Question 1

When marginal product is rising, marginal cost will be:

Accepted Answer

A)   falling.
B)   rising.
C)   rising or falling.
D)   constant.E) A) and B)
F) A) and C)

Question 2

Narrbegin Exhibit 6.8 Cost schedule for producing pizzas
   Pizzas  Fized  cost ($)   Variable  cost ($)   Tatal  cost ($)  0148217327478540664700\begin{array} { | c | c | c | c | } \hline 	ext { Pizzas } & \begin{array} { c } 	ext { Fized } \	ext { cost (\$)  }\end{array} & \begin{array} { c } 	ext { Variable } \	ext { cost (\$)  }\end{array} & \begin{array} { c } 	ext { Tatal } \	ext { cost (\$)  }\end{array} \\hline 0 & & & \\hline 1 & & & 48 \\hline 2 & & 17 & \\hline 3 & & 27 & \\hline 4 & & & 78 \\hline 5 & 40 & & \\hline 6 & & 64 & \\hline 7 & & 00 & \\hline\end{array} Pizzas 01234567​ Fized  cost ($)  ​40​ Variable  cost ($)  ​17276400​ Tatal  cost ($)  ​4878​​  
-By filling in the blanks in Exhibit 6.8, the AVC of four pizzas is shown to be equal to:

Accepted Answer

A)   $9.50.
B)   $10.00.
C)   $19.50.
D)   $40.00. E) B) and C)
F) A) and C)

Question 3

For a typical firm, the long-run average total cost curve:

Accepted Answer

A)   is a tangent to the minimum point of each possible short-run average total cost curve.
B)   is a tangent to each possible short-run average total cost curve at one point.
C)   intersects each possible short-run average total cost curve at two points.
D)   passes through the minimum points of all possible short-run average total cost curves.E) B) and D)
F) A) and C)

Question 4

Total cost is equal to total fixed costs plus total variable cost.

Accepted Answer

A) True 
 B)False

Question 5

The vertical distance between the TC and TVC is:

Accepted Answer

A)   AVC.
B)   MC.
C)   TFC.
D)   ATC.
E)   TMC.F) A) and B)
G) All of the above

Question 6

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Accepted Answer

A)   negative returns to scale.
B)   diminishing returns.
C)   inverse return to labour.
D)   demand.E) A) and C)
F) None of the above

Question 7

Narrbegin Exhibit 6.3 A marginal product curve  
-As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C) :

Accepted Answer

A)   50.
B)   100.
C)   150.
D)   175.E) None of the above
F) All of the above

Question 8

A fixed input is any resource for which the quantity can:

Accepted Answer

A)   change any time.
B)   change during a specific time.
C)   not change at all.
D)   not change during a specific time.E) A) and D)
F) None of the above

Question 9

Narrbegin Exhibit 6.10 Long-run average cost  Narrend
-If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Accepted Answer

A)   500 units per week.
B)   1000 units per week.
C)   1500 units per week.
D)   2000 units per week.E) C) and D)
F) A) and D)

Question 10

The shape of the total cost curve is:

Accepted Answer

A)   completely following the shape of TFC.
B)   always upwards sloping.
C)   intersecting the TVC at its minimum.
D)   mimicing the shape of the TVC.E) A) and B)
F) A) and C)

Question 11

Marginal cost is defined as the increase in total cost resulting from an increase in:

Accepted Answer

A)   one unit of output.
B)   output of 100 units.
C)   a firm's plant size.
D)   one unit of labour.E) A) and B)
F) All of the above

Question 12

As a firm expands its output from zero:

Accepted Answer

A)   marginal wage of labour increases.
B)   it suffers from the diseconomies of scale.
C)   it has to pay wages, rent and electricity to cover the variable costs.
D)   no change in the cost is occurring.E) A) and C)
F) A) and B)

Question 13

Narrbegin Exhibit 6.1: The production function  
-In Exhibit 6.1, the marginal product of labour is equal to zero at point:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) All of the above
F) None of the above

Question 14

In the long run, total fixed cost will:

Accepted Answer

A)   remain constant.
B)   increase.
C)   decrease.
D)   not exist by definition.E) B) and C)
F) A) and C)

Question 15

Narrbegin Exhibit 6.9 Cost curves  
-In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Accepted Answer

A)   Diseconomies of scale; constant returns to scale; economies of scale.
B)   Constant returns to scale; economies of scale; diseconomies of scale.
C)   Economies of scale; constant returns to scale; diseconomies of scale.
D)   Diseconomies of scale; economies of scale; constant returns to scale.E) C) and D)
F) B) and D)

Question 16

Which of the following is not a source of economies of scale?

Accepted Answer

A)   Division and specialisation of labour.
B)   Increase in output.
C)   More efficient use of capital.
D)   All of these.E) A) and C)
F) A) and B)

Question 17

Narrbegin Exhibit 6.8 Cost schedule for producing pizzas
   Pizzas  Fized  cost ($)   Variable  cost ($)   Tatal  cost ($)  0148217327478540664700\begin{array} { | c | c | c | c | } \hline 	ext { Pizzas } & \begin{array} { c } 	ext { Fized } \	ext { cost (\$)  }\end{array} & \begin{array} { c } 	ext { Variable } \	ext { cost (\$)  }\end{array} & \begin{array} { c } 	ext { Tatal } \	ext { cost (\$)  }\end{array} \\hline 0 & & & \\hline 1 & & & 48 \\hline 2 & & 17 & \\hline 3 & & 27 & \\hline 4 & & & 78 \\hline 5 & 40 & & \\hline 6 & & 64 & \\hline 7 & & 00 & \\hline\end{array} Pizzas 01234567​ Fized  cost ($)  ​40​ Variable  cost ($)  ​17276400​ Tatal  cost ($)  ​4878​​  
-By filling in the blanks in Exhibit 6.8, the ATC of three pizzas is shown to be equal to:

Accepted Answer

A)   $9.00.
B)   $10.00.
C)   $13.33.
D)   $22.33. E) All of the above
F) A) and D)

Question 18

If MC is greater than ATC, we know that:

Accepted Answer

A)   ATC must be rising.
B)   AVC must be falling.
C)   ATC must be falling.
D)   ATC could be rising or falling.E) None of the above
F) B) and D)

Question 19

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) All of the above
F) A) and C)

Question 20

Marginal product can be:

Accepted Answer

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

Exam 7: Production Costs

The shape of the total cost curve is:

Correct Answer
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As a firm expands its output from zero:

Correct Answer
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Total cost is equal to total fixed costs plus total variable cost.

Correct Answer
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Correct Answer
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For a typical firm, the long-run average total cost curve:

Correct Answer
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Narrbegin Exhibit 6.1: The production function -In Exhibit 6.1, the marginal product of labour is equal to zero at point:

Correct Answer
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Correct Answer
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Marginal product can be:

Correct Answer
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Narrbegin Exhibit 6.10 Long-run average cost Narrend -If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Correct Answer
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Marginal cost is defined as the increase in total cost resulting from an increase in:

Correct Answer
verified

A fixed input is any resource for which the quantity can:

Correct Answer
verified

When marginal product is rising, marginal cost will be:

Correct Answer
verified

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Correct Answer
verified

If MC is greater than ATC, we know that:

Correct Answer
verified

The vertical distance between the TC and TVC is:

Correct Answer
verified

Which of the following is not a source of economies of scale?

Correct Answer
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Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C) :

Correct Answer
verified

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Correct Answer
verified

In the long run, total fixed cost will:

Correct Answer
verified

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

Correct Answer
verified

Exam 7: Production Costs

The shape of the total cost curve is:

Correct AnswerverifiedShow Answer

As a firm expands its output from zero:

Correct AnswerverifiedShow Answer

Total cost is equal to total fixed costs plus total variable cost.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a typical firm, the long-run average total cost curve:

Correct AnswerverifiedShow Answer

Narrbegin Exhibit 6.1: The production function -In Exhibit 6.1, the marginal product of labour is equal to zero at point:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal product can be:

Correct AnswerverifiedShow Answer

Narrbegin Exhibit 6.10 Long-run average cost Narrend -If the firm represented in Exhibit 6.10 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimise its short-run average total cost is:

Correct AnswerverifiedShow Answer

Marginal cost is defined as the increase in total cost resulting from an increase in:

Correct AnswerverifiedShow Answer

A fixed input is any resource for which the quantity can:

Correct AnswerverifiedShow Answer

When marginal product is rising, marginal cost will be:

Correct AnswerverifiedShow Answer

The situation in which the marginal product of labour is greater than zero and declining as more labour is hired is called the law of:

Correct AnswerverifiedShow Answer

If MC is greater than ATC, we know that:

Correct AnswerverifiedShow Answer

The vertical distance between the TC and TVC is:

Correct AnswerverifiedShow Answer

Which of the following is not a source of economies of scale?

Correct AnswerverifiedShow Answer

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, the marginal product of labour when five additional workers are employed per day is (points from B to C) :

Correct AnswerverifiedShow Answer

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Correct AnswerverifiedShow Answer

In the long run, total fixed cost will:

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

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