)
F) None of the above

Question 17

The average product of labor exceeds the marginal product of labor

Accepted Answer

A)   when the average product of labor is falling.
B)   when the average product of labor is rising.
C)   when the marginal product of labor is at its maximum.
D)   when the average product of labor is at its maximum.E) A) and B)
F) A) and C)

Question 18

A firm's total cost (TC)  equals the sum of its fixed cost plus its

Accepted Answer

A)   marginal cost.
B)   variable cost.
C)   variable cost plus its marginal cost.
D)   sunk cost plus its variable cost plus its marginal cost.E) None of the above
F) A) and B)

Question 19

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Accepted Answer

The long-run average cost curve shows th...

Question 20

-The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC,

Accepted Answer

A)   decreases as output increases.
B)   is equal to its marginal cost, MC.
C)   is equal to its total fixed cost, TFC.
D)   is equal to its average product.E) None of the above
F) B) and C)

Exam 11: Output and Costs

Pizza Hut -Using the data in the above table, what is the average product of three employees?

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When the marginal product curve is downward sloping, the average product curve

Correct AnswerverifiedShow Answer

-In the above figure, which of the following statements is FALSE?

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A firm's total cost (TC) equals the sum of its fixed cost plus its

Correct AnswerverifiedShow Answer

When long-run average costs increase as output increases, there are

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Marginal cost eventually increases because

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If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

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-The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC,

Correct AnswerverifiedShow Answer

When marginal cost is greater than average total cost, the

Correct AnswerverifiedShow Answer

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so, carefully explain these reasons. If not, explain why each curve is U-shaped.

Correct AnswerverifiedThe curves are U-shaped for quite differ...View AnswerShow Answer

The average product of labor exceeds the marginal product of labor

Correct AnswerverifiedShow Answer

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

Correct AnswerverifiedShow Answer

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Correct AnswerverifiedThe long-run average cost curve shows th...View AnswerShow Answer

Cost schedule -Using the data in the above table, when output increases from 4 to 9 units, the marginal cost of one of those 5 units is

Correct AnswerverifiedShow Answer

If total fixed cost increases, then the average total cost curve ________ and the marginal cost curve ________.

Correct AnswerverifiedShow Answer

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a firm is experiencing economies of scale,

Correct AnswerverifiedShow Answer

Cost schedule -In the above table, the total cost of producing 9 units of output is

Correct AnswerverifiedShow Answer

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Correct AnswerverifiedThe statement is incorrect. When output ...View AnswerShow Answer

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The curves are U-shaped for quite differ...
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The long-run average cost curve shows th...
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Correct Answer
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If total fixed cost increases, then the average total cost curve and the marginal cost curve .

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The statement is incorrect. When output ...
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