MICRO CH 11 PRACTICE PROBLEMS

(Table: Output and Costs) Using the information in the table, when quantity equals four, total variable cost equals: A) 48. B) 38. C) 58. D) 28.

A

A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of: A) economies of scale. B) diseconomies of scale. C) labor-intensive production. D) capital-intensive production.

A

The long run is a planning period: A) over which a firm can consider all inputs as variable. B) that is at least 5 years in length. C) that must be over 6 months in length. D) that must be between 6 months and 5 years.

A

(Figure: Long-Run Average Cost) Output per period in the region B to C indicates that a firm is experiencing: A) constant returns to scale. B) diseconomies of scale. C) economies of scale. D) falling marginal cost.

B

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the figure, the total product of labor for three workers is: A) 51 bushels. B) 45 bushels. C) 39 bushels. D) 15 bushels.

B

(Table: Costs of Producing Bagels) Marginal cost reaches its minimum value for the ________ bagel. A) first B) third C) fourth D) fifth

B

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) 100 bushels. B) 300 bushels. C) 1,300 bushels. D) 2,300 bushels.

B

An input whose quantity cannot be changed during a particular period is a(n): A) marginal input. B) fixed input. C) incremental input. D) variable input.

B

Buffalo Aircraft doubles the amount of all the inputs it uses—the factory doubles in size and twice as many workers are hired. After this expansion, the number of aircraft produced triples. This means that Buffalo Aircraft is experiencing: A) increasing marginal cost. B) economies of scale. C) increasing average total cost. D) decreasing average variable cost.

B

Diminishing returns to an input set in: A) when all inputs are fixed. B) when some inputs are fixed and some are variable. C) when all inputs are variable. D) only in the long run.

B

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

B

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

C

(Table: Costs of Producing Bagels) Average total cost reaches its minimum value for the ________ bagel. A) first B) third C) fourth D) fifth

C

(Table: Costs of Producing Bagels) The marginal cost of producing the sixth bagel is: A) $0.10. B) $0.15. C) $0.20. D) $0.80.

C

(Table: Output and Costs) Using the information in the table, when quantity increases from one to two, marginal cost equals: A) 13. B) 10. C) 8. D) 17.

C

(Table: Total Product and Marginal Product) The marginal product of the second worker is: A) 10. B) 15. C) 20. D) 30.

C

A total product curve indicates the relationship between: A) a variable input and price. B) a variable input and variable cost. C) a variable input and output. D) output and price.

C

In the long run, all costs are: A) fixed. B) constant. C) variable. D) marginal.

C

The ________ is the increase in output obtained by hiring an additional worker. A) average product B) total product C) marginal product D) marginal cost

C

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

C

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

D

(Table: Costs of Producing Bagels) The total cost of producing six bagels is: A) $0.10. B) $0.20. C) $0.80. D) $0.90.

D

(Table: Output and Costs) Using the information in the table, when quantity equals three, average total cost equals: A) 13. B) 10. C) 8. D) 17.

D

(Table: Total Product and Marginal Product) Negative marginal returns begin when the ________ worker is added. A) fifth B) sixth C) seventh D) eighth

D

The term diminishing returns refers to: A) a falling interest rate that can be expected as one's investment in a single asset increases. B) a reduction in profits caused by increasing output beyond the optimal point. C) a decrease in total output due to overcrowding, when too much labor is used with too little land or capital. D) a decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are held constant.

D