Question 1

When the price of gasoline increases significantly, the delivery companies like UPS, FedEx, and the USPS all find

Accepted Answer

A)  their TVC curves shifting up.
B)  their TFC curves shifting up.
C)  themselves moving up along their TC curves.
D)  themselves moving up along their TVC curves.E) A) and B)
F) A) and C)

Question 2

Use the following data to answer the question.  The average product (AP) when two units of labor are hired is

Accepted Answer

A)  12.
B)  11.
C)  44.
D)  24.E) A) and C)
F) A) and D)

Question 3

If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that

Accepted Answer

A)  technology precludes both economies and diseconomies of scale.
B)  the industry will be a natural monopoly.
C)  both relatively small and relatively large firms can be viable in the industry.
D)  the industry will comprise a very large number of small firms.E) A) and C)
F) None of the above

Question 4

Answer the question on the basis of the following cost data.  The marginal cost of the fifth unit of output is

Accepted Answer

A)  $3.
B)  $62.
C)  $80.
D)  $78.E) B) and C)
F) A) and D)

Question 5

If marginal cost is below average variable cost,

Accepted Answer

A)  average total cost is increasing but average variable cost is decreasing.
B)  both average total cost and average variable cost are decreasing.
C)  both average total cost and average variable cost are increasing.
D)  average variable cost is less than average fixed cost.E) A) and B)
F) C) and D)

Question 6

Other things equal, if the prices of a firm's variable inputs were to fall,

Accepted Answer

A)  one could not predict how unit costs of production would be affected.
B)  marginal cost, average variable cost, and average fixed cost would all fall.
C)  marginal cost, average variable cost, and average total cost would all fall.
D)  average variable cost would fall, but marginal cost would be unchanged.E) B) and D)
F) B) and C)

Question 7

When average costs are increasing, marginal costs are greater than average costs.

Accepted Answer

A) True 
 B)False

Question 8

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $50,000Annual lease on building = $22,000Annual revenue from operations = $380,000Payments to workers = $120,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's explicit costs are

Accepted Answer

A)  $286,000.
B)  $150,000.
C)  $94,000.
D)  $156,000.E) C) and D)
F) None of the above

Question 9

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one

Accepted Answer

A)  more worker will increase the average amount of output per worker.
B)  more worker will decrease the average amount of output per worker.
C)  fewer worker will decrease the average amount of output per worker.
D)  fewer worker will not affect the average amount of output per worker.E) A) and B)
F) None of the above

Question 10

The law of diminishing returns implies that

Accepted Answer

A)  the more hours you spend studying, the less you will know.
B)  your understanding will be increased by decreasing your marginal study time.
C)  eventually, the more hours you spend studying per day, the less you will learn with each added hour.
D)  the more hours you spend studying per day, the more you will learn with each added hour.E) A) and B)
F) B) and D)

Question 11

The short-run average total cost curve is U-shaped because

Accepted Answer

A)  average fixed costs decline continuously as output increases.
B)  of increasing and diminishing returns.
C)  of economies and diseconomies of scale.
D)  minimum efficient scale is encountered.E) C) and D)
F) None of the above

Question 12

If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then

Accepted Answer

A)  it is encountering diseconomies of scale.
B)  it is encountering economies of scale.
C)  the law of diminishing returns is taking hold.
D)  the firm's long-run ATC curve will be rising.E) B) and C)
F) A) and C)

Question 13

Plant sizes get larger as you move from ATC-1 to ATC-4.  The firm's minimum efficient scale is at what output level?

Accepted Answer

A)  2,500
B)  3,000
C)  3,500
D)  4,000E) A) and C)
F) None of the above

Question 14

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of

Accepted Answer

A)  diseconomies of scale.
B)  diminishing marginal utility.
C)  diminishing marginal returns.
D)  increasing opportunity cost.E) B) and C)
F) A) and D)

Question 15

If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be

Accepted Answer

A)  economies of scale.
B)  diseconomies of scale.
C)  constant returns to scale.
D)  increasing average total costs.E) B) and D)
F) C) and D)

Question 16

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run.  What is the long-run average cost of producing 30 units of output?

Accepted Answer

A)  $7
B)  $8
C)  $9
D)  $10E) All of the above
F) B) and C)

Question 17

Which of the following statements is false?

Accepted Answer

A)  The short run refers to a period of less than one year.
B)  In the long run, all inputs can vary in quantity.
C)  Firms may continue operating at a loss in the short run.
D)  In the long run, firms would not continue operating at a loss.E) All of the above
F) A) and B)

Question 18

Which of the following statements is true, given the total cost function: Total cost = 10 Q + 5 Q 2 + 100?

Accepted Answer

A)  Total cost at Q = 4 is 120.
B)  Average total cost at Q = 10 is 70.
C)  Total cost at Q = 5 is 175.
D)  Average fixed cost is zero at Q = 100.E) A) and B)
F) None of the above

Question 19

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total variable costs are.

Accepted Answer

A)  $15,000.
B)  $20,000.
C)  $50.
D)  $5,000.E) All of the above
F) B) and D)

Question 20

Explain why there are only two plants, run by one firm in the U.S., that produce large commercial aircraft but thousands of plants, run by hundreds of firms, that produce ready-mix concrete.

Accepted Answer

The answer is that MES is very different...

Exam 9: Businesses and the Costs of Production

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of

Correct Answer
verified

If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that

Correct Answer
verified

The law of diminishing returns implies that

Correct Answer
verified

Explain why there are only two plants, run by one firm in the U.S., that produce large commercial aircraft but thousands of plants, run by hundreds of firms, that produce ready-mix concrete.

Correct Answer
verified
The answer is that MES is very different...
View Answer

If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be

Correct Answer
verified

Other things equal, if the prices of a firm's variable inputs were to fall,

Correct Answer
verified

If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

Use the following data to answer the question. The average product (AP) when two units of labor are hired is

Correct Answer
verified

When average costs are increasing, marginal costs are greater than average costs.

Correct Answer
verified

Plant sizes get larger as you move from ATC-1 to ATC-4. The firm's minimum efficient scale is at what output level?

Correct Answer
verified

Answer the question on the basis of the following cost data. The marginal cost of the fifth unit of output is

Correct Answer
verified

Which of the following statements is true, given the total cost function: Total cost = 10 Q + 5 Q ² + 100?

Correct Answer
verified

The short-run average total cost curve is U-shaped because

Correct Answer
verified

If marginal cost is below average variable cost,

Correct Answer
verified

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one

Correct Answer
verified

Correct Answer
verified

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total variable costs are.

Correct Answer
verified

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 30 units of output?

Correct Answer
verified

When the price of gasoline increases significantly, the delivery companies like UPS, FedEx, and the USPS all find

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of

Correct AnswerverifiedShow Answer

If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that

Correct AnswerverifiedShow Answer

The law of diminishing returns implies that

Correct AnswerverifiedShow Answer

Explain why there are only two plants, run by one firm in the U.S., that produce large commercial aircraft but thousands of plants, run by hundreds of firms, that produce ready-mix concrete.

Correct AnswerverifiedThe answer is that MES is very different...View AnswerShow Answer

If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be

Correct AnswerverifiedShow Answer

Other things equal, if the prices of a firm's variable inputs were to fall,

Correct AnswerverifiedShow Answer

If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Use the following data to answer the question. The average product (AP) when two units of labor are hired is

Correct AnswerverifiedShow Answer

When average costs are increasing, marginal costs are greater than average costs.

Correct AnswerverifiedShow Answer

Plant sizes get larger as you move from ATC-1 to ATC-4. The firm's minimum efficient scale is at what output level?

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following cost data. The marginal cost of the fifth unit of output is

Correct AnswerverifiedShow Answer

Which of the following statements is true, given the total cost function: Total cost = 10 Q + 5 Q 2 + 100?

Correct AnswerverifiedShow Answer

The short-run average total cost curve is U-shaped because

Correct AnswerverifiedShow Answer

If marginal cost is below average variable cost,

Correct AnswerverifiedShow Answer

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total variable costs are.

Correct AnswerverifiedShow Answer

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 30 units of output?

Correct AnswerverifiedShow Answer

When the price of gasoline increases significantly, the delivery companies like UPS, FedEx, and the USPS all find

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The answer is that MES is very different...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following statements is true, given the total cost function: Total cost = 10 Q + 5 Q ² + 100?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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