MicroEcon Chap 11

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output, marginal cost is approximately: a) $200. b) $250. c) $100. d) $120.

a) $200.

Reference: Ref 11-16 (Table: Cost Data) Look at the table Cost Data. The average variable cost of producing 5 purses is: a) $38. b) $10. c) $48. d) $190.

a) $38.

(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from A to B. a) constant returns to scale b) constant total cost as output increases c) economies of scale d) diseconomies of scale

a) constant returns to scale

In the short run, the average total cost curve slopes upward because of: a) diminishing returns. b) increasing returns. c) economies of scale. d) diseconomies of scale.

a) diminishing returns.

(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer and bakes 200 cakes per day, what is her average fixed cost? a) $200 b) $5 c) $10 d) $1,000

b) $5

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns. a) increases; is constant b) decreases; increases c) increases; decreases d) is constant; decreases

b) decreases; increases

The total cost curve for a snowmobile dealership shows how _____ cost depends on the quantity of _____. a) average; variable inputs b) total; output c) marginal; output d) total; fixed inputs

b) total; output

The total product curve: a) will be downward-sloping if there are diminishing returns to the variable input. b) will become flatter as output increases if there are diminishing returns to the variable input. c) will become horizontal when the marginal product of the variable input is constant. d) shows the relation between output and the quantity of a variable input for varying levels of the fixed input.

b) will become flatter as output increases if there are diminishing returns to the variable input.

When marginal cost is BELOW average variable cost, average variable cost must be: a) at its maximum. b) rising. c) falling. d) at its minimum.

c) falling.

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits: a) higher wages. b) decreasing returns to scale. c) increasing returns to scale. d) increased input prices.

c) increasing returns to scale.

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the _____ cost curve. a) average variable b) average total c) marginal d) total

c) marginal

(Figure: The Total Product) Look at the figure The Total Product. Labor added from L1 and up to L2 is: a) adding increasing amounts to total product. b) adding negative amounts to total product. c) subject to diminishing marginal returns. d) adding negative amounts to total product and subject to diminishing marginal returns.

c) subject to diminishing marginal returns.

(Table: Long-Run Total Cost) Look at the table Long-Run Total Cost. This soybean grower receives constant returns to scale over the _____ and _____ bushels. a) fifth; sixth b) fourth; fifth c) third; fourth d) first; second

c) third; fourth

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. At 7 units of output, average fixed cost is approximately _____, and average variable cost is approximately _____. a) $40; $100 b) $100; $100 c) $140; $140 d) $10; $135

a) $40; $100

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is _____ cost. a) average fixed b) average variable c) fixed d) marginal

a) average fixed

(Figure and Table: Variable, Fixed, and Total Costs) Look at the figure and table Variable, Fixed, and Total Costs. The marginal cost of increasing production from 51 to 64 bushels of wheat is: a) $12.50. b) $18.75. c) $15.38. d) $16.00.

c) $15.38.

The long run refers to the period for which: a) diminishing returns raise marginal cost. b) marginal costs are decreasing. c) all inputs are variable. d) a fixed input exists.

c) all inputs are variable.

The long-run average cost curve will be upward-sloping when the firm has: a) constant returns to scale. b) economies of scale. c) diseconomies of scale. d) diminishing returns.

c) diseconomies of scale.

At the current level of output, Becca Furniture's marginal cost curve is above the average total cost curve. This means Becca Furniture's average total cost curve: a) may be rising, falling, or flat depending on other things. b) must be flat. c) must be rising. d) must be falling.

c) must be rising.

(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The total cost of producing 2 bagels is: a) $0.50. b) $0.10. c) $0.20. d) $0.40.

d) $0.40.

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

d) $50.

(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the second worker is: a) 15. b) 10. c) 30. d) 20.

d) 20.

(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the fifth worker is _____ bagels. a) 10,000 b) 5,000 c) 12,000 d) 9,000

d) 9,000

(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product of labor for eight workers is _____ bushels. a) 40 b) 75 c) 35 d) 96

d) 96

Once diminishing returns have set in, as output increases, the total cost curve: a) ecomes horizontal. b) increases at first, and then decreases. c) gets flatter. d) gets steeper.

d) gets steeper.

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

d) its lowest point.

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

d) the dining room

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

d) will decrease (the MC curve will shift down).