Microeconomics Chapter 11

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. At seven units of output, average fixed cost is approximately ________, and average variable cost is approximately ________. A. $40; $100 B. $10; $135 C. $100; $100 D. $140; $140

A. $40; $100

A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year with three workers. The marginal product of the third worker is: A. 300 bushels. B. 1,300 bushels. C. 2,300 bushels. D. 100 bushels.

A. 300 bushels

Figure: Short-Run Costs Reference: Ref 11-14 (Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is: A. average fixed cost. B. average variable cost. C. fixed cost. D. marginal cost.

A. average fixed cost

(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has ________ in the output region from B to C. A. diseconomies of scale B. economies of scale C. falling marginal cost D. constant returns to scale

A. diseconomies of scale

Krista operates a dry-cleaning business in Tampa that incurs $900 per month in fixed costs. Last month her total output equaled 3,000 pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost ________ by a little more than ________. A. increased; 3.33 cents B. fell; 3.33 cents C. fell; 2.50 cents D. increased; 2.50 cents

A. increased; 3.33 cents

In economics, the short run is defined as: A. period in which some inputs are considered to be fixed in quantity. B. less than 6 months. C. less than 1 year. D. period in which some inputs are fixed, but it cannot exceed 1 year.

A. period in which some inputs are considered to be fixed in quantity

The marginal product of labor is: A. the slope of the total product of labor curve. B. the change in labor divided by the change in total product. C. the change in output that occurs when capital increases by one unit. D. the change in average product divided by the change in the quantity of labor.

A. the slope of the total product of labor curve

The production function provides information about: A. the transformation of inputs into output. B. a firm's profit level. C. the location of the firm's production. D. a firm's market structure.

A. the transformation of inputs into output

If an eyeglass business produces 10 pairs of eyeglasses and incurs $35 in average total cost and $5 in average fixed cost, then average variable cost is: A. $35. B. $30. C. $300. D. $50.

B. $30

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. C is the ________ cost curve. A. total B. average variable C. average total D. marginal

B. average variable

(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. In the figure, the total cost of producing three pairs of boots is approximately: A. $72. B. $24. C. $216. D. $75.

C. $216

Figure: The Marginal Product of Labor Reference: Ref 11-2 (Figure: The Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is: A. 39 bushels. B. 15 bushels. C. 51 bushels. D. 45 bushels.

C. 51 bushels

(Figure:Long-Run and Short-Run Average Cost Curves ) Look at the figure Long-Run and Short-Run Average Cost Curves. If a firm is producing at point C on the ATC2 but anticipates increasing output to 225,000 units in the long run, the firm will build a ________ plant and have ________. A. smaller; diseconomies of scale B. bigger; economies of scale C. bigger; diseconomies of scale D. smaller; economies of scale

C. bigger; diseconomies of scale

(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has ________ in the output region from A to B. A. diseconomies of scale B. economies of scale C. constant returns to scale D. constant total cost as output increases

C. constant returns to scale

Average variable cost is the ratio of: A. total cost to the marginal cost. B. total cost to the amount of variable input. C. variable cost to the quantity of output. D. marginal cost to the quantity of output.

C. variable cost to the quantity of output

(Table: Costs for Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes. Assume that her fixed costs are $10. What is the average total cost of 5 cakes? A. $60 B. $110 C. $2 D. $12

D. $12

Darren runs a barbershop with average fixed costs equal to $60 per day and a total output of 50 haircuts per day. What is his weekly total fixed cost if he is open six days per week? A. $3,000 B. $60 C. The answer cannot be determined with the information available. D. $18,000

D. $18,000

Reference: Ref 11-16 (Table: Cost Data) Look at the table Cost Data. When the purse factory produces five units of output (purses), which of the following is true about the firm's cost curves? A. Average total cost is greater than average variable cost, and average variable cost is falling. B. Marginal cost is below average variable cost, and average variable cost is falling. C. Marginal cost is above average variable cost and below average total cost, and average total cost is rising. D. Marginal cost is greater than average total cost, and average total cost is rising.

D. Marginal cost is greater than average total cost, and average total cost is rising.

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the ________ cost curve. A. average variable B. total C. marginal D. average total

D. average total

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the ________ cost curve. A. average variable B. average total C. total D. marginal

D. marginal