Econ Chapter 6

A farm can produce 1,000 bushels of wheat per year with two workers or 1,300 bushels of wheat per year with four workers. The marginal product of the fourth worker is _____ bushels. 1,300 100 300 150

150

Diminishing marginal returns to the variable inputs cause the total cost curve to be horizontal. TRUE OR FALSE

FALSE

Large initial setup costs are a cause of increasing returns to scale. TRUE OR FALSE

True

Darren runs a barbershop with average fixed costs equal to $60 per day and a total output of 50 haircuts per day. What is his weekly total fixed cost if he is open six days per week? a.$18,00 b. $3000 c. $60 d. cannot be determined

a

When a cherry orchard in Oregon adds a worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is: A) $40. B) $19. C) $4,000. D) $24,000.

a

Which of the following is the best example of a firm adding a fixed cost? a. A furniture manufacturer builds a new factory b. A private swimming club hires a lifeguard c. A real estate agent buys balloons to advertise the showing of a house d. a seamstress buys fabric for a custom-made coat

a

A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $5 in average total cost. The total fixed cost of producing 10 pairs of eyeglasses is: a$300. b$35. c$3. d$50.

b

A factor of production whose quantity cannot be changes during a particular period is a(n): a. marginal factor of production b. fixed factor of production c. incremental factor of production d. variable factor of production

b

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is: a. 100 bushels b. 300 bushels c. 1300 bushels d. 2300 bushels

b

Buford Bus Manufacturing installs a new assembly line. As a result, the output produced per worker increases. The marginal cost of output at Buford: a. will increase (marginal cost will shift left) b. will decrease (marginal cost will shift right) c. will be unchanged d. is at its maximum

b

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, average total cost is: a. $30 b. $35 c. $50 d. $100

b

Krista operates a dry-cleaning business in Tampa that incurs $900 per month in fixed costs. Last month her total output equaled 3,000 pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost ________ by a little more than ________. a. fell; 3.33 cents b. increase; 3.33 cents c. fell; 2,5 cents d. increase; 2.5 cents

b

Average fixed cost is: a. total cost divided by output b. variable cost divided by output c. fixed cost divided by output d. the change in total cost divided by the change in output

c

The long-run average total cost of producing 100 units of output is $4, and the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has: a. economies of scale b. diseconomies of scale c. constant return to scale d. diminishing returns

c

The short-run is a period that is: a. less than a week b. less than a month c. long enough to vary output but not plant capacity d. long enough to make all economic adjustments

c

A factor of production whose quantity can be changed during a particular period is a(n): a. marginal factor of production b. fixed factor of production c. incremental factor of production d. variable factor of production

d

The change in total output resulting from a one-unit increase in the quantity of an input used, holding the quantities of all other inputs constant is: a. average cost b. average product c. marginal cost d. marginal product

d

The slope of a long-run average total cost curve exhibiting increasing returns to scale is: a. zero b. infinite c. positive d. negative

d

The swoosh-shape of the marginal cost curve is caused by the ___ having a powerful influence lower levels and the _____ having a powerful influence at high levels of output. a. diminishing returns effect; specialization effect b. diminishing returns effect; spreading effect c. spreading effect; fixed cost effect d. specialization effect; diminishing returns effect

d

The term diminishing returns refers to a: a. falling interest rate that can be expected as one's investment in a single asset increases b. reduction in profits caused by increasing output beyond the optimal point c. decrease in total output due to overcrowding, when too much labor is used with too little land or capital d. decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are help constant

d

Buford Bus Manufacturing installs a new assembly line. As a result, the output per worker increases. The marginal cost of output at Buford: will increase (the MC curve will shift up). will decrease (the MC curve will shift down). will be unchanged. is at its maximum.

decrease

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run best demonstrates: being too small for the relevant market. diseconomies of scale. not having enough managers. economies of scale.

diseconomies of scale.

When Aishe's Bar-B-Que produces 10 pork sandwiches, the total cost is $5. When 11 pork sandwiches are produced, the total cost rises to $6. From this we know that the marginal cost of the eleventh pork sandwich: can't be calculated without more information. is greater than the average cost of 11 pork sandwiches .is less than the average cost of 11 pork sandwiches. is equal to the average cost of 11 pork sandwiches.

is greater than the average cost of 11 pork sandwiches

The marginal cost curve intersects the average variable cost curve at: its maximum. no point; the curves don't intersect. its end point. its lowest point.

lowest point

As production increases and the fixed cost is divided by larger quantities of output, average fixed cost drops. This is referred to as the _____ effect. spreading increasing returns constant cost diminishing returns

spreading

In the short run, as output gets larger: fixed cost gets smaller. average total cost decreases after the point of diminishing returns. marginal cost gets smaller. the average variable cost curve gets closer to the average total cost curve.

the average variable cost curve gets closer to the average total cost curve.

You own a deli. Which of the following is most likely a fixed input at your deli? the employees the tomato sauce used to make soups the dining room the bread used to make sandwiches

the dining room