Question 1

The question is based on the following table, which provides information on the production of a product that requires one variable input.  Marginal product is zero when the total product is

Accepted Answer

A)   0.
B)   5.
C)   56.
D)   58.E) A) and D)
F) A) and C)

Question 2

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Accepted Answer

A) True 
 B)False

Question 3

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) None of the above
F) C) and D)

Question 4

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 5

If the short-run average variable costs of production for a firm are rising, then this indicates that

Accepted Answer

A)   average total costs are at a maximum.
B)   average fixed costs are constant.
C)   marginal costs are above average variable costs.
D)   average variable costs are below average fixed costs.E) B) and D)
F) A) and B)

Question 6

In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs

Accepted Answer

A)   are $2.50.
B)   are $1,250.
C)   are $750.
D)   are $1,100.E) A) and B)
F) A) and C)

Question 7

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) All of the above
F) None of the above

Question 8

Which of the following holds true?

Accepted Answer

A)   There is no relationship between AP and AVC.
B)   When MP is rising, AVC is falling, and when MP is falling, AVC is rising.
C)   When AP is rising, AVC is falling, and when AP is falling, AVC is rising.
D)   When AP is rising, AVC is rising, and when AP is falling, AVC is falling.E) A) and D)
F) A) and C)

Question 9

The following schedule gives the cost data for a firm.  Diseconomies of scale start between

Accepted Answer

A)   0 and 10 units of output.
B)   40 and 50 units of output.
C)   20 and 30 units of output.
D)   30 and 40 units of output.E) A) and B)
F) A) and C)

Question 10

If a firm's revenues just cover all its implicit costs, then

Accepted Answer

A)   normal profit is zero.
B)   economic profit is zero.
C)   total revenues equal its explicit costs.
D)   total revenues equal its implicit costs.E) C) and D)
F) B) and D)

Question 11

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes

Accepted Answer

A)   economies and diseconomies of scale.
B)   X-inefficiency.
C)   the law of diminishing returns.
D)   the law of diminishing marginal utility.E) A) and D)
F) A) and C)

Question 12

The following cost data are for a firm in the short run.  What is the firm's average variable cost at an output of 5 units?

Accepted Answer

A)   $30
B)   $60
C)   $120
D)   $140E) C) and D)
F) None of the above

Question 13

(Consider This)  Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost?

Accepted Answer

A)   The $20 ticket to the match.
B)   The $10 cost to drive to the match.
C)   The $5 cost to park at the stadium.
D)   The $100 offered by Susie's boss.E) B) and D)
F) A) and C)

Question 14

Which of the following would contribute most to a firm experiencing "economies of scale"?

Accepted Answer

A)   rising long-run average costs
B)   the law of diminishing marginal returns
C)   specialization of labor and management within the firm
D)   deterioration of information and control within the firmE) B) and D)
F) All of the above

Question 15

A firm's economic profit is usually higher than its accounting profit.

Accepted Answer

A) True 
 B)False

Question 16

As output increases, total variable cost

Accepted Answer

A)   increases more rapidly than does total cost.
B)   increases continuously at a decreasing rate.
C)   increases at a decreasing rate and then at an increasing rate.
D)   increases at a constant rate.E) A) and B)
F) All of the above

Question 17

If a firm produces zero output in the short run, then its profits will also be zero.

Accepted Answer

A) True 
 B)False

Question 18

In comparing the changes in TC and TVC associated with an additional unit of output, we find that

Accepted Answer

A)   the change in TVC is equal to MC, while the change in TC is equal to TFC.
B)   the change in TC exceeds the change in TVC.
C)   the change in TVC exceeds the change in TC.
D)   both TC and TVC changes are equal to MC.E) None of the above
F) A) and C)

Question 19

At what point does marginal product equal average product?

Accepted Answer

A)   where average product is equal to its minimum value
B)   where average product is equal to its maximum value
C)   where marginal product is equal to its minimum value
D)   where marginal product is equal to its maximum valueE) A) and B)
F) A) and C)

Question 20

When total product is increasing at an increasing 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 B)

Exam 9: Businesses and the Costs of Production

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes

Correct Answer
verified

The following schedule gives the cost data for a firm. Diseconomies of scale start between

Correct Answer
verified

Correct Answer
verified

If the short-run average variable costs of production for a firm are rising, then this indicates that

Correct Answer
verified

As output increases, total variable cost

Correct Answer
verified

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Correct Answer
verified

The following cost data are for a firm in the short run. What is the firm's average variable cost at an output of 5 units?

Correct Answer
verified

At what point does marginal product equal average product?

Correct Answer
verified

In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs

Correct Answer
verified

Which of the following holds true?

Correct Answer
verified

The law of diminishing returns implies that

Correct Answer
verified

If a firm produces zero output in the short run, then its profits will also be zero.

Correct Answer
verified

Which of the following would contribute most to a firm experiencing "economies of scale"?

Correct Answer
verified

When total product is increasing at an increasing rate, marginal product is

Correct Answer
verified

In comparing the changes in TC and TVC associated with an additional unit of output, we find that

Correct Answer
verified

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

Correct Answer
verified

The question is based on the following table, which provides information on the production of a product that requires one variable input. Marginal product is zero when the total product is

Correct Answer
verified

A firm's economic profit is usually higher than its accounting profit.

Correct Answer
verified

If a firm's revenues just cover all its implicit costs, then

Correct Answer
verified

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes

Correct AnswerverifiedShow Answer

The following schedule gives the cost data for a firm. Diseconomies of scale start between

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the short-run average variable costs of production for a firm are rising, then this indicates that

Correct AnswerverifiedShow Answer

As output increases, total variable cost

Correct AnswerverifiedShow Answer

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Correct AnswerverifiedShow Answer

The following cost data are for a firm in the short run. What is the firm's average variable cost at an output of 5 units?

Correct AnswerverifiedShow Answer

At what point does marginal product equal average product?

Correct AnswerverifiedShow Answer

In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs

Correct AnswerverifiedShow Answer

Which of the following holds true?

Correct AnswerverifiedShow Answer

The law of diminishing returns implies that

Correct AnswerverifiedShow Answer

If a firm produces zero output in the short run, then its profits will also be zero.

Correct AnswerverifiedShow Answer

Which of the following would contribute most to a firm experiencing "economies of scale"?

Correct AnswerverifiedShow Answer

When total product is increasing at an increasing rate, marginal product is

Correct AnswerverifiedShow Answer

In comparing the changes in TC and TVC associated with an additional unit of output, we find that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The question is based on the following table, which provides information on the production of a product that requires one variable input. Marginal product is zero when the total product is

Correct AnswerverifiedShow Answer

A firm's economic profit is usually higher than its accounting profit.

Correct AnswerverifiedShow Answer

If a firm's revenues just cover all its implicit costs, then

Correct AnswerverifiedShow Answer

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Correct AnswerverifiedShow Answer

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