Chapter 6 Micro

When an increase in the firm's output reduces its long-run average total cost, it experiences: A) economies of scale. B) diseconomies of scale. C) constant returns to scale. D) variable returns to scale

A

3. If a firm experiences lower costs per unit as it increases production in the long run, this is an example of: A) increasing returns to scale. B) decreasing returns to scale. C) increasing opportunity costs. D) scale reduction

A.) increasing returns to scale.

4. When an increase in the firm's output reduces its long-run average total cost, it experiences: A) increasing returns to scale. B) decreasing returns to scale. C) constant returns to scale. D) variable returns to scale

A.) increasing returns to scale.

13. Marginal cost ________ over the range of increasing marginal returns and ________ over the range of diminishingmarginal returns. A) increases; falls B) falls; increases C) is constant; rises D) increases; is constant

B

2. Marginal cost is the change in: A) total product resulting from a one-unit change in a variable input. B) total cost resulting from a one-unit change in quantity of a variable input. C) total cost divided by the change in output. D) average cost resulting from a one-unit change in quantity of output

C.) total cost divided by the change in output.

1. 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.

18. If Jakob knows the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is: A) $21. B) $60. C) $147. D) The answer cannot be determined from the information provided

D

5. A factor of production whose quantity can be changed during a particular period is a(n): A) marginal factor of production. B) fixed factor of production. C) incremental factor of production. D) variable factor of production

D.

16. Buffalo Aircraft doubles the amount of all the inputs it usesóthe factory doubles in size and twice as many workersare 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

19. Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthlytotal fixed costs are $500, and her monthly total variable costs are $2,500. If for some reason Cindy's fixed cost fellto $400, then her: A) average fixed costs would increase. B) average total costs would decrease. C) marginal costs would decrease. D) average variable costs would decrease.

B

8. Diminishing marginal returns occur when: A) each additional unit of a variable factor adds more to total output than the previous unit. B) an additional variable factor adds less to total output than the previous unit. C) the marginal product of a variable factor is increasing, but at a decreasing rate. D) total product decreases

B

10. The total cost curve for a snowmobile dealership shows how ________ cost depends on the quantity of ________. A) total; fixed inputs B) average; variable C) total; output D) marginal; output

C

11. The slope of a long-run average total cost curve exhibiting decreasing returns to scale is: A) zero. B) infinite. C) positive. D) negative.

C

12. If Marie Marionettes is operating under conditions of diminishing marginal product, the marginal costs will be: A) equal to ATC. B) decreasing. C) increasing. D) constant.

C

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

C.