Question 1

Which of the following gadgets is hoped to deliver a Third Industrial Revolution?

Accepted Answer

A)   tablet computers or iPads
B)   GPS and iPhones
C)   3-D printers
D)   drones or unmanned aerial vehiclesE) A) and B)
F) B) and D)

Question 2

Normal profit is

Accepted Answer

A)   determined by subtracting implicit costs from total revenue.
B)   determined by subtracting explicit costs from total revenue.
C)   the return to the entrepreneur when economic profits are zero.
D)   the average profitability of an industry over the preceding 10 years.E) B) and D)
F) A) and B)

Question 3

When a firm is experiencing economies of scale,

Accepted Answer

A)   long-run total cost is decreasing.
B)   long-run average (per-unit)  total cost is decreasing.
C)   an increase in output is accompanied by a more-than-proportionate increase in long-run total cost.
D)   a given percentage increase in output requires a more-than-proportionate increase in resources.E) B) and D)
F) B) and C)

Question 4

Which of the following represents a long-run adjustment?

Accepted Answer

A)   A farmer uses an extra dose of fertilizer on his corn crop.
B)   Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants.
C)   A steel manufacturer cuts back on its purchases of coke and iron ore.
D)   A supermarket hires four additional clerks.E) A) and D)
F) B) and D)

Question 5

Total fixed costs of production in the short run

Accepted Answer

A)   cannot be reduced by producing less output.
B)   can be reduced by producing more output.
C)   are small in comparison to variable costs.
D)   increase as the firm produces more output.E) C) and D)
F) A) and C)

Question 6

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Accepted Answer

A)   $925.
B)   $1,250.
C)   $1,750.
D)   $3,000.E) A) and B)
F) A) and C)

Question 7

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that

Accepted Answer

A)   there are no fixed costs.
B)   this firm can never maximize its profits.
C)   the marginal product of labor is constant.
D)   labor exhibits diminishing marginal returns.E) A) and B)
F) A) and C)

Question 8

Round Things, Inc.'s production process exhibits economies of scale. Currently their long-run average cost is $12/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be

Accepted Answer

A)   $12/unit/
B)   less than $12/unit.
C)   greater than $24/unit/
D)   greater than $12/unit but less than $24/unit/E) B) and C)
F) None of the above

Question 9

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the

Accepted Answer

A)   total product of labor.
B)   average product of labor.
C)   marginal product of labor.
D)   total product of capital.E) B) and C)
F) A) and D)

Question 10

(Last Word)  Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Accepted Answer

A)   Economies of scale in manufacturing will be eliminated, driving up production costs and prices.
B)   lower prices of manufactured goods through the elimination of large fixed costs and transportation costs
C)   monopolization of manufactured goods industries, as few individuals can afford additive manufacturing technology
D)   significant increases in the fixed costs of producing manufactured goodsE) B) and D)
F) B) and C)

Question 11

If you owned a small farm, which of the following would most likely be a fixed cost?

Accepted Answer

A)   harvest labor
B)   hail insurance
C)   fertilizer
D)   seedE) A) and C)
F) B) and D)

Question 12

The short-run marginal-cost curve is upward-sloping because of the law of diminishing marginal returns.

Accepted Answer

A) True 
 B)False

Question 13

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) C) and D)
F) A) and B)

Question 14

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Accepted Answer

A) True 
 B)False

Question 15

When diseconomies of scale occur,

Accepted Answer

A)   the long-run average total cost curve falls.
B)   marginal cost intersects average total cost.
C)   the long-run average total cost curve rises.
D)   average fixed costs will rise.E) B) and C)
F) A) and B)

Question 16

When total product is increasing at a decreasing rate, marginal product is

Accepted Answer

A)   positive and increasing.
B)   positive and decreasing.
C)   constant.
D)   negative.E) None of the above
F) A) and D)

Question 17

Answer the question on the basis of the following cost data.   Output  Total Cost 0$24133241348454561669\begin{array}{|c|c|}\hline 	ext { Output } & 	ext { Total Cost } \\hline 0 & \$ 24 \\hline 1 & 33 \\hline 2 & 41 \\hline 3 & 48 \\hline 4 & 54 \\hline 5 & 61 \\hline 6 & 69 \\hline\end{array} Output 0123456​ Total Cost $24334148546169​​  The profit-maximizing output for this firm

Accepted Answer

A)   is 3.
B)   is 4.
C)   is 5.
D)   cannot be determined from the information given. E) B) and D)
F) C) and D)

Question 18

Fixed costs are associated with

Accepted Answer

A)   highly adjustable inputs such as labor.
B)   both the short run and the long run.
C)   the short run only.
D)   the long run only.E) A) and B)
F) A) and C)

Question 19

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that

Accepted Answer

A)   technological progress has occurred.
B)   economies of scale are being realized.
C)   the firm is encountering diminishing returns.
D)   diseconomies of scale are being encountered.E) A) and D)
F) A) and C)

Question 20

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly-line basis?

Accepted Answer

A)   an increase in the amount of steel that the firm buys
B)   a decrease in the number of production workers in the assembly line
C)   a switch in production to a redesigned and retooled facility
D)   an increase in the number of shifts of workers from two to threeE) A) and B)
F) B) and C)

Exam 9: Businesses and the Costs of Production

The short-run marginal-cost curve is upward-sloping because of the law of diminishing marginal returns.

Correct Answer
verified

When a firm is experiencing economies of scale,

Correct Answer
verified

When total product is increasing at a decreasing rate, marginal product is

Correct Answer
verified

Total fixed costs of production in the short run

Correct Answer
verified

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that

Correct Answer
verified

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Correct Answer
verified

When diseconomies of scale occur,

Correct Answer
verified

Which of the following represents a long-run adjustment?

Correct Answer
verified

If you owned a small farm, which of the following would most likely be a fixed cost?

Correct Answer
verified

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

Fixed costs are associated with

Correct Answer
verified

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly-line basis?

Correct Answer
verified

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Correct Answer
verified

Round Things, Inc.'s production process exhibits economies of scale. Currently their long-run average cost is $12/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be

Correct Answer
verified

(Last Word) Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Correct Answer
verified

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the

Correct Answer
verified

Correct Answer
verified

Which of the following gadgets is hoped to deliver a Third Industrial Revolution?

Correct Answer
verified

Normal profit is

Correct Answer
verified

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

The short-run marginal-cost curve is upward-sloping because of the law of diminishing marginal returns.

Correct AnswerverifiedShow Answer

When a firm is experiencing economies of scale,

Correct AnswerverifiedShow Answer

When total product is increasing at a decreasing rate, marginal product is

Correct AnswerverifiedShow Answer

Total fixed costs of production in the short run

Correct AnswerverifiedShow Answer

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that

Correct AnswerverifiedShow Answer

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Correct AnswerverifiedShow Answer

When diseconomies of scale occur,

Correct AnswerverifiedShow Answer

Which of the following represents a long-run adjustment?

Correct AnswerverifiedShow Answer

If you owned a small farm, which of the following would most likely be a fixed cost?

Correct AnswerverifiedShow 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

Fixed costs are associated with

Correct AnswerverifiedShow Answer

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly-line basis?

Correct AnswerverifiedShow Answer

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Correct AnswerverifiedShow Answer

Round Things, Inc.'s production process exhibits economies of scale. Currently their long-run average cost is $12/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be

Correct AnswerverifiedShow Answer

(Last Word) Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Correct AnswerverifiedShow Answer

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following gadgets is hoped to deliver a Third Industrial Revolution?

Correct AnswerverifiedShow Answer

Normal profit is

Correct AnswerverifiedShow Answer

If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that

Correct AnswerverifiedShow Answer

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