ECH Chapter 11 Quiz
Reference: Ref 11-11 (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing 10 pairs of boots is approximately:
$1,308.
Reference: Ref 11-22 (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The fixed cost of producing 25 statues is:
$10.
Reference: Ref 11-19 (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers and bakes 400 cakes per day, what is her average total cost?
$10.25
Reference: Ref 11-31 (Table: Lindsay's Farm) Look at the table Lindsay's Farm. Lindsay's fixed cost of production is:
$200.
A business produces 10 pairs of eyeglasses. It incurs $35 in average total cost and $5 in average fixed cost. The average variable cost of producing 10 pairs of eyeglasses is:
$30.
Reference: Ref 11-22 (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The total cost of producing 25 statues is:
$30.
Reference: Ref 11-18 (Figure: Long-Run and Short-Run Average Cost Curves) Look at the figure Long-Run and Short-Run Average Cost Curves. If a firm faced the long-run average total cost curve shown in the figure and it expected to produce 100,000 units of the good in the long run, the firm should build the plant associated with:
ATC2
If the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is:
The answer cannot be determined from the information provided.
Lauren has 11 people working in her tangerine grove. The marginal product of the eleventh worker is 13 bushels of tangerines. If she hires a twelfth worker, the marginal product of that worker will be:
The answer cannot be determined with the information available.
A production function that is characterized by economies of scale will not be subject to the operation of diminishing returns.
True
Diminishing returns are one explanation for diseconomies of scale.
True
Economies of scale most often occur in industries whose initial fixed cost of plant and equipment is low.
True
If a firm builds a larger plant and increases output and if its long-run average total cost does not change, the firm has constant returns to scale.
True
In the long run, when a firm adds physical capital, workers become more productive, so variable costs increase.
True
The long-run average total cost curve shows the relationship between output and the average total cost when fixed cost has been chosen to minimize average total cost for each level of output.
True
The long-run average total cost curve shows the relationship between output and the average total cost when variable cost has been chosen to minimize average total cost for each level of output.
True
The term diminishing returns refers to:
a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.
In the long run:
all inputs are variable.
Reference: Ref 11-31 (Table: Lindsay's Farm) Look at the table Lindsay's Farm. Lindsay's variable costs of production:
are zero when she produces no crops.
Reference: Ref 11-17 (Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled W represents the firm's _____ cost curve.
average total
Reference: Ref 11-14 (Figure: Short-Run Costs) Look at the figure Short-Run Costs. C is the _____ cost curve.
average variable
Reference: Ref 11-17 (Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve X represents the firm's _____ cost curve.
average variable
Reference: Ref 11-18 (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 _____ of scale.
bigger; diseconomies
Think about running a restaurant. Probably:
cooks and hosts are variable resources.
An input whose quantity CANNOT be changed in the short run is:
fixed.
Once diminishing returns have set in, as output increases, the total cost curve:
gets steeper.
The fixed cost curve is:
horizontal.
Reference: Ref 11-29 (Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya is operating:
in the short run.
As defined in the text, the long run is a planning period:
in which a firm can adjust all resources.
Reference: Ref 11-21 (Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from 0 to A.
increasing returns to scale
Reference: Ref 11-29 (Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya's variable:
input is labor.
Reference: Ref 11-29 (Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. Tonya's fixed:
input is land.
A planning period during which all of a firm's resources are variable is the _____ run.
long
Reference: Ref 11-4 (Figure: The Total Product) Look at the figure The Total Product. As labor is hired between L1 and L2, the total product is _____ and the marginal product is _____.
rising; positive
In the short run:
some inputs are fixed and some inputs are variable.
Reference: Ref 11-4 (Figure: The Total Product) Look at the figure The Total Product. Labor added from L1 and up to L2 is:
subject to diminishing marginal returns.
A factor of production whose quantity can be changed during the SHORT run is a(n) _____ factor of production.
variable
Diminishing returns to an input occur:
when some inputs are fixed and some are variable.
If two firms are identical in all respects except that one has more of the fixed input capital than another, the marginal product curve for the firm with more capital:
will lie above the marginal product curve for the firm with less capital.
Reference: Ref 11-10 (Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 25 bushels of soybeans is:
$100.
Reference: Ref 11-22 (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The variable cost of producing 25 statues is:
$20.
Reference: Ref 11-10 (Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 45 bushels of soybeans is:
$200.
Reference: Ref 11-11 (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing three pairs of boots is approximately:
$216.
Reference: Ref 11-10 (Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The total cost of producing 25 bushels of soybeans is:
$250.
Reference: Ref 11-31 (Table: Lindsay's Farm) Look at the table Lindsay's Farm. When Lindsay produces 50 units of produce, her total cost is:
$250.
Reference: Ref 11-19 (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers and bakes 100 cakes per day, what is her average total cost?
$29
Reference: Ref 11-10 (Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 60 bushels of soybeans is:
$300.
A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $5 in average fixed cost. The total cost of producing 10 pairs of eyeglasses is:
$350.
Reference: Ref 11-31 (Table: Lindsay's Farm) Look at the table Lindsay's Farm. When Lindsay produces 140 units of produce, her total cost is:
$350.
Reference: Ref 11-22 (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The variable cost of producing 43 statues is:
$40.
Reference: Ref 11-11 (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing five pairs of boots is approximately:
$408.
Reference: Ref 11-14 (Figure: Short-Run Costs) Look at the figure Short-Run Costs. At 7 units of output, average fixed cost is approximately _____, and average variable cost is approximately _____.
$40; $100
Reference: Ref 11-16 (Table: Cost Data) Look at the table Cost Data. The average total cost of producing 4 purses is:
$47.50.
A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $35 in average total cost. The total fixed cost of producing 10 pairs of eyeglasses is:
$50.
Reference: Ref 11-22 (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The total cost of producing 43 statues is:
$50.
Reference: Ref 11-16 (Table: Cost Data) Look at the table Cost Data. The average total cost of producing 2 purses is:
$60
Reference: Ref 11-18 (Figure: Long-Run and Short-Run Average Cost Curves) Look at the figure Long-Run and Short-Run Average Cost Curves. If a firm faced the long-run average total cost curve shown in the figure and it expected to produce 100,000 units of the good in the long run, the firm should build the plant associated with:
ATC2.
Reference: Ref 11-21 (Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from A to B.
constant returns to scale
The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the marginal product of labor for the custodial staff will:
decrease.
Reference: Ref 11-19 (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers, her average fixed cost _____ in the range of output between 100 and 400 cakes.
decreases
Reference: Ref 11-19 (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers, her average total cost _____ in the range of output between 100 and 400 cakes.
decreases
Reference: Ref 11-21 (Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from B to C.
decreasing returns to scale
Reference: Ref 11-29 (Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. As she hires more labor, Tonya's production function shows that the number of apples picked increases at a decreasing rate because of:
diminishing returns
Reference: Ref 11-29 (Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. As she hires more labor, Tonya's production function shows that the number of apples picked increases at a decreasing rate because of:
diminishing returns.
Reference: Ref 11-4 (Figure: The Total Product) Look at the figure The Total Product. Between points A and B the marginal product of labor is:
falling
Reference: Ref 11-4 (Figure: The Total Product) Look at the figure The Total Product. Between points A and B the marginal product of labor is:
falling.
A _____ is an organization that produces goods or services for sale.
firm
Reference: Ref 11-14 (Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the _____ cost curve.
marginal
Reference: Ref 11-17 (Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled V represents the firm's _____ cost curve.
marginal
Reference: Ref 11-16 (Table: Cost Data) Look at the table Cost Data. When the purse factory produces 5 units of output (purses):
marginal cost is above average total cost, and average total cost is rising.
The _____ is the increase in output that is produced when a firm hires an additional worker.
marginal product
Reference: Ref 11-19 (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. How many mixers should Pat buy to get the lowest average total cost if she plans to make 100 cakes?
one
The long run is a planning period:
over which a firm can consider all inputs as variable.
The total cost curve is:
positively sloped.
