ECO Chapter 11 quiz

In the short run all factors of production are fixed. a firm's plant is fixed. no factors of production are fixed. labor usage must remain fixed.

a firm's plant is fixed.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's average total cost? $2 $12 $10 $8

$10

In the figure above, when 40 units are produced the average fixed cost is $8. $12. $4. $20.

$4

The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes? $100 $400 $300 $200

$400

The above (incomplete) table provides information about the relationships between labor and various product measures. The amount of labor that maximizes the marginal product of labor is 4 units of labor. 5 units of labor. 2 units of labor. 3 units of labor.

2 units of labor.

The above (incomplete) table provides information about the relationships between labor and various product measures. The total product that can be produced with 6 units of labor is 20. 19. More information is needed to answer the question. None of the above answers is correct.

20.

At point d in the above figure, the average product of labor equals 15. 4. 3.75. approximately 1.

3.75.

Using the data in the above table, what is the average product of three employees? 2 pizzas per hour 3 pizzas per hour 12 pizzas per hour 4 pizzas per hour

4 pizzas per hour

Using the data in the above table, what is the marginal product of the second worker? 4.5 pizzas per hour 4 pizzas per hour 5 pizzas per hour The marginal product is undefined.

4 pizzas per hour

In the figure above, the marginal product of the second worker is 1 units. 10 units. 2 units. 5 units.

5 units.

Which of the following statements is TRUE? Average fixed cost equals average total cost plus average variable cost. Average variable cost is always greater than average fixed cost. Average fixed cost equals total fixed cost divided by total output. Average total cost always falls as output increases.

Average fixed cost equals total fixed cost divided by total output.

Which of the following would be classified as a fixed cost for the local supermarket? The cost of the boxes of cereal sold in the store. The Social Security tax the store pays the federal government on the workers' income. The salary and any overtime paid the store's manager. The rent from the six-year lease for the building the store uses.

The rent from the six-year lease for the building the store uses.

In the above figure, which of the following statements is FALSE? The vertical gap between curves A and B is equal to average fixed cost. Total variable cost and total cost both increase as output increases. Marginal cost is equal to the slope of curve A. The total fixed cost curve is curve C.

The vertical gap between curves A and B is equal to average fixed cost.

In the above figure, which of the following statements is FALSE? Curve A is the marginal cost curve. The vertical gap between curves B and C gets smaller as AFC decreases. Average fixed cost decreases as output increases. The vertical gap between curves B and C equals marginal fixed cost

The vertical gap between curves B and C equals marginal fixed cost

The law of diminishing returns states that as the size of a plant increases, the firm's fixed cost increases. a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes. a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually. the size of a plant increases, the firm's fixed cost decreases.

a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes.

An example of a variable factor of production in the short run is capital equipment. land. a building. an employee.

an employee.

In general, increasing marginal returns occur whenever the slope of the total product curve is positive. through the entire range of production. as output expands at low levels of production. as output expands at high levels of production.

as output expands at low levels of production.

Some of the cost curves for Ike's Ice Cream Kitchen are given in the above figure. At which of the following levels of output will AFC be the lowest? at 70 gallons at 10 gallons at 40 gallons at 0 gallons

at 70 gallons

In the above figure, curve D slopes downward because there are diminishing returns. all costs decrease as output increases. there are decreasing marginal costs. average fixed costs decrease as output increases.

average fixed costs decrease as output increases.

Average variable cost is at a minimum at the same amount of output at which marginal product is at a minimum. marginal product is at a maximum. average product is at a maximum. average product is at a minimum.

average product is at a maximum.

When the marginal and average products of labor are equal to each other, the average product must be at its maximum value. marginal product must be at its maximum value. total product must be at its maximum value. None of the above answers is correct

average product must be at its maximum value.

In the figure above, curve B is the ________ curve. average total cost average fixed cost marginal cost average variable cost

average total cost

In the figure above, curve C is the ________ curve. average total cost average variable cost marginal cost average fixed cost

average variable cost

In the above figure, the intersection of curves A and C is the point at which average total cost is minimized. average fixed cost is minimized. total product is maximized. average variable cost is minimized.

average variable cost is minimized.

Total variable cost is the sum of all costs associated with the production of goods. implicit costs. costs of the firm's fixed factors of production. costs that rise as output increases.

costs that rise as output increases.

In the above figure, the marginal product of labor is zero at point a. c. e. f.

e.

Marginal cost ________ as the quantity produced is increased. always decreases first decreases and then increases first increases and then decreases always increases

first decreases and then increases

Most total product curves have output increasing at an increasing rate as labor is added. first decreasing and then increasing marginal returns to labor. output first increasing and then decreasing as labor is added. first increasing and then decreasing marginal returns to labor.

first increasing and then decreasing marginal returns to labor.

A firm's total product curve shows that inefficiency is not possible. how the cost of the fixed resources change when output changes. that in the long run the firm must adjust the quantity of all the resources it employs. how the amount of output changes when the quantity of labor changes.

how the amount of output changes when the quantity of labor changes.

As output increases, marginal cost will eventually decrease because of the law of diminishing returns. decrease because of the law of increasing returns. increase because of the law of increasing returns. increase because of the law of diminishing returns.

increase because of the law of diminishing returns.

The marginal product of labor is equal to the total product divided by the total number of workers hired. increase in the total product that results from hiring one more worker with all other inputs remaining the same. slope of the marginal product of labor curve. None of the above answers are correct.

increase in the total product that results from hiring one more worker with all other inputs remaining the same.

When the marginal product of labor is a maximum, the average product of labor is a maximum. equal to marginal product. increasing. decreasing.

increasing.

In a diagram with the total cost curve and the total variable cost curve, as output increases, the vertical distance between these two curves is constant. decreases. increases. gets smaller and then bigger again.

is constant.

At point e in the above figure, the marginal product of labor is less than the average product of labor. equals the average product of labor. is at its maximum. is greater than the average product of labor.

is less than the average product of labor.

The steeper the slope of the total product curve, the larger is the marginal product of labor. higher is the level of the total cost curve. more efficient is the technology employed. smaller is the marginal product of labor.

larger is the marginal product of labor.

In the figure above, when 20 units are produced the marginal cost is less than $8. $8. more than $8 and less than $16. None of the above answers is correct.

less than $8.

If average variable cost is decreasing as output increases, then marginal cost is definitely less than average variable cost. increasing as output increases. greater than average variable cost. decreasing as output increases.

less than average variable cost.

All the decisions made by people who operate firms have one overriding objective, which is to make maximum attainable profit. maximize the firm's total revenue. maximize the quantity that the firm sells. maximize the firm's market share.

make maximum attainable profit.

In the figure above, curve A is the ________ curve. average total cost marginal cost average fixed cost average variable cost

marginal cost

At that amount of output where diminishing marginal returns first sets in total product will begin to decline. average product will begin to decline. marginal product will begin to decline. all of the above

marginal product will begin to decline.

The total output produced with any quantity of labor is equal to the sum of the marginal products of each of the workers hired. average products of each of the workers hired. total wages the firm pays its workers. Both answers A and B are correct.

marginal products of each of the workers hired.

Total product is maximum output that a given quantity of labor can produce. maximum amount of amount of output produced by a given quantity of labor divided by price of the output. the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. maximum amount of output produced by a given quantity of labor divided by the given quantity of labor employed.

maximum output that a given quantity of labor can produce.

Health care costs rose more than 10 percent in 2019, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a variable cost in a hospital? An MRI machine laboratory equipment nurses gurneys

nurses

A firm's marginal cost is the increase in its total cost divided by the increase in its average revenue. average cost. quantity of labor. output

output

When the demand for electricity peaks during the hottest days of summer, Florida Power and Light Company can generate more electricity by using more fuel and increasing the working hours of many of its employees. The company cannot, however, increase electric power production by building additional generating capacity. This means that the company is in the short run. intermediate run. market run. long run.

short run.

Average product of labor is equal to the quantity of labor employed divided by total product. total product multiplied by the quantity of labor employed. the total product produced. total product divided by the quantity of labor employed.

total product divided by the quantity of labor employed.

The long run is a time frame in which the quantities of all factors of production can be varied. the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. all costs are sunk costs. the quantities of all factors of production are fixed.

the quantities of all factors of production can be varied.

Which of the following would be classified as a variable cost for the local Texaco station? the opportunity cost of money used to finance the installation of some new pumps the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week the premiums paid for liability insurance, which are constant throughout the life of the contract interest payments to a local bank for a 5-year loan

the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each weekIn a diagram with the total cost curve and the total variable cost curve, as output increases, the vertical distance between these two curves

A firm's total cost ( TC) equals the sum of its fixed cost plus its sunk cost plus its variable cost plus its marginal cost. variable cost. marginal cost. variable cost plus its marginal cost.

variable cost.

Health care costs rose more than 10 percent in 2019, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs solely comes from increased wages to nurses and doctors, then for the health care industry productivity is increasing. long run average total cost is decreasing. fixed costs are increasing. variable costs are increasing.

variable costs are increasing.