Econ Chapter 9

In the diagram, total product will be at a maximum at: Multiple Choice a. Q3 units of labor. b. Q2 units of labor. c. Q1 units of labor. d. some point that cannot be determined with the above information.

a

Refer to the diagram. At output level Q: Multiple Choice marginal product is falling. marginal product is rising. marginal product is negative. one cannot determine whether marginal product is falling or rising.

a

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Refer to the data. The marginal product of the sixth worker is: Multiple Choice 180 units of output. 30 units of output. 15 units of output. negative.

c

If in the short run a firm's total product is increasing, then its: Multiple Choice a. marginal product must also be increasing. b. marginal product must be decreasing. c. marginal product could be either increasing or decreasing. d. average product must also be increasing.

c

Marginal cost: Multiple Choice equals both average variable cost and average total cost at their respective minimums. is the difference between total cost and total variable cost. rises for a time, but then begins to decline when diminishing returns set in. declines continuously as output increases.

A.

Production costs to an economist: Multiple Choice A. consist only of explicit costs. B. reflect opportunity costs. C. never reflect monetary outlays. D. always reflect monetary outlays.

B

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's explicit costs are: Multiple Choice $286,000. $150,000. $94,000. $156,000.

B

Which of the following constitutes an implicit cost to the Johnston Manufacturing Company? A. Payments of wages to its office workers. B. Rent paid for the use of equipment owned by the Schultz Machinery Company. C. Use of savings to pay operating expenses instead of generating interest income. D. Economic profits resulting from current production.

C.

Answer the question on the basis of the following cost data: Refer to the data. The marginal cost of producing the sixth unit of output is: Multiple Choice $24. $12. $16. $8

D

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Refer to the data. Average product is at a maximum when: Multiple Choice five workers are hired. four workers are hired. three workers are hired. two workers are hired.

D

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's economic profit is: Multiple Choice $150,000. $80,000. $230,000. $94,000.

D

Answer the question on the basis of the following cost data: Refer to the data. The total variable cost of producing 5 units is: Multiple Choice $61. $48. $37. $24.

37

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are: Multiple Choice $5,000. $500. $0.50. $50.

A

In the short run: Multiple Choice TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate. TVC will increase for a time at an increasing rate, but then beyond some point will increase at a diminishing rate. TVC will increase by the same absolute amount for each additional unit of output produced. one cannot generalize concerning the behavior of TVC as output increases.

A

Marginal product is: Multiple Choice A. the increase in total output attributable to the employment of one more worker. B. the increase in total revenue attributable to the employment of one more worker. C. the increase in total cost attributable to the employment of one more worker. D. total product divided by the number of workers employed.

A

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's implicit costs, including a normal profit, are: Multiple Choice $136,000. $150,000. $94,000. $156,000.

A

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's total economic costs are: Multiple Choice $286,000. Correct $150,000. $94,000. $156,000.

A

The law of diminishing returns indicates that: Multiple Choice A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. B. because of economies and diseconomies of scale, a competitive firm's long-run average total cost curve will be U-shaped. C. the demand for goods produced by purely competitive industries is downsloping. D. beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.

A

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. If, other things equal, Creamy Crisp's revenue fell to $286,000: Multiple Choice its implicit costs, including a normal profit, would exceed its explicit costs. it would earn a normal profit but not an economic profit. Correct it would suffer an economic loss. its accounting profit would fall to zero.

B

Which of the following represents a long-run adjustment? Multiple Choice A. A farmer uses an extra dose of fertilizer on his corn crop. B. Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants. C. A steel manufacturer cuts back on its purchases of coke and iron ore. D. A supermarket hires four additional clerks.

B

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Refer to the data. Diminishing marginal returns become evident with the addition of the: Multiple Choice a. sixth worker. b. fourth worker. c. third worker. d. second worker.

C

If a firm decides to produce no output in the short run, its costs will be: Multiple Choice its marginal costs. its variable costs. its fixed costs. zero.

C

Other things equal, if the prices of a firm's variable inputs were to fall: Multiple Choice one could not predict how unit costs of production would be affected. marginal cost, average variable cost, and average fixed cost would all fall. marginal cost, average variable cost, and average total cost would all fall. average variable cost would fall, but marginal cost would be unchanged.

C

Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. Marginal cost will be at a minimum for this firm when it is hiring: Multiple Choice Q3 workers. Q2 workers. Q1 workers. more than Q3 workers.

C

Which of the following is correct? Multiple Choice a. When total product is rising, both average product and marginal product must also be rising. b. When marginal product is falling, total product must be falling. c. When marginal product is falling, average product must also be falling. d. Marginal product rises faster than average product and also falls faster than average product.

D

Which of the following statements is correct? Multiple Choice Average total cost is the difference between average variable cost and average fixed cost. Marginal cost measures the cost per unit of output associated with any level of production. When marginal product rises, marginal cost must also rise. Marginal cost is the price or cost of an extra variable input (for example, an additional worker or machine) divided by its marginal product.

D