Chapter 7: Behind Supply

n the short run, an increase in wages (the price of the variable input) will cause average cost to ______________ and marginal cost to ______________. A Increase; decrease B Not change; not change C Increase; increase D Decrease; decrease E Decrease; increase

C

If the average product of labor is 12 units of output per worker per day when eight workers are hired, eight workers will be able to produce ______________ units per day. A 12 B 8 C 10 D 96

D

Match the input to its correct category. Drag and drop to match Is it capital, land, or labor? 1 Laptop computer 2 Salmon 3 Janitor 4 Accountant 5 Corner Lot 6 Office building

1 capital 2 land 3 labor 4 labor 5 land 6 capital

Match the input to its correct category ______. Drag and drop to match. Land, Labor, or Capital? 1 Cow 2 Robotic drill press 3 Computer software 4 Lawyer 5 Fresh water 6 Tractor trailer

1 land 2 capital 3 capital 4 labor 5 land 6 capital

An increase in technology will cause the total product function to ______________ and average costs to ______________. A Increase; decrease B Not change; decrease C Not change; not change D Increase; not change E Increase; increase

A

At 1,000 units of output, the fixed cost of production is $12,500 per week. Total cost of producing 1,000 units per week is $28,500 per week. The variable cost of producing 1,000 units of output per week is equal to _____. A $16,000 B $41,000 C $16 D $41,000,000

A

Using the information from the table above, if the monthly wage of an office chair factory worker is $2,160, what is the marginal cost of increasing output from 190 office chairs per month to 235 office chairs per month? A $48.00 B $37.73 C $2,160 D $8,640.00

A

At 600 units of output, total fixed cost is equal to $1,000 and total variable cost is equal to $12,000. Total cost is equal to _______. A $6,000 B $13,000 C $20 D $21.67

B

Consider this example: The total cost of producing 1,000 units of output is equal to $55,000 per week. The total cost of producing 1,010 units is equal to $55,500 per week. The marginal cost of increasing output from 1,000 units per week to 1,010 units per week is: A $500 B $50 C $10 D $5

B

Currently, Frank has 10 employees. The marginal product of the 10^{th} th worker is 25 units per week. The average product of the 10 workers is 20 units per week. If Frank hires one more worker, the marginal product of the 11^{th} th worker will be 24 units per week. The average product of labor will ______________. A Stay the same B Rise C Fall D Equal the marginal product of labor

B

Diminishing marginal returns means that marginal product will eventually ______________ and the total product function will ______________ as production increases. A Increase; not change B Decrease; not change C Increase; decrease D Decrease; decrease E Not change; not change

B

In a model with only labor and capital as inputs, in the short run the amount of ______________ is fixed, while in the long run the amount of ______________ is variable. A Capital, capital B Either labor or capital, both labor and capital C Both labor and capital, either labor or capital D Labor, labor

B

Marcus has four employees. The four employees produce 55 floral arrangements in a day. Marcus hires a fifth employee. The five employees produce 60 floral arrangements in a day. The fifth employee's marginal product is __________. A 60 floral arrangements in a day B 5 floral arrangements in a day C 11 ¾ floral arrangements in a day D 12 floral arrangements in a day

B

What are two of the reasons that average cost tends to have a "bowl" shape? A Fixed costs tend to dominate high levels of output and variable costs tend to dominate low levels of output B Fixed costs tend to dominate low levels of output and variable costs tend to dominate high levels of output C Fixed costs and variable costs tend to dominate low levels of output D Fixed costs and variable costs tend to dominate high levels of output

B

What does diminishing marginal productivity mean? A As you increase the amount of a variable input, its average product eventually gets smaller. B As you increase the amount of a variable input, its marginal product eventually gets smaller. C As you increase the amount of a fixed input, its marginal product eventually gets smaller. D As you increase the amount of a variable input, total output eventually declines.

B

A production function can best be described as which of the following? A A graphical depiction of what can and cannot be produced with a given amount of inputs B The quantity of inputs required to produce each unit of output in a given amount of time C The relationship between the quantity of inputs and quantity of outputs produced in a given amount of time D The quantity of outputs created by a given quantity of inputs in a given amount of time

C

Alicia is currently spending $6,000 per week on total variable costs to produce 500 hats. To produce 505 hats per week she would have to spend $6,100 per week. The marginal cost per hat is ______. A $6,100 B $100 C $20 D $5

C

Currently, the marginal product of labor is 45 units per week. The average product of labor at the current level of output is 32 units per week. If the employer hires one more worker, the marginal product of labor will be 47 units per week. The average product of labor will ______________. A Equal the marginal product of labor B Fall C Rise D Stay the same

C

If at 500 units of output, total fixed cost is equal to $10,000 and total variable cost is equal to $15,000. Total cost is equal to _____. A $50 B $15,000 C $25,000 D $1,250,000

C

The law of diminishing marginal returns is the cause of ______________ marginal product and ______________ marginal cost. A Increasing; increasing B Increasing; decreasing C Decreasing; decreasing D Decreasing; increasing

D

The slope of a firm's production function will ______ as the amount of a variable input used increases if the input experiences diminishing marginal productivity. A Not change B Be indeterminate depending on the amount of the variable input used C Increase D Decrease

D

Using the information in the question above, if Samantha's average cost to bind books is $2.50 before hiring the additional book binder, her average cost to bind books will ______________ if she hires the additional worker. A Depend on her level of output B Stay the same C Decrease D Increase

D

In the short run, an increase in the price of one of the fixed inputs will cause average cost to ______________ and marginal cost to ______________. A Increase; decrease B Not change; not change C Increase; increase D Decrease; decrease E Increase; not change

E

If the average product of labor is seven units of output per worker per day, the total output of 15 workers will be ______________ units per day. A 105 B 7 C 2 1/7 D 70

A

If the quantity of an input is variable in the short run, its total cost will ______________ as output increases. A Increase B Decrease C Stay the same D Rise then fall

A

Currently, the marginal product of labor is 32 units per week. The average product of labor at the current level of output is 48 units per week. If the employer hires one more worker, the marginal product of labor will be 30 units per week. The average product of labor will ______________. A Equal the marginal product of labor B Fall C Rise DStay the same

B

If labor is the only variable input a firm owner uses and the wage rate is $200 per week, what is the firm owner's variable cost per week if she hires 12 workers? A $200 B $1,200 C $2,400 D It depends on the level of output.

C

If the quantity of an input is fixed in the short run, its total cost will ______________ as output increases. A Increase B Decrease C Stay the same D Rise then fall

C

Marginal cost is the slope of _______. A The average cost curve B The average product curve C The total cost curve D The marginal product curve

C

Samantha is evaluating whether to increase production at her book bindery. If she hires one more worker, she can increase output by 50 books per week. A book binder's weekly wage is $250. Samantha's marginal cost of increasing output by 50 books per week is ________. A $0.20 B $0.50 C $5.00 D $2.00

C

Santa Claus's only variable input is labor. The wage he must pay is 200 candy canes per week. What is Santa's total weekly variable cost if he hires 200 elves? A 200 candy canes B 400 candy canes C 40,000 candy canes D It depends on the level of output.

C

The fixed cost of producing wedding cakes is $10,000 per month. The variable cost for producing 10 wedding cakes per month is $12,000. The average cost of producing 10 wedding cakes per month is ____. A $1,000 B $1,200 C $2,200 D $22,000

C

The production of 12,000 candy bars per day requires 60 workers. The average product of each worker is ______________ candy bars per day. A 12,000 B 600 C 200 D 20

C

At 1,000 units of output the fixed cost of production is $12,500 per week. Total cost of producing 1,000 units per week is $28,500 per week. If labor is the only variable input and the weekly wage is $1,600, how much labor is being used produce 1,000 units of output? A 5.0 B 17.8 C 16.0 D 10.0

D

Diminishing marginal returns means that marginal product will eventually ______ and marginal cost will eventually _______. A Increase; not change B Decrease; not change C Increase; decrease D Decrease; increase

D

If average product is increasing as the variable input increases, which of the following is true? A Average cost must be increasing B Marginal cost must be increasing C Marginal cost must be decreasing D Average cost must be decreasing

D

Juan wants to increase production at his confection shop. If he hires one more worker, he can increase output by 100 candies per week. A confection worker's weekly wage is $200. Juan's marginal cost of increasing output by 100 candies per week is ______. A $0.50 B $1.00 C $1.50 D $2.00

D