Micro HW #11

Along the total product​ curve, output increases as​ _______. A. the quantity of labor increases and the plant size remains constant B. total cost increases C. the quantity of labor and the plant size increase D. average total cost increases

A

The​ long-run average cost curve is the relationship between the lowest attainable average total cost and​ output, when plant size is​ ______ and labor is​ ______. A. ​varied; varied B. held​ constant; held constant C. held​ constant; varied D. ​varied; held constant

A

Total cost is the cost of​ _____ by a firm. Total fixed cost is the cost of the​ _____ - the cost of​ _____, _____, and​ _____. Total variable cost is the cost of the​ _____ - the cost of​ _____. A. all the factors of production​ used; ​firm's fixed factors of​ production; land,​ capital; entrepreneurship; ​firm's variable factor of​ production; labor B. the interest on capital​ used; ​firm's fixed rate of​ interest; physical​ capital; financial​ capital; entrepreneurship; ​firm's variable rate of​ interest; financial capital C. the quantities of goods​ produced; ​firm's fixed​ quantities; land;​ labor; capital; ​firms's variable​ quantities; labor D. the output​ produced; ​firm's fixed​ output; primary;​ intermediate; final output ​firm's variable​ output; primary goods and services

A

Total product is the total​ _____ of a good produced in a given period. Marginal product is the change in​ _____ product that results from a​ one-unit increase in the​ _____. Average product is the total product divided by the​ _____. A. ​quantity; total; quantity of labor​ employed; quantity of a factor of production B. ​price; average; total​ product; total cost C. ​cost; average; marginal​ cost; average cost D. ​quantity; total; average​ product; price

A

When marginal product exceeds average​ product, ______ product is increasing. When average product exceeds marginal​ product, ______ product is decreasing. A. ​average; average B. ​marginal; marginal C. ​average; neither average product nor marginal D. ​marginal; average

A

Which of the following illustrates economies of scale​, diseconomies of scale​, and constant returns to scale​? ​Liza's average total cost changes from​ $4.50 to​ $2.20 when she increases salad production from 7 to 9 an hour. ​Sam's average total cost changes from​ $1.30 to​ $2.80 when he increases smoothie production from 5 to 8 gallons an hour. ​Tina's average total cost remains at​ $3 when she increases pizza production from 12 to 13 an hour. A. Liza faces economies of​ scale; Sam faces diseconomies of​ scale; Tina faces constant returns to scale. B. Tina faces economies of​ scale; Sam faces diseconomies of​ scale; Liza faces constant returns to scale. C. Sam faces economies of​ scale; Liza faces diseconomies of​ scale; Tina faces constant returns to scale. D. Sam faces economies of​ scale; Tina faces diseconomies of​ scale; Liza faces constant returns to scale.

A

​______ are features of a​ firm's technology that lead to falling​ long-run average cost as output increases that arise because of​ _______. A. Economies of​ scale; greater specialization of both labor and capital B. Decreasing​ economies; comparative advantage C. Economies of​ scope; the challenge of managing a large enterprise D. Economies of​ scale; free markets

A

A​ firm's minimum efficient scale is the​ _______. A. smallest quantity of output at which a firm maximizes producer surplus B. smallest quantity of output at which​ long-run average cost reaches its lowest level C. ​firm's profit-maximizing point D. production point at which the firm produces just enough to break even

B

A​ firm's production function shows the relationship between the maximum output attainable and the​ ______. A. quantity of labor B. quantities of both labor and capital C. total cost D. quantity of capital

B

Marginal cost​ _______. A. decreases at low outputs until it reaches its minimum​ value, then remains constant B. decreases at low outputs and increases at high outputs C. is constantly​ increasing, but as output increases it increases by smaller and smaller amounts D. increases at low outputs until it reaches its maximum​ value, then remains constant

B

Maximum MP occurs at the same output as​ ______. Maximum AP occurs at the same output as​ ______. A. maximum MC​; maximum AVC B. minimum MC​; minimum AVC C. minimum AVC​; minimum MC D. maximum AVC​; maximum MC

B

The law of diminishing marginal returns states that as a firm uses more of a​ _____ factor of production with a given quantity of the​ _____ factor of​ production, the​ _____ product of the​ _____ factor eventually diminishes. A. ​fixed; variable;​ average; variable B. ​variable; fixed;​ marginal; variable C. ​variable; fixed;​ average; variable D. ​fixed; variable;​ total; fixed

B

Tina employs 4 people in her pizza​ store, where she produces 12 pizzas an hour. Her total fixed​ cost, total variable​ cost, and total costs of pizza production per hour are​ $15, $19.40, and​ $34.40 respectively. Calculate​ Tina's average fixed cost​, average variable cost and average total cost. A. ​$1.62; $10;​ $1.25 B. ​$1.25; $1.62;​ $2.87 C. ​$1.25; $2.87;​ $1.62 D. ​$34.40; $15;​ $19.40

B

When Sam increases smoothie production from 4 gallons to 5​ gallons, his total cost of production increases from​ $32.50 to​ $36.85. Calculate​ Sam's marginal cost of producing smoothies. A. ​$4.45 B. ​$4.35 C. ​$26.85 D. ​$2.50

B

When economies of scale are​ present, the LRAC curve​ ______. When diseconomies of scale are​ present, the LRAC curve​ ______. A. slopes​ downward; is horizontal B. slopes​ downward; slopes upward C. is​ horizontal; slopes upward D. slopes​ upward; slopes downward

B

Which of the following are examples of short run and long run​ decisions? A. Olive Garden has increased its plant size. Olive Garden has opened two new restaurants in Ames. B. ​Starbucks' has hired more labor to meet the increasing demand. ​Starbucks' has opened another store to meet the increasing demand. C. The profits of Dell has improved this quarter. ​Consumers' preferences for Dell laptops have changed over time. D. LG has adopted a new technology to create a new cell phone. The sale of LG phones has increased. Part 2

B

As the labor employed​ increases, marginal product of labor initially​ ______. As the labor employed​ increases, the average product of labor​ initially______. A. decreases and eventually​ increases; decreases and eventually increases B. increases and eventually​ decreases; decreases and eventually increases C. increases and eventually​ decreases; increases and eventually decreases D. decreases and eventually​ increases; increases and eventually decreases

C

If diseconomies of scale are present and the firm​ ______ all its​ inputs, its output​ _______. A. ​increases; increases by the same percentage B. ​halves; doubles C. ​doubles; less than doubles D. ​doubles; more than doubles

C

Choose the correct statement. A. When average product exceeds marginal​ product, marginal product is rising. B. When marginal product is​ falling, average product is falling. C. When average product is​ rising, marginal product is rising. D. When marginal product exceeds average​ product, average product is rising.

D

If other things remain the​ same, the average total cost curve​ ______, and the marginal cost curve​ ______. A. does not​ change; shifts upward B. does not​ change; does not change C. shifts​ upward; shifts upward D. shifts​ upward; does not change

D

If your current decision is​ rational, the cost of the shoes​ ______ influence whether you wear the shoes or not because​ ______. A. ​does; as soon as you buy the shoes you feel compelled to wear them and you​ don't want to waste money B. ​does; the opportunity cost of wearing the shoes is zero C. does​ not; the opportunity cost of buying the shoes is zero D. does​ not; the cost of the shoes has been incurred regardless of the pain that wearing the shoes gives you

D

January​ 31, 2008​: Starbucks will open 75 more stores abroad than originally​ predicted, for a total of 975. February​ 25, 2008​: For three hours on​ Tuesday, Starbucks will shut down every single one of its​ 7,100 stores so that baristas can receive a refresher course. June​ 2, 2008​: Starbucks replaces baristas with vending machines. July​ 18, 2008​: Starbucks is closing 616 stores by the end of March. The decisions made on​ ______ are​ long-run decisions because they​ ______. A. February​ 25, June​ 2, and July​ 18; all deal with stores located in the United States B. June​ 2; are changes to labor which affect people for the long term C. January 31 and February​ 25; are the earliest decisions D. January 31 and July​ 18; change​ Starbucks' plant

D

Over the output range for which marginal cost exceeds average variable cost but is less than average total​ cost, _______. A. both average variable cost and average total cost are rising B. average fixed cost is rising while average variable cost is falling C. average fixed cost is falling more slowly than average variable cost is rising D. average fixed cost is falling more quickly than average variable cost is rising

D

Total product is​ _______. A. the increase in output that results when an additional worker is hired B. the average output that a given quantity of labor can produce C. the minimum output that a given quantity of labor chooses to produce D. the maximum output that a given quantity of labor can produce

D

When the marginal product curve is​ ______, the marginal cost curve is falling. When the average product curve is​ ______, the average variable cost curve is falling. A. ​falling; rising B. ​rising; falling C. ​falling; falling D. ​rising; rising

D

​Long-run average cost curve is a curve that shows the​ _____ average total cost at which it is​ _____ to produce each output when the firm has had sufficient time to change both its plant size and labor employed. A. ​highest; possible B. ​highest; not possible C. ​lowest; not D. ​lowest; possible

D

Indicate whether each of the following statements is true or false. The marginal cost curve intersects the average variable cost curve at its minimum. When marginal cost is greater than average fixed cost, average fixed cost is increasing. The marginal cost curve intersects the average fixed cost curve at its minimum. When marginal cost is less than average total cost, average total cost is decreasing.

true, false, false, true

The shape of the AVC curve arises because of​ _______. A. increasing returns as output increases B. increasing returns initially and eventually diminishing returns C. falling average fixed cost D. constant returns

B

In a market in which the smallest output at which​ long-run average cost reaches its lowest level is large relative to market​ demand, the market is​ _______. A. perfectly competitive B. monopolistically competitive C. either an oligopoly or monopoly D. experiencing growth

C

In the short​ run, ______. In the long​ run, ______. A. a​ firm's plant is​ fixed; a firm can change its plant B. all factors of production are variable except​ technology; the quantities of all factors of production can be varied C. all costs are sunk​ costs; the quantity of only one factor of production is fixed D. the quantity of only one factor of production is​ fixed; the quantities of all factors of production can be varied

A

The​ long-run average cost curve traces out the lowest attainable​ _______ of producing each output. A. average total cost B. average variable cost C. average fixed cost D. marginal cost

A

A sunk cost is irrelevant to a​ firm's current decisions because​ _______. A. the decision to make the expenditure was made by previous managers B. it cannot be changed by any current decision C. it is a fixed factor of production D. it occurred in the long run

B

Choose the statement that is correct. A. ATC​ = AVC−AFC B. ​TC/Q​ = ​TFC/Q +​ TVC/Q C. ​(​TC/Q−​TFC/Q​) increases over all values of output D. ​ATC/Q = TC

B

If 6 workers can produce 210 surfboards a​ week, then average product is​ ______ surfboards per worker. A. 126 B. 35 C. 216 D. 210

B

If other things remain the​ same, the average fixed cost curve​ ______ and the average variable cost curve​ ______. A. does not​ change; shifts upward B. shifts​ upward; does not change C. shifts​ upward; shifts downward D. does not​ change; does not change

B

In​ economics, the short run is the time frame in which​ ______ and the long run is the period of time in which​ ______. A. the quantities of all factors of production are variable but technology is​ fixed; sunk costs are variable B. the quantities of some factors of production are​ fixed; the quantities of all factors of production can be varied C. the quantities of some factors of production are​ variable; the quantities of all factors of production are fixed D. the quantities of all factors of production are​ fixed; the quantities of all factors of production can be varied

B

The law of diminishing returns says that as the firm uses more of​ ______, with a given quantity of​ ______, marginal product of the variable factor eventually diminishes. A. a fixed factor of​ production; variable factors of production B. a variable factor of​ production; the fixed factor of production C. all factors of​ production; entrepreneurship D. all factors of​ production; capital

B

Most production processes experience​ _______ marginal returns​ initially, but all production processes eventually reach a point of​ _______ marginal returns. A. ​constant; diminishing B. ​diminishing; increasing C. ​increasing; diminishing D. ​diminishing; constant

C

The marginal cost curve slopes downward at low outputs because of​ _______. The marginal cost curve eventually slopes upward because of​ _______. A. the law of diminishing​ returns; increasing average fixed cost B. falling average fixed​ cost; the law of diminishing returns C. greater specialization and division of​ labor; the law of diminishing returns D. the law of diminishing​ returns; greater specialization and division of labor

C

The shape of the ATC curve arises because of​ _______. A. falling total product B. rising marginal cost C. the influence of two opposing forces—spreading total fixed cost over a larger output and eventually diminishing returns D. the influence of two opposing forces—spreading total fixed cost over a larger output and eventually increasing return

C

The smallest quantity of output at which​ long-run average cost is at a minimum is a​ firm's _______. A. efficient output point B. maximum efficient scale C. minimum efficient scale D. ​profit-maximizing output point

C

The​ long-run average cost curve is made up of the segments of individual average​ ______ cost curves with the lowest average​ ______ cost for a given output. A. ​variable; total B. ​variable; variable C. ​total; total D. ​total; variable

C

Which of the following firms produce at the minimum efficient scale​? A. Toyota produces 20 cars a day at its Texas plant at which its profit is maximized. B. ​Starbucks' makes 1000 chai lattes each day at which is total revenue is maximized. C. Dell produces 100 computers a week at which its long run average total cost is minimized. D. A Gap outlet in Chicago sells 500 jackets a day and lowers its average variable cost.

C

Which of the following illustrates diminishing marginal returns​? A. Total cost decreases as the quantity of labor hired increases. B. Debra produces 30 hats per hour. C. Hiring more workers decreases the productivity of each additional worker. D. A company makes greater investments as it earns higher profits.

C

Diminishing returns to capital​ _______ occur as the quantity of capital increases because for a given quantity of​ _______ incremental amounts of output. A. do​ not; labor each additional unit of capital will result in smaller B. ​do; capital each additional unit of labor will result in smaller C. do​ not; labor each additional unit of capital will result in larger D. ​do; labor each additional unit of capital will result in smaller

D

Expenditure on shoes is​ ______. A. an expenditure on plant B. an unnecessary expenditure C. a​ short-run cost D. a sunk cost

D

If marginal cost exceeds average total cost and output​ increases, average total cost​ _______ and average variable cost​ _______. A. ​increases; decreases B. ​decreases; increases C. ​decreases; decreases D. ​increases; increases

D

January​ 31, 2008​: Starbucks will open 75 more stores abroad than originally​ predicted, for a total of 975. February​ 25, 2008​: For three hours on​ Tuesday, Starbucks will shut down every single one of its​ 7,100 stores so that baristas can receive a refresher course. June​ 2, 2008​: Starbucks replaces baristas with vending machines. July​ 18, 2008​: Starbucks is closing 616 stores by the end of March. The decisions made on​ ______ are​ short-run decisions because they​ ______. A. January 31 and July​ 18; change the number of stores but not necessarily the number of employees B. June 2 and July​ 18; are the most recent decisions C. February 25 and June​ 2; change a variable factor of production but not a fixed factor of production D. February​ 25, June​ 2, and July​ 18; deal with stores located in the United States

C

Marginal product eventually diminishes because​ _______. A. workers become lazy after they have worked at the same task for a long period of time B. workers are promoted and their replacements are not as familiar with the required tasks C. more and more workers are using the same capital and working in the same space D. capital becomes obsolete and workers cannot be as productive as when the capital is new

C

The AFC curve has this shape because​ _______. A. when output​ increases, total fixed cost increases B. when output​ increases, total fixed cost decreases C. when output​ increases, the firm spreads its total fixed cost over a larger output D. it reflects diminishing returns

C

Which of the following is an example of sunk cost​? A. The government has regulated a minimum wage rate for all fast food employees. B. Nancy uses her own laptop at work. C. Ned spent​ $50,000 to train employees at his​ start-up firm. D. Rachel buys her groceries from Winco as it is much cheaper.

C

​______ are features of a​ firm's technology that lead to rising​ long-run average cost as output increases that arise because of​ _______. A. Diseconomies of​ scale; comparative advantage B. Economies of​ scope; greater specialization of both labor and capital C. Diseconomies of​ scale; the challenge of managing a large enterprise D. Output​ diseconomies; free markets

C

That law of diminishing returns states that as a firm uses more of a​ _______ factor eventually diminishes. A. fixed factor of production with a given quantity of the variable factor of​ production, the marginal product of the fixed B. variable factor of production with a given quantity of the fixed factor of​ production, the marginal product of the fixed C. variable factor of production with a given quantity of the fixed factor of​ production, the total product of the variable D. variable factor of production with a given quantity of the fixed factor of​ production, the marginal product of the variable

D