ECON202 2 of 4

The range over which average variable cost is increasing is the same as the range over which:

Average product is decreasing

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the:

Average product of labor

Refer to the above graph showing the marginal product (MPL) and the average product of labor (APL). At which quantity of labor employed does diminishing marginal returns set in?

B

If a firm's revenues just cover all its opportunity costs, then:

Economic profit is zero

Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured by:

CD

Marginal product of labor refers to the:

Increase in output resulting from employing one more unit of labor

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one:

More worker will decrease the average amount of output per worker

Refer to the above table. The total variable cost of producing 5 units is:

$63

Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.Refer to the above information. The economic profits of Harvey's firm in the first year were:

$160,000

The fixed cost of the firm is $500. The firm's total variable cost is indicated in the table. Refer to the above table and information. The average total cost of the firm when 3 units of output are being produced is:

$500

What is the firm's average variable cost at an output of 5 units?

$60

If the minimum efficient scale (MES) in an industry is 20 percent of the total consumption of a product, how many MES plants could be supported profitably in that industry?

5

If a more efficient technology was discovered by a firm, there would be:

A downward shift in the MC curve

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of:

Diminishing marginal returns

If all resources used in the production of a product are increased by 10 percent and output increases by less than 5 percent, then the firm is experiencing:

Diseconomies of scale

If long-run average total cost decreases as output increases, this is due to:

Economies of scale

Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units of output, then:

MC > AVC

If the short-run average variable cost of production for a firm is decreasing, then it follows that:

Marginal cost must be below average variable cost

If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?

None, because fixed costs do not affect marginal cost

Diseconomies of scale occur mainly because:

Of the inherent difficulties involved in managing and coordinating a large business enterprise

Over the range of positive, but diminishing, marginal returns for an input, the total product curve:

Rises at a decreasing rate

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true?

The firm may earn positive accounting profits, but will face economic losses

The mass affordability of the iPhone is the results of the following, except:

The law of diminishing returns in manufacturing

When marginal cost is increasing:

Total cost must be increasing

At what point does marginal product equal average product?

Where average product is equal to its maximum value