ECO 202

Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured by: A. 0B B. AC C. CD D. DE

AC

The range over which average variable cost is increasing is the same as the range over which: A. Marginal cost is decreasing B. Average fixed cost is increasing C. Average product is increasing D. Average product is decreasing

Average product is decreasing

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the: A. Total product of labor B. Average product of labor C. Marginal product of labor D. Total product of capital

Average product of labor

Refer to the above graph showing the marginal product (MPL) and the average product of labor (APL). At which quantity of labor employed does diminishing marginal returns set in? A. A B. B C. C D. D

B

If a firm's revenues just cover all its opportunity costs, then: A. Normal profit is zero B. Economic profit is zero C. Total revenues equal its explicit costs D. Total revenues equal its implicit costs

Economic profit is zero

Refer to the above table. The total variable cost of producing 5 units is: A. $10 B. $14.60 C. $63 D. $73

63

If the minimum efficient scale (MES) in an industry is 20 percent of the total consumption of a product, how many MES plants could be supported profitably in that industry? A. 5 B. 10 C. 20 D. 100

5

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: A. $350 B. $400 C. $500 D. $700

$500

Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.Refer to the above information. The economic profits of Harvey's firm in the first year were: A. $155,000 B. $160,000 C. $220,000 D. $280,000

$160,000

What is the firm's average variable cost at an output of 5 units? A. $30 B. $60 C. $120 D. $140

60

If a more efficient technology was discovered by a firm, there would be: A. An upward shift in the AVC curve B. An upward shift in the AFC curve C. A downward shift in the AFC curve D. A downward shift in the MC curve

A downward shift in the MC curve

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of: A. Diseconomies of scale B. Diminishing marginal utility C. Diminishing marginal returns D. Increasing opportunity cost

Diminishing marginal returns

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: A. Economies of scale B. Diseconomies of scale C. Constant returns to scale D. Decreasing average total costs

Diseconomies of scale

If long-run average total cost decreases as output increases, this is due to: A. Declining average fixed costs B. The law of diminishing returns C. Economies of scale D. Externalities

Economies of scale

Marginal product of labor refers to the: A. Last unit of output produced by labor at the end of each period B. Increase in output resulting from employing one more unit of labor C. Total output divided by the number of labor employed D. Smallest unit of the output produced by labor

Increase in output resulting from employing one more unit of labor

Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units of output, then: A. AVC > MC B. AFC = AVC C. MC > AVC D. AVC = MC

MC > AVC

If the short-run average variable cost of production for a firm is decreasing, then it follows that: A. Average variable cost must be above average fixed cost B. Marginal cost must be below average variable cost C. Average fixed cost must be constant D. Marginal cost must be decreasing

Marginal cost must be below average variable cost

The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one: A. More worker will increase the average amount of output per worker B. More worker will decrease the average amount of output per worker C. Less worker will decrease the average amount of output per worker D. Less worker will not affect the average amount of output per worker

More worker will decrease the average amount of output per worker

If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm? A. None, because fixed costs do not affect marginal cost B. Marginal cost would increase by 50 percent C. Marginal cost would increase by less than 50 percent D. Marginal cost would increase by more than 50 percent

None, because fixed costs do not affect marginal cost

Diseconomies of scale occur mainly because: A. Of the law of diminishing returns B. Firms in an industry must be relatively large in order to use the most efficient production techniques C. Of the inherent difficulties involved in managing and coordinating a large business enterprise D. The short-run average total cost curve rises when marginal product is greater than average total cost

Of the inherent difficulties involved in managing and coordinating a large business enterprise

Over the range of positive, but diminishing, marginal returns for an input, the total product curve: A. Falls B. Rises at a constant rate C. Rises at a decreasing rate D. Rises at an increasing rate

Rises at an increasing rate

28. Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which of the following statements is definitely true? A. The firm will earn positive accounting and economic profits B. The firm will face accounting and economic losses C. The firm will face an accounting loss, but earn positive economic profits D. The firm may earn positive accounting profits, but will face economic losses

The firm may earn positive accounting profits, but will face economic losses

The mass affordability of the iPhone is the results of the following, except: A. Mass production and spreading of fixed costs B. The law of diminishing returns in manufacturing C. Economies of scale and large volumes D. Mass sales and distribution cost-savings

The law of diminishing returns in manufacturing

When marginal cost is increasing: A. Total cost must be increasing B. Average total cost must be increasing C. Average total cost must be decreasing D. Average fixed cost might be increasing or decreasing

Total cost must be increasing

At what point does marginal product equal average product? A. Where average product is equal to its minimum value B. Where average product is equal to its maximum value C. Where marginal product is equal to its minimum value D. Where marginal product is equal to its maximum value

Where average product is equal to its maximum value