ECON EXAM 2

When the slope of the total product curve is steep, the marginal product is A)not defined. B)zero. C)low. D)high. E)negative

d

A characteristic of the long run is A)all inputs can be varied. B)there are fixed inputs. C)plant capacity cannot be increased or decreased. D)there are both fixed and variable inputs.

a

If average variable costs increase as output increases, then A) total cost must be constant. B) marginal cost must be greater than average variable cost. C) average total cost must be increasing also. D) total fixed cost must be increasing also. E) output must be zero.

b

At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes inan hour. The marginal product of the third worker is A)4 cakes, and the average product for three workers is 6 cakes. B)18 cakes, and the average product for three workers is 6 cakes. C)6 cakes, and the average product for three workers is also 6 cakes. D)9 cakes and is equal to the average product. E)32 cakes, and the average product for three workers is 9 cakes

a

In the short run, total variable cost A)includes the cost of labor. B)is positive when output is zero. C)does not change when production changes. D)includes the cost of capital. E)includes both the cost of capital and of labor

a

The total product is 10 units. The average total cost is $30 and the average fixed cost is $10. What is the amount of the total variable cost? A) $200 B) $20 C) $300 D) $10 E) It is impossible to determine with the information given.

a

Which of the following is a factor of production that generally is fixed in the short run? A)a factory building B)water C)labor D)raw materials

a

which of the following is an implicit cost of production? A)rent that could have been earned on a building owned and used by the firm B)interest paid on a loan to a bank C)wages paid to labor plus the cost of carrying benefits for workers D)the utility bill paid to water, electricity, and natural gas companies

a

If Melissa owns a software company that incurs no fixed costs, then A)her total variable cost is less than her total cost. B)her total cost equals her total variable cost. C)her marginal cost must equal zero. D)she will earn an economic profit. E)her total cost equals zero

b

The law of diminishing marginal returns states A)average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. B)that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. C)that at some point, adding more of a fixed input to a given amount of variable inputs will cause themarginal product of the variable input to decline. D)that in the presence of a fixed factor, at some point average product of labor starts to fall as more and morevariable inputs are added.

b

Which of the following always decreases when output increases? A) average variable cost B) average fixed cost C) total fixed cost D) total cost E) marginal cost

b

in the short run, marginal product of labor increases at first and then falls because A)managerial inefficiency sets in when a firm gets too large. B)there are fewer opportunities for division of labor and specialization when fewer workers are hired. C)as more labor is hired, they are not as skilled as the first ones hired .D)the new workers do not have as much experience as those who have been with the firm for a long timeand therefore are not as productive

b

Diminishing marginal product of labor occurs when adding another unit of labor A)decreases output by an amount smaller than the output added by the previous unit of labor. B)decreases output. C)changes output by an amount smaller than the output added by the previous unit of labor. D)increases output by an amount larger than the output added by the previous unit of labor

c

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of A)the average cost of production. B)the division of labor. C)the average product of labor. D)the marginal product of labor.

c

Total cost includes A)the cost of fixed resources only. B)the cost of variable resources only. C)the cost of both variable and fixed resources. D)the cost of neither variable nor fixed resources. E)all explicit costs and all the implicit costs that actually must be paid using money.

c

Which of the following is an implicit cost of production? A)the interest you pay your mother for the money she loaned you to start your business B)the salary you pay yourself for running your business C)the loss in the value of capital equipment due to wear and tear D)the utility bill paid to water, electricity, and natural gas companies

c

if another worker adds 9 units of output to a group of workers who had an average product of 7 units, then theaverage product of labor A)will remain the same. B)will decrease. C)will increase. D)and what will happen to it cannot be determined.

c

The marginal product of labor is defined as A)the cost of hiring one more worker. B)the additional sales revenue that results when one more worker is hired. C)the additional number of workers required to produce one more unit of output. D)the additional output that results when one more worker is hired, holding all other resources constant

d

The production function shows A)the technology used to produce output. B)the total cost of producing a given quantity of output. C)the incremental output gained by improving the production process. D)the maximum output that can be produced from each possible quantity of inputs.

d

The short run is the time frame A)during which all costs are implicit costs. B)during which the quantities of all resources are variable. C)during which the quantities of all resources are fixed. D)during which the quantities of some resources are fixed. E)that is less than a yea

d

Which of the following is an example of a long-run adjustment? A)Ford Motor Company lays off 2,000 assembly line workers. B)Your university offers Saturday morning classes next fall. C)A soybean farmer turns on the irrigation system after a month long dry spell. D)Walmart builds another Supercenter.

d

if 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units,then the average product of 12 workers is A)60 units. B)54 units. C)48 units. D)5 units.

d