Econ test 2 Chapter 9

economies of scale

"3-D printers" can reduce the cost of producing stuff because they: Exploit huge ____ ___ ___ in production

average cost

A firm encountering economies of scale over some range of output will have a: Falling long-run _____ ____ curve

payments employed

Implicit costs are: _____ for self- _____ resources

true

"3-D printers" are capable of producing real output like chairs or machine parts using a computer-controlled special printer at low cost even if you produce only one unit of output. true or false

Explicit costs

Cash expenditures a firm makes to pay for resources are called:

False

Diseconomies of scale are caused by the law of diminishing marginal returns. True or false.

large business

Diseconomies of scale occur mainly because: Of the inherent difficulties involved in managing and coordinating a _____ _____

Total opportunity cost

Economic profits are equal to: _____ revenues minus the ________ ________

accounting implicit

Economic profits are: Equal to the difference between _____ profits and ____ costs

Increase more labor

Marginal product of labor refers to the: ___ in output resulting from employing one ___ unit of _____

Marginal increasing

Over the range of output where the slope of the short-run total cost curve becomes steeper: ______ cost is increasing or decreasing.

4000 to 4500

Plant sizes get larger as you move from ATC-1 to ATC-4. Refer to the above table. In the long run the firm should use plant size ATC-3 for what level of output?

A marginal costs B

The following table shows the relationship between output and costs for two firms in the short run. Which of the following is correct about firm A's marginal costs? ____ has a greater ____ _____ than ___ at each level of output

Total cost faster

The law of diminishing returns explains why: _____ _____ eventually rises faster and ______

less hour

The law of diminishing returns implies:Eventually, the more hours you spend studying per day, the ____ you will learn with each added ______

$10

The marginal product of labor is constant

False

When a firm increases its output, its average fixed costs will stay constant. True or false

average variable cost lowest

correct statement about the marginal cost curve: it cuts the ______ ____ ____ curve at its _____ point

marginal product marginal product of the preceding unit of resource

illustrate the law of diminishing returns: the _________ of a resource used is less than the ____________

Graph A

"The bigger the volume, the lower the cost, and we pass these savings on to you" is a familiar slogan. Its idea is illustrated in which of the above graphs?

Total decrease

A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average: ____ cost will increase or decrease

Diseconomies of scale

A given level of consumer demand will support a large number of producers in an industry if: ___________________ are already encountered even at low levels of output

additional diminish

According to the law of diminishing marginal returns: the _____ output generated by additional units of an input will ______

37

Assume that the only variable resource used to produce output is labor. Refer to the above table. With diminishing marginal returns, if the firm hires seven units of labor, which of the following numbers would most probably be the total product?

average fixed

At any level of output: Average total cost will exceed average variable cost by the level of ____ ____ cost

marginal product

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that: the _____ ____ of labor is constant

Marginal decrease

At the point where diminishing marginal returns of an input sets in, the: ____ product starts to ____

average product maximum

At what point does marginal product equal average product? Where ____ ___ is equal to its _____ value

Economic zero

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

downward MC

If a more efficient technology was discovered by a firm, there would be: a ______ shift in the ____ curve

Diseconomies of scale

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:

Average total increasing

If marginal cost exceeds average total cost in the short run, then which is likely to be true? _____ ____ cost is increasing or decreasing

true

If the average product of labor equals 4 at all levels of output, the marginal product of labor is also equal to 4 at all levels of output. True or false

constant returns

If the long-run average total cost curve for a firm is horizontal in the relevant range of production, then it indicates that there: are _____ _____ to scale

10 percent

If there are ten plants producing the total domestic consumption of the product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?

$200

If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be:

930

If you know that when a firm produces 10 units of output, total costs are $1,030 and average fixed costs are $10, then total variable costs are:

1500 to 3500

Plant sizes get larger as you move from ATC-1 to ATC-4. Refer to the above table. Over what range of output are economies of scale experienced by this firm?

Point B

Refer to the above graph. At which point is average product (AP) at its maximum?

Total variable

Refer to the above graph. If the firm is producing at Q1, the area 0BEQ1 represents: ______ _____ costs

Point c

Refer to the above graph. It shows the total product (TP) curve. At which point is the marginal product zero?

Graph A

Refer to the above graphs. They show the long-run average total cost (LRATC) for a product. Which graph would most probably be applicable to a natural monopoly?

$4.57

Refer to the above table. The average variable cost of producing 35 units of output is:

$25

Refer to the above table. The marginal cost of producing the sixth unit of output is:

Marginal product decreasing

The firm's short-run marginal-cost curve is increasing when: ____ ___ is increasing or decreasing

$500

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:

$60

The following cost data are for a firm in the short run: What is the firm's average variable cost at an output of 5 units?

3 and 4

The following data show the relationship between total costs and output in the short run. The firm's marginal costs are equal to average total cost somewhere between units:

58

The question is based on the following table that provides information on the production of a product that requires one variable input. Refer to the above table. Marginal product is zero when the total product is:

Marginal cost

The table shows the relationship between total cost and output for a firm. The firm has a U-shaped: ____ ____ curve

30 output diseconomies of scale

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Refer to the above table. Suppose that the three plant sizes shown are the only ones possible, then there are economies of scale in producing: up to ____ units of ___ and ____ of ____ after that.

$7

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Refer to the above table. What is the long-run average cost of producing 30 units of output?

variable inputs

What is a correct statement about diminishing marginal returns: that in order to increase output at a constant rate, the firm must add larger and larger quantities of the _____ ______

average total costs

When a firm is experiencing diseconomies of scale: ____ ____ ____ will decline if it reduces its scale of operations

True

When average costs are increasing, marginal costs are greater than average costs. True or false

average labor maximum

When average variable cost is at a minimum: The _____ product of ___ is at a ______

Marginal product negative

When the total product curve is falling, the: _____ _____ of labor is positive or negative

production

Which is most likely to be a long-run adjustment for a firm that manufactures cars on an assembly line basis? A change in _____ to a redesigned and retooled facility

wages owner

Which would be an implicit cost for a firm? The cost: of ______ foregone by the ____ of the firm.

Specialization

Which would contribute most to a firm experiencing "economies of scale"? ____________ of production within a firm