Econ Chapter 6 Practice Questions

Wage rate divided by MPP.

"Unit labor cost" is equal to the: A. Wage rate. B. Wage rate divided by MPP. C. The change in labor cost divided by the change in output. D. Marginal cost.

A higher wage rate

112. Which of the following is least likely to increase productivity? A. Technological advances B. Increased managerial capabilities C. A higher wage rate D. Improved labor skills

First, marginal cost below average total cost, and then marginal cost above average total cost.

A U-shaped average total cost curve implies: A. First, diminishing returns, and then, increasing returns. B. First, marginal cost below average total cost, and then marginal cost above average total cost. C. That total costs are at a minimum at the minimum of the average cost curve. D. A linear total cost curve.

Maximum output that can be produced with varying combinations of factor inputs.

A production function shows the: A. Minimum amount of output that can be obtained from alternative combinations of inputs. B. Maximum quantity of inputs required to produce a given quantity of output. C. Maximum output that can be produced with varying combinations of factor inputs. D. Output capacity of the entire economy.

Economic costs include implicit costs and accounting costs do not.

Accounting costs and economic costs differ because: A. Economic costs include implicit costs and accounting costs do not. B. Accounting costs include implicit costs and economic costs do not. C. Economic costs include explicit costs and accounting costs do not. D. Accounting costs include explicit costs and economic costs do not.

Total costs.

An increase in production in the short run definitely results in an increase in: A. Average total costs. B. Marginal costs. C. Total costs. D. Average fixed costs.

Constant returns to scale.

Assume a given amount of output can be produced by several small plants or one large plant with identical minimum per-unit costs. This long-run situation reflects the existence of: A. Economies of scale. B. Diseconomies of scale. C. Constant returns to scale. D. Diminishing returns.

A downward shift in the MC curve.

Assuming labor is a variable input, an increase in labor productivity will result in: A. A downward shift in the MPP curve. B. A downward shift in the MC curve. C. An upward shift in the ATC curve. D. A downward shift in the production function.

Variable cost.

At any given rate of output, the difference between total cost and fixed cost is: A. Marginal cost. B. Average variable cost. C. Zero in the short run. D. Variable cost.

Marginal physical product of a factor of production diminishes as more of that factor is used.

Ceteris paribus, the law of diminishing returns states that beyond some point, the: A. Returns on stocks and bonds diminish with higher security prices. B. Addition to total utility diminishes as more units of a good are consumed. C. Marginal physical product of a factor of production diminishes as more of that factor is used. D. Output of any good increases as more of a variable input is used.

Variable costs.

Changes in marginal costs result from changes in: A. Fixed costs. B. Variable costs. C. Erratic costs. D. Total revenue.

Variable costs.

Changes in short-run total costs result from changes in: A. Variable costs. B. Fixed costs. C. Profit. D. The price elasticity of demand.

A rising ratio of variable input to fixed input.

Diminishing returns occur because of: A. Inefficiency in the production process. B. The use of inferior factors of production. C. A rising ratio of variable input to fixed input. D. Lower opportunity costs of the factors of production.

The upward-sloping segment of the long-run average total cost curve.

Diseconomies of scale are reflected in: A. The downward-sloping segment of the long-run average total cost curve. B. The downward-sloping segment of the long-run marginal cost curve. C. A downward shift of the long-run average total cost curve. D. The upward-sloping segment of the long-run average total cost curve.

Includes both implicit and explicit costs.

Economic cost: A. Includes both implicit and explicit costs. B. Is the sum of actual monetary payments made for resources used to produce a good. C. Includes only implicit costs. D. Decreases as the level of production increases.

Total cost that result from using operations of larger size.

Economies of scale are reductions in average: A. Total cost that result from declining average fixed costs. B. Fixed cost that result from reducing the firm's scale of operations. C. Total cost that result from using operations of larger size. D. Fixed cost resulting from improved technology and production efficiency.

Explain why average total costs decline as output increases in the long run.

Economies of scale: A. Exist in both the short run and the long run. B. Explain why average variable and average total costs decline in the short run. C. Explain why average total costs decline as output increases in the long run. D. Explain why average total costs increase as output increases in the long run.

Are the sum of actual monetary payments made for resources used to produce a good.

Explicit costs: A. Include only payments to labor. B. Are the sum of actual monetary payments made for resources used to produce a good. C. Include the market value of all resources used to produce a good. D. Are the total value of resources used to produce a good but for which no monetary payment is made.

Higher output per worker.

Greater labor productivity means: A. Lower output per labor hour. B. Higher labor cost per unit of output. C. Lower output per worker. D. Higher output per worker.

Enough workers to produce where the MPP equals zero.

If a firm could hire all the workers it wanted at a zero wage (i.e., the workers are volunteers), the firm should hire: A. Enough workers to produce the output where diminishing returns begin. B. Enough workers to produce the output where worker productivity is the highest. C. Enough workers to produce where the MPP equals zero. D. All the workers that can fit into the factory.

$1.33.

If an additional unit of labor costs $20 and has a MPP of 15 units of output, the marginal cost is: A. $0.75. B. $1.33. C. $30.00. D. $300.00.

Marginal cost of each unit of output is rising.

If marginal physical product (MPP) is falling, then the: A. Marginal cost of each unit of output is falling. B. Marginal cost of each unit of output is rising. C. Total cost of each unit of output is falling. D. Total cost of each unit of output is rising.

Total costs must be rising

If the marginal cost curve is rising, then which of the following must be true? A. The average total cost curve must be rising B. The average total cost curve must be below the marginal cost curve C. The average total cost curve must be above the marginal cost curve D. Total costs must be rising

Are the value of resources used to produce a good but for which no monetary payment is made.

Implicit costs: A. Include only payments to labor. B. Are the sum of actual monetary payments made for resources used to produce a good. C. Include the value of all resources used to produce a good. D. Are the value of resources used to produce a good but for which no monetary payment is made.

The time period when all costs are variable.

In economics, the long run is considered to be: A. The time period when all costs are variable. B. The time period when all costs are explicit. C. One year. D. More than two years.

Rent, wages and all other costs are variable in the long run

In the long run, which of the following is likely to be a variable cost? A. Factory rental but not wage costs B. Wage costs but not costs for equipment C. Interest payments on borrowed funds but not utilities D. Rent, wages and all other costs are variable in the long run

Can be observed in every production process.

In the short run, the law of diminishing returns: A. Occurs for only a few economies. B. Can be observed in every production process. C. Does not occur in command economies. D. Can be overcome by using more variable inputs.

Fixed costs.

In the short run, when a firm produces zero output, total cost equals: A. Zero. B. Variable costs. C. Fixed costs. D. Marginal costs.

Zero.

In the short run, when a firm produces zero output, variable cost equals: A. Zero. B. Total cost. C. Fixed cost. D. Marginal cost.

Labor and raw materials costs

In the short run, which of the following is most likely a variable cost? A. Contractual lease payments B. Labor and raw materials costs C. Property taxes D. Interest payments on borrowed funds

Long run decision, therefore an investment decision.

Intel's chief executive says the company might expand the technology it is using in its planned $2.5 billion chip-manufacturing factory in China if the U.S. government allows it, underscoring then technology giant's ambitions in the world's fourth-biggest economy. The Intel executive is making a A. Long run decision, therefore an investment decision. B. Long run decision, therefore a production decision. C. Decision that would definitely increase costs. D. Decision that would cause ATC to increase.

An increase in the amount of capital per worker.

Labor productivity will increase in response to: A. Lower wages. B. An increase in the amount of capital per worker. C. Higher resource costs. D. An increase in diminishing returns.

Is the change in total cost from producing one additional unit of output.

Marginal cost: A. Is the change in total output from hiring one more factor of production. B. Is the change in total cost from producing one additional unit of output. C. Falls when there are diminishing returns. D. Is the change in the total cost when hiring one more factor of production.

Rises as a direct result of diminishing returns.

Marginal cost: A. Rises as a direct result of diminishing returns. B. Falls whenever marginal physical product decreases. C. Falls in the short run because some resources are fixed. D. Rises whenever marginal revenue product rises.

Change in total output associated with one additional unit of the variable input.

Marginal physical product is the: A. Change in total input required to produce one additional unit of output. B. Change in total output associated with one additional unit of the variable input. C. Number of units of output obtained from all units of input employed. D. Additional cost of an additional unit of output.

Dad says her cost is $31,000 and Mom says her cost is $47,600.

Megan used to work at the local pizzeria for $15,000 per year but quit in order to start her own deli. To buy the necessary equipment, she withdrew $20,000 from her inheritance, (which paid 8 percent interest). Last year she paid $25,000 for ingredients and $500 per month rent but had revenue of $50,000. She asked her dad the accountant and her mom the economist to calculate her costs for her. A. Dad says her cost is $9,000 and Mom says her cost is $2,400. B. Dad says her cost is $31,000 and Mom says her cost is $35,000. C. Dad says her cost is $25,000 and Mom says her cost is $16,600. D. Dad says her cost is $31,000 and Mom says her cost is $47,600.

The difference between total revenue and total cost.

Profit is: A. The difference between total cost and variable cost. B. The difference between total revenue and total cost. C. Earned at all points along the production function. D. Only possible with technical efficiency.

The law of diminishing returns does not apply at the Quality Lawnmower Co.

Suppose we can describe the production function for the Quality Lawnmower Co. with the equation, TP = 6L (where L = the number of workers). Based on this information, which of the following statements is true? A. The Quality Lawnmower Co. will never experience economies of scale. B. The law of diminishing returns does not apply at the Quality Lawnmower Co. C. Diminishing returns begins after the sixth worker. D. The marginal physical product curve becomes negative at six workers.

Less than 7.

Table 6.1 Units of labor Units of output 0 0 1 15 2 35 3 45 4 52 If a fifth unit of labor was added to Table 6.1, its MPP would most likely be: A. Zero. B. 7. C. Less than 7. D. Greater than 7.

$0.50 per unit

Table 6.1 Units of labor Units of output 0 0 1 15 2 35 3 45 4 52 If workers are paid $10, what is the labor cost per unit of output in Table 6.1 when output is increased from 15 to 35 units of output? A. $0.28 per unit B. $0.50 per unit C. $10 per unit D. $20 per unit

20

Table 6.1 Units of labor Units of output 0 0 1 15 2 35 3 45 4 52 What is the marginal physical product of the second unit of labor in Table 6.1? A. 20 B. 17 C. 35 D. 5

The third

Table 6.1 Units of labor Units of output 0 0 1 15 2 35 3 45 4 52 With which unit of labor do diminishing marginal returns first appear in Table 6.1? A. The first B. The second C. The third D. The fourth

Continues to decline.

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 Above 10 units of output, the average fixed cost in Table 6.2: A. Rises above $2.00. B. Remains constant. C. Stays below $0.50. D. Continues to decline.

$40. (The total fixed cost is $40 at any unit of output because total cost is $40 at 0 units of output.)

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 At 10 units of output in Table 6.2, the total fixed cost is: A. $44. B. $14. C. $40. D. $54.

$1.10 per unit. (AVC is equal to VC 62 - 40 divided by quantity 20 which is $1.10.)

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 At 20 units of output in Table 6.2, the average variable cost is: A. $1.10 per unit. B. $1.75 per unit. C. $2.00 per unit. D. $3.10 per unit.

$40. (To find the total variable cost at 30 units of output you must subtract the fixed cost 40 from the total cost 80 which is $40.)

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 At 30 units of output in Table 6.2, the total variable cost is: A. $30. B. $40. C. $50. D. $80.

$2.00. (Average fixed cost is equal to fixed cost divided by quantity. Fixed cost of 40 because total cost is 40 at 0 units of output divided by 20 is equal to $2.00.)

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 Average fixed cost at 20 units of output in Table 6.2 is: A. $1.00. B. $2.00. C. $2.50. D. $4.00.

20 units per day.

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 For the output levels in Table 6.2, the minimum of the average variable cost curve occurs at a production rate of: A. Zero units per day. B. 10 units per day. C. 20 units per day. D. 30 units per day.

$1.80. (Marginal cost is equal to the change in total cost 80 - 62 divided by the change in quantity 30 - 20 which is $1.80.)

Table 6.2 Output (units per day) 0 10 20 30 Total cost ($ per day) 40 54 62 80 The marginal cost between 20 and 30 units of output in Table 6.2 is: A. $1.60. B. $4.00. C. $1.80. D. $18.00.

30

Table 6.3 Units Units of labor of output MPP 0 0 ---- 1 _____ 30 2 66 _____ 3 _____ 30 4 116 _____ How many units of output can be produced when one unit of labor is employed in Table 6.3? A. 0 B. 30 C. 36 D. 66

96 (Because the marginal physical product of the third worker is 30, the total units of output increased from 66 to 96 with the addition of the third worker)

Table 6.3 Units Units of labor of output MPP 0 0 ---- 1 _____ 30 2 66 _____ 3 _____ 30 4 116 _____ How many units of output can be produced when three units of labor are employed in Table 6.3? A. 30 B. 31 C. 66 D. 96

20 (The marginal physical product is the difference in total output associated with one additional unit of input which is 20.. 116 - 96)

Table 6.3 Units Units of labor of output MPP 0 0 ---- 1 _____ 30 2 66 _____ 3 _____ 30 4 116 _____ What is the marginal physical product of the fourth unit of labor in Table 6.3? A. 116 B. 29 C. 20 D. 5

36 (The marginal physical product is the difference in total output associated with one additional unit of input which is 33 .. 66 - 30)

Table 6.3 Units Units of labor of output MPP 0 0 ---- 1 _____ 30 2 66 _____ 3 _____ 30 4 116 _____ What is the marginal physical product of the second unit of labor in Table 6.3? A. 66 B. 36 C. 33 D. 18

$2.00 per unit of output (The wage rate divided by the marginal physical product is equal to the unit labor cost. When the wage rate is $72 per day and the MPP is 36 additional units per day, the unit labor cost is $2.00... 72/36)

Table 6.3 Units Units of labor of output MPP 0 0 ---- 1 _____ 30 2 66 _____ 3 _____ 30 4 116 _____ What is the unit labor cost in Table 6.3 for the second unit of labor if the MPP represents daily output and the wage rate is $72 per day? A. $0.50 per unit of output B. $2.00 per unit of output C. $36.00 per unit of output D. $72.00 per unit of output

$13. (AVC is equal to VC... 42 - 16 divided by quantity... 2 which is $13.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 At 2 units of output in Table 6.4, the average variable cost is: A. $13. B. $6. C. $12. D. $21.

$5.33. (AFC is equal to FC...16 divided by quantity...3 which is $5.33.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 At 3 units of output in Table 6.4, average fixed costs are: A. $16.00. B. $19.50. C. $5.33. D. $15.50.

$62.00. (VC is equal to TC... 78 minus FC... 16 which is $62.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 At 4 units of output in Table 6.4, the total variable cost is: A. $5.00. B. $20.00. C. $19.50. D. $62.00.

$16.00. (The total fixed cost is $16 at any unit of output because total cost is $16 at 0 units of output)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 At 4 units of output in Table 6.4, total fixed costs are: A. $78.00. B. $19.50. C. $16.00. D. $20.00.

3 units per day. (ATC is equal to TC divided by quantity. The ATC is $30, $21, $19.3 and $19.5 with output levels of 1 through 4 respectively. Therefore, ATC is minimized at 3 units of output.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 For the output levels in Table 6.4, the minimum of the average total cost curve occurs at a production rate of: A. 2 units per day. B. 3 units per day. C. 4 units per day. D. Zero units per day.

2 units per day. (AVC is equal to VC divided by quantity. The AVC is $14, $13, $14 and $15.5 with output levels of 1 through 4 respectively. Therefore, AVC is minimized at 2 units of output.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 For the output levels in Table 6.4, the minimum of the average variable cost curve occurs at a production rate of: A. 3 units per day. B. 2 units per day. C. 4 units per day. D. Zero units per day.

$20.00. (Marginal cost is equal to the change in total cost... 78 - 58 divided by the change in quantity... 4 - 3 which is $20.)

Table 6.4 Output Total cost (units per day) ($ per day) 0 16 1 30 2 42 3 58 4 78 The marginal cost of the fourth unit of output in Table 6.4 is: A. $4.00. B. $20.00. C. $16.00. D. $19.50.

$6.00. (AVC is equal to VC... 12 divided by quantity... 2 which is $6.00.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ The average variable cost of the second unit of output in Table 6.5 is: A. $6.00. B. $4.00. C. $8.00. D. $15.00.

$3. (Marginal cost is equal to the change in total cost...30 - 27 divided by the change in quantity... 3 - 2 which is $3.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ The marginal cost of the third unit of output in Table 6.5 is: A. $4. B. $3. C. $30. D. $15.

$30. (Total cost is equal to fixed cost plus variable cost which is $30.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ The total cost of 3 units of output in Table 6.5 is: A. $30. B. $15. C. $23. D. $38.

$12. (Because the marginal cost of the second unit of output is $4, the variable cost increased from $8 to $12 with the additional unit of output.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ The total variable cost of 2 units of output in Table 6.5 is: A. $15. B. $27. C. $8. D. $12.

$8.00. (VC is equal to TC... 23 minus FC... 15 which is $8.00.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ The total variable cost of the first unit of output in Table 6.5 is: A. $15.00. B. $12.00. C. $8.00. D. $6.00.

$15. (The total fixed cost is $15 at any unit of output because total cost is $15 at 0 units of output.)

Table 6.5 Q TFC TVC TC AVC MC 0 ____ ____ 15 ____ ____ 1 ____ ____ 23 ____ ____ 2 ____ ____ ____ ____ 4 3 ____ 15 ____ ____ ____ Total fixed costs in Table 6.5 are equal to: A. $0 because the problem involves the long run. B. $15. C. $30. D. $60.

At the amount indicated by the production function.

Technical efficiency is achieved when a firm produces: A. At the amount indicated by the production function. B. Below the opportunity cost for the resources it uses. C. Enough output to cover the opportunity cost of resources. D. An amount less than or equal to the production function.

Average total cost curve downward.

Technological changes that increase productivity shift the: A. Production function downward. B. Average total cost curve downward. C. Marginal cost curve upward. D. Marginal physical product curve downward.

Declines as long as output increases.

The average fixed cost (AFC) curve: A. Is U-shaped as a result of diminishing returns. B. Declines as long as output increases. C. Is intersected at its minimum point by marginal cost. D. Intersects the marginal cost curve at its minimum point.

Marginal costs are less than average total costs.

The average total cost (ATC) curve will be negatively sloped so long as: A. Average variable costs are less than average total costs. B. Marginal costs are greater than average total costs. C. Average fixed costs are less than average total costs. D. Marginal costs are less than average total costs.

Decline in AFC becomes smaller than the increase in AVC.

The average total cost (ATC) curve will become positively sloped when the: A. Decline in AFC becomes smaller than the increase in AVC. B. Decline in AFC becomes larger than the increase in AVC. C. AVC curve becomes positively sloped. D. AVC curve intersects the AFC curve.

The effect of diminishing returns.

The average variable cost curve slopes upward with a higher rate of output in the short run because of: A. The effect of diminishing returns. B. The shape of the average fixed cost curve. C. Diseconomies of scale. D. Implicit but not explicit costs.

Marginal physical product.

The change in total output associated with one additional unit of input is the: A. Opportunity cost of the output. B. Average productivity. C. Marginal physical product. D. Marginal cost.

Lowest average total cost for producing each level of output.

The long-run average total cost curve is constructed from the: A. Minimum points of the short-run marginal cost curves. B. Minimum points of the short-run average variable cost curves. C. Lowest average total cost for producing each level of output. D. Minimum points of the long-run marginal cost curves.

ATC. (average total cost)

The marginal cost curve intersects the minimum of the curve representing: A. TC. B. ATC. C. AFC. D. MPP.

Maximizes total profit.

The most desirable rate of output for a firm is the output that: A. Minimizes total costs. B. Maximizes total profit. C. Minimizes marginal costs. D. Maximizes total revenue.

Opportunity cost.

The most desired goods and services that are given up in order to get more of another good is the: A. Average total cost. B. Variable cost. C. Marginal cost. D. Opportunity cost.

Short run.

The period in which at least one input is fixed in quantity is the: A. Long run. B. Production run. C. Short run. D. Investment decision.

Long run.

The period in which there are no fixed costs is the: A. Production run. B. Long run. C. Short run. D. Implicit run.

Law of diminishing returns.

The shape of the marginal cost curve reflects the: A. Law of diminishing returns. B. Competitiveness of the firm. C. Law of diminishing marginal utility. D. Law of demand.

The quantity of labor changes.

The short-run production function shows how output changes when: A. The quantity of labor changes. B. The quantity of land changes. C. Technology changes. D. The fixed inputs change.

Total cost.

The sum of fixed cost and variable cost at any rate of output is: A. Total variable cost. B. Total cost. C. Average total cost. D. Average marginal cost.

Using the fewest resources to produce a good or service.

When a firm produces at a technically efficient output level, it is: A. Producing the output at the minimum MC curve. B. Using the fewest resources to produce a good or service. C. Producing the output where the AVC curve is at a minimum. D. Producing the best combination of goods and services.

Above the average total cost curve.

When the average total cost curve is rising, then the marginal cost curve will be: A. Below the average fixed cost curve. B. Falling with greater output. C. Above the average total cost curve. D. Below the average total cost curve.

Economies of scale must exist.

When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles: A. The law of diminishing returns must not apply in the smaller factory. B. Economies of scale must exist. C. The short-run ATC curve must be declining. D. Marginal costs must be declining.

$0.67 per unit. (The wage rate divided by the marginal physical product is equal to the unit labor cost. When the wage rate is $10 per hour and the MPP is 15 units per hour, the unit labor cost is $0.67... 10/15)

When the wage rate is $10 per hour and the MPP of a worker is 15 units per hour, the unit labor cost is: A. $0.67 per unit. B. $10.00 per hour. C. $15.00 per unit. D. $150.00 per hour.

Land, labor, capital, and entrepreneurship

Which of the following are factors of production? A. Output in a production function B. Productivity C. Land, labor, capital, and entrepreneurship D. Implicit and explicit costs

The eventual dominance of the rising MC curve

Which of the following contributes to the typical U-shape of the average total cost (ATC) curve? A. The initial dominance of diminishing returns B. The eventual dominance of the rising MC curve C. The steady impact of a rising AFC curve D. The continual decline of diseconomies of scale

Fixed costs

Which of the following costs do NOT change when output changes in the short run? A. Average variable costs B. Variable costs C. Average fixed costs D. Fixed costs

Flour

Which of the following is a factor of production for the Little Biscuit Bread Company? A. Flour B. Bread C. Productivity D. Money

Diseconomies of scale

Which of the following is a long-run concept? A. Diminishing marginal productivity B. Diminishing returns C. Diseconomies of scale D. Fixed costs

The average total cost curve when it is above the marginal cost curve

Which of the following is always downward sloping? A. The marginal cost curve when it is below the average total cost curve B. The marginal cost curve when it is above the average total cost curve C. The average total cost curve when it is below the marginal cost curve D. The average total cost curve when it is above the marginal cost curve

Property taxes

Which of the following is most likely a fixed cost? A. Raw materials cost B. Labor cost C. Energy cost D. Property taxes

The rent for a factory

Which of the following is most likely a fixed cost? A. The material used to make jackets B. The labor on an automotive assembly line C. The rent for a factory D. The electricity used to run packaging equipment

In the long run, firms can increase the availability of space and equipment to keep up with the increase in variable inputs.

Which of the following is the best explanation of why the law of diminishing returns does NOT apply in the long run? A. In the long run, firms can increase the availability of space and equipment to keep up with the increase in variable inputs. B. The MPP does not change in the long run. C. In the long run, firms have enough time to find the most qualified workers. D. All factors of production are fixed in the long run.

Marginal physical product of the input

Which of the following is the slope of the production function with respect to an input? A. Marginal physical product of the input B. Average product of the input C. Unit cost of the input D. Input price

Accounting costs are always less than or equal to economic costs.

Which of the following statements about the relationship between economic costs and accounting costs is true? A. Accounting costs are always less than or equal to economic costs. B. Accounting costs must always equal economic costs. C. Accounting costs are always greater than economic costs. D. Accounting costs are equal to or greater than economic costs.

A production function tells us the maximum amount of output attainable from the use of all resources.

Which of the following statements is NOT true regarding the production function and the production possibilities curve? A. Both the production function and the production possibilities curve maximize the amount of output attainable. B. The production function describes the capacity of a single firm where as the production function summarizes the output capacity of the entire economy. C. A production function tells us the maximum amount of output attainable from the use of all resources. D. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources.

Increased training for the firm's workers

Which of the following would cause a firm's production function to shift upward? A. An increase in production by the firm B. Hiring more workers C. Increased training for the firm's workers D. An increase in factor costs