Question 1

The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question.  The total cost of producing 3 units of output is

Accepted Answer

A)  $65.
B)  $105.
C)  $145.
D)  $185.E) B) and C)
F) A) and B)

Question 2

Refer to the diagram. If labor is the only variable input, the average product of labor is at a

Accepted Answer

A)  minimum at point b.
B)  maximum at point b.
C)  maximum at point a.
D)  maximum at point c.E) A) and B)
F) B) and C)

Question 3

Refer to the diagram. Minimum efficient scale

Accepted Answer

A)  occurs at some output greater than Q₃.
B)  is achieved at Q₁.
C)  is achieved at Q₃.
D)  cannot be identified in this diagram.E) A) and B)
F) B) and D)

Question 4

The question is based on the following table, which provides information on the production of a product that requires one variable input.  Diminishing marginal returns sets in with the addition of the

Accepted Answer

A)  first unit of input.
B)  second unit of input.
C)  third unit of input.
D)  fourth unit of input.E) All of the above
F) C) and D)

Question 5

Why is the distinction between fixed and variable cost important?

Accepted Answer

The distinction between fixed and variab...

Question 6

Maria's Mexican Cantina is a restaurant that has been around for 30 years. In that time they have remained in the same building and only changed inputs such as staff and the menu. Based on this, we can conclude that Maria's

Accepted Answer

A)  has only ever operated in the short run.
B)  experienced a long run change whenever it changed personnel.
C)  has operated in the long run, even though it chose to keep the building input fixed.
D)  only operated in the long run if other firms entered or left the industry at this time.E) A) and B)
F) B) and D)

Question 7

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 B)
F) A) and C)

Question 8

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

Accepted Answer

A)  learning-by-doing
B)  labor specialization
C)  use of larger machines
D)  inelastic resource supply curvesE) B) and C)
F) C) and D)

Question 9

Refer to the cost data provided. How much is the firm's total fixed costs?

Accepted Answer

A)  $900
B)  $500
C)  $400
D)  Total fixed costs cannot be determined from the given data.E) A) and C)
F) None of the above

Question 10

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) None of the above
F) All of the above

Question 11

Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Accepted Answer

A)  new technology in additive manufacturing
B)  new technology in energy production involving fusion reactors
C)  significant decreases in petroleum prices with the discovery of new oil fields and new extraction techniques
D)  new transportation technology involving antigravitational fieldsE) A) and D)
F) All of the above

Question 12

Refer to the provided table. The total fixed cost of production is

Accepted Answer

A)  $10.
B)  $20.
C)  $98.
D)  $0.E) B) and C)
F) A) and C)

Question 13

Answer the question on the basis of the following cost data.  The total cost of eight units of output is

Accepted Answer

A)  $700.00.
B)  $93.75.
C)  $750.00.
D)  $140.00.E) B) and C)
F) All of the above

Question 14

Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. Average variable cost will be at a minimum when the firm is hiring

Accepted Answer

A)  Q₃ workers.
B)  Q₂ workers.
C)  Q₁ workers.
D)  more than Q₃ workers.E) B) and C)
F) A) and D)

Question 15

Refer to the diagram. At output level Q, total variable cost is

Accepted Answer

A)  0 BEQ.
B)  BCDE.
C)  0 CDQ.
D)  0 AFQ.E) B) and D)
F) C) and D)

Question 16

The law of diminishing returns results in

Accepted Answer

A)  an eventually rising marginal product curve.
B)  a total product curve that eventually increases at a decreasing rate.
C)  an eventually falling marginal cost curve.
D)  a total product curve that rises indefinitely.E) C) and D)
F) B) and C)

Question 17

Explain the differences between total product, marginal product, and average product.

Accepted Answer

Total product (TP)is the total quantity,...

Question 18

The firm's short-run marginal-cost curve is increasing when

Accepted Answer

A)  marginal product is increasing.
B)  marginal product is decreasing.
C)  total fixed cost is increasing.
D)  average fixed cost is decreasing.E) A) and D)
F) B) and D)

Question 19

Answer the question on the basis of the following cost data.  The average fixed cost of producing 3 units of output is

Accepted Answer

A)  $14.00.
B)  $24.
C)  $16.00.
D)  $8.00.E) C) and D)
F) A) and B)

Question 20

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.  What is the firm's average product when three workers are hired?

Accepted Answer

A)  18 units of output.
B)  36 units of output.
C)  42units of output.
D)  21units of output.E) B) and C)
F) A) and D)

Exam 9: Businesses and the Costs of Production

The law of diminishing returns results in

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following cost data. The average fixed cost of producing 3 units of output is

Correct AnswerverifiedShow Answer

Refer to the diagram. If labor is the only variable input, the average product of labor is at a

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. What is the firm's average product when three workers are hired?

Correct AnswerverifiedShow Answer

Why is the distinction between fixed and variable cost important?

Correct AnswerverifiedThe distinction between fixed and variab...View AnswerShow Answer

Explain the differences between total product, marginal product, and average product.

Correct AnswerverifiedTotal product (TP)is the total quantity,...View AnswerShow Answer

Which of the following represents a long-run adjustment?

Correct AnswerverifiedShow Answer

Refer to the diagram. Minimum efficient scale

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following cost data. The total cost of eight units of output is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. Average variable cost will be at a minimum when the firm is hiring

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. Diminishing marginal returns sets in with the addition of the

Correct AnswerverifiedShow Answer

Refer to the diagram. At output level Q, total variable cost is

Correct AnswerverifiedShow Answer

Maria's Mexican Cantina is a restaurant that has been around for 30 years. In that time they have remained in the same building and only changed inputs such as staff and the menu. Based on this, we can conclude that Maria's

Correct AnswerverifiedShow Answer

Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Correct AnswerverifiedShow Answer

Total fixed costs of production in the short run

Correct AnswerverifiedShow Answer

The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question. The total cost of producing 3 units of output is

Correct AnswerverifiedShow Answer

Refer to the provided table. The total fixed cost of production is

Correct AnswerverifiedShow Answer

Refer to the cost data provided. How much is the firm's total fixed costs?

Correct AnswerverifiedShow Answer

The firm's short-run marginal-cost curve is increasing when

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The distinction between fixed and variab...
View Answer

Correct Answer
verified
Total product (TP)is the total quantity,...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified