Micro HW #11
Along the total product curve, output increases as _______. A. the quantity of labor increases and the plant size remains constant B. total cost increases C. the quantity of labor and the plant size increase D. average total cost increases
A
The long-run average cost curve is the relationship between the lowest attainable average total cost and output, when plant size is ______ and labor is ______. A. varied; varied B. held constant; held constant C. held constant; varied D. varied; held constant
A
Total cost is the cost of _____ by a firm. Total fixed cost is the cost of the _____ - the cost of _____, _____, and _____. Total variable cost is the cost of the _____ - the cost of _____. A. all the factors of production used; firm's fixed factors of production; land, capital; entrepreneurship; firm's variable factor of production; labor B. the interest on capital used; firm's fixed rate of interest; physical capital; financial capital; entrepreneurship; firm's variable rate of interest; financial capital C. the quantities of goods produced; firm's fixed quantities; land; labor; capital; firms's variable quantities; labor D. the output produced; firm's fixed output; primary; intermediate; final output firm's variable output; primary goods and services
A
Total product is the total _____ of a good produced in a given period. Marginal product is the change in _____ product that results from a one-unit increase in the _____. Average product is the total product divided by the _____. A. quantity; total; quantity of labor employed; quantity of a factor of production B. price; average; total product; total cost C. cost; average; marginal cost; average cost D. quantity; total; average product; price
A
When marginal product exceeds average product, ______ product is increasing. When average product exceeds marginal product, ______ product is decreasing. A. average; average B. marginal; marginal C. average; neither average product nor marginal D. marginal; average
A
Which of the following illustrates economies of scale, diseconomies of scale, and constant returns to scale? Liza's average total cost changes from $4.50 to $2.20 when she increases salad production from 7 to 9 an hour. Sam's average total cost changes from $1.30 to $2.80 when he increases smoothie production from 5 to 8 gallons an hour. Tina's average total cost remains at $3 when she increases pizza production from 12 to 13 an hour. A. Liza faces economies of scale; Sam faces diseconomies of scale; Tina faces constant returns to scale. B. Tina faces economies of scale; Sam faces diseconomies of scale; Liza faces constant returns to scale. C. Sam faces economies of scale; Liza faces diseconomies of scale; Tina faces constant returns to scale. D. Sam faces economies of scale; Tina faces diseconomies of scale; Liza faces constant returns to scale.
A
______ are features of a firm's technology that lead to falling long-run average cost as output increases that arise because of _______. A. Economies of scale; greater specialization of both labor and capital B. Decreasing economies; comparative advantage C. Economies of scope; the challenge of managing a large enterprise D. Economies of scale; free markets
A
A firm's minimum efficient scale is the _______. A. smallest quantity of output at which a firm maximizes producer surplus B. smallest quantity of output at which long-run average cost reaches its lowest level C. firm's profit-maximizing point D. production point at which the firm produces just enough to break even
B
A firm's production function shows the relationship between the maximum output attainable and the ______. A. quantity of labor B. quantities of both labor and capital C. total cost D. quantity of capital
B
Marginal cost _______. A. decreases at low outputs until it reaches its minimum value, then remains constant B. decreases at low outputs and increases at high outputs C. is constantly increasing, but as output increases it increases by smaller and smaller amounts D. increases at low outputs until it reaches its maximum value, then remains constant
B
Maximum MP occurs at the same output as ______. Maximum AP occurs at the same output as ______. A. maximum MC; maximum AVC B. minimum MC; minimum AVC C. minimum AVC; minimum MC D. maximum AVC; maximum MC
B
The law of diminishing marginal returns states that as a firm uses more of a _____ factor of production with a given quantity of the _____ factor of production, the _____ product of the _____ factor eventually diminishes. A. fixed; variable; average; variable B. variable; fixed; marginal; variable C. variable; fixed; average; variable D. fixed; variable; total; fixed
B
Tina employs 4 people in her pizza store, where she produces 12 pizzas an hour. Her total fixed cost, total variable cost, and total costs of pizza production per hour are $15, $19.40, and $34.40 respectively. Calculate Tina's average fixed cost, average variable cost and average total cost. A. $1.62; $10; $1.25 B. $1.25; $1.62; $2.87 C. $1.25; $2.87; $1.62 D. $34.40; $15; $19.40
B
When Sam increases smoothie production from 4 gallons to 5 gallons, his total cost of production increases from $32.50 to $36.85. Calculate Sam's marginal cost of producing smoothies. A. $4.45 B. $4.35 C. $26.85 D. $2.50
B
When economies of scale are present, the LRAC curve ______. When diseconomies of scale are present, the LRAC curve ______. A. slopes downward; is horizontal B. slopes downward; slopes upward C. is horizontal; slopes upward D. slopes upward; slopes downward
B
Which of the following are examples of short run and long run decisions? A. Olive Garden has increased its plant size. Olive Garden has opened two new restaurants in Ames. B. Starbucks' has hired more labor to meet the increasing demand. Starbucks' has opened another store to meet the increasing demand. C. The profits of Dell has improved this quarter. Consumers' preferences for Dell laptops have changed over time. D. LG has adopted a new technology to create a new cell phone. The sale of LG phones has increased. Part 2
B
As the labor employed increases, marginal product of labor initially ______. As the labor employed increases, the average product of labor initially______. A. decreases and eventually increases; decreases and eventually increases B. increases and eventually decreases; decreases and eventually increases C. increases and eventually decreases; increases and eventually decreases D. decreases and eventually increases; increases and eventually decreases
C
If diseconomies of scale are present and the firm ______ all its inputs, its output _______. A. increases; increases by the same percentage B. halves; doubles C. doubles; less than doubles D. doubles; more than doubles
C
Choose the correct statement. A. When average product exceeds marginal product, marginal product is rising. B. When marginal product is falling, average product is falling. C. When average product is rising, marginal product is rising. D. When marginal product exceeds average product, average product is rising.
D
If other things remain the same, the average total cost curve ______, and the marginal cost curve ______. A. does not change; shifts upward B. does not change; does not change C. shifts upward; shifts upward D. shifts upward; does not change
D
If your current decision is rational, the cost of the shoes ______ influence whether you wear the shoes or not because ______. A. does; as soon as you buy the shoes you feel compelled to wear them and you don't want to waste money B. does; the opportunity cost of wearing the shoes is zero C. does not; the opportunity cost of buying the shoes is zero D. does not; the cost of the shoes has been incurred regardless of the pain that wearing the shoes gives you
D
January 31, 2008: Starbucks will open 75 more stores abroad than originally predicted, for a total of 975. February 25, 2008: For three hours on Tuesday, Starbucks will shut down every single one of its 7,100 stores so that baristas can receive a refresher course. June 2, 2008: Starbucks replaces baristas with vending machines. July 18, 2008: Starbucks is closing 616 stores by the end of March. The decisions made on ______ are long-run decisions because they ______. A. February 25, June 2, and July 18; all deal with stores located in the United States B. June 2; are changes to labor which affect people for the long term C. January 31 and February 25; are the earliest decisions D. January 31 and July 18; change Starbucks' plant
D
Over the output range for which marginal cost exceeds average variable cost but is less than average total cost, _______. A. both average variable cost and average total cost are rising B. average fixed cost is rising while average variable cost is falling C. average fixed cost is falling more slowly than average variable cost is rising D. average fixed cost is falling more quickly than average variable cost is rising
D
Total product is _______. A. the increase in output that results when an additional worker is hired B. the average output that a given quantity of labor can produce C. the minimum output that a given quantity of labor chooses to produce D. the maximum output that a given quantity of labor can produce
D
When the marginal product curve is ______, the marginal cost curve is falling. When the average product curve is ______, the average variable cost curve is falling. A. falling; rising B. rising; falling C. falling; falling D. rising; rising
D
Long-run average cost curve is a curve that shows the _____ average total cost at which it is _____ to produce each output when the firm has had sufficient time to change both its plant size and labor employed. A. highest; possible B. highest; not possible C. lowest; not D. lowest; possible
D
Indicate whether each of the following statements is true or false. The marginal cost curve intersects the average variable cost curve at its minimum. When marginal cost is greater than average fixed cost, average fixed cost is increasing. The marginal cost curve intersects the average fixed cost curve at its minimum. When marginal cost is less than average total cost, average total cost is decreasing.
true, false, false, true
The shape of the AVC curve arises because of _______. A. increasing returns as output increases B. increasing returns initially and eventually diminishing returns C. falling average fixed cost D. constant returns
B
In a market in which the smallest output at which long-run average cost reaches its lowest level is large relative to market demand, the market is _______. A. perfectly competitive B. monopolistically competitive C. either an oligopoly or monopoly D. experiencing growth
C
In the short run, ______. In the long run, ______. A. a firm's plant is fixed; a firm can change its plant B. all factors of production are variable except technology; the quantities of all factors of production can be varied C. all costs are sunk costs; the quantity of only one factor of production is fixed D. the quantity of only one factor of production is fixed; the quantities of all factors of production can be varied
A
The long-run average cost curve traces out the lowest attainable _______ of producing each output. A. average total cost B. average variable cost C. average fixed cost D. marginal cost
A
A sunk cost is irrelevant to a firm's current decisions because _______. A. the decision to make the expenditure was made by previous managers B. it cannot be changed by any current decision C. it is a fixed factor of production D. it occurred in the long run
B
Choose the statement that is correct. A. ATC = AVC−AFC B. TC/Q = TFC/Q + TVC/Q C. (TC/Q−TFC/Q) increases over all values of output D. ATC/Q = TC
B
If 6 workers can produce 210 surfboards a week, then average product is ______ surfboards per worker. A. 126 B. 35 C. 216 D. 210
B
If other things remain the same, the average fixed cost curve ______ and the average variable cost curve ______. A. does not change; shifts upward B. shifts upward; does not change C. shifts upward; shifts downward D. does not change; does not change
B
In economics, the short run is the time frame in which ______ and the long run is the period of time in which ______. A. the quantities of all factors of production are variable but technology is fixed; sunk costs are variable B. the quantities of some factors of production are fixed; the quantities of all factors of production can be varied C. the quantities of some factors of production are variable; the quantities of all factors of production are fixed D. the quantities of all factors of production are fixed; the quantities of all factors of production can be varied
B
The law of diminishing returns says that as the firm uses more of ______, with a given quantity of ______, marginal product of the variable factor eventually diminishes. A. a fixed factor of production; variable factors of production B. a variable factor of production; the fixed factor of production C. all factors of production; entrepreneurship D. all factors of production; capital
B
Most production processes experience _______ marginal returns initially, but all production processes eventually reach a point of _______ marginal returns. A. constant; diminishing B. diminishing; increasing C. increasing; diminishing D. diminishing; constant
C
The marginal cost curve slopes downward at low outputs because of _______. The marginal cost curve eventually slopes upward because of _______. A. the law of diminishing returns; increasing average fixed cost B. falling average fixed cost; the law of diminishing returns C. greater specialization and division of labor; the law of diminishing returns D. the law of diminishing returns; greater specialization and division of labor
C
The shape of the ATC curve arises because of _______. A. falling total product B. rising marginal cost C. the influence of two opposing forces—spreading total fixed cost over a larger output and eventually diminishing returns D. the influence of two opposing forces—spreading total fixed cost over a larger output and eventually increasing return
C
The smallest quantity of output at which long-run average cost is at a minimum is a firm's _______. A. efficient output point B. maximum efficient scale C. minimum efficient scale D. profit-maximizing output point
C
The long-run average cost curve is made up of the segments of individual average ______ cost curves with the lowest average ______ cost for a given output. A. variable; total B. variable; variable C. total; total D. total; variable
C
Which of the following firms produce at the minimum efficient scale? A. Toyota produces 20 cars a day at its Texas plant at which its profit is maximized. B. Starbucks' makes 1000 chai lattes each day at which is total revenue is maximized. C. Dell produces 100 computers a week at which its long run average total cost is minimized. D. A Gap outlet in Chicago sells 500 jackets a day and lowers its average variable cost.
C
Which of the following illustrates diminishing marginal returns? A. Total cost decreases as the quantity of labor hired increases. B. Debra produces 30 hats per hour. C. Hiring more workers decreases the productivity of each additional worker. D. A company makes greater investments as it earns higher profits.
C
Diminishing returns to capital _______ occur as the quantity of capital increases because for a given quantity of _______ incremental amounts of output. A. do not; labor each additional unit of capital will result in smaller B. do; capital each additional unit of labor will result in smaller C. do not; labor each additional unit of capital will result in larger D. do; labor each additional unit of capital will result in smaller
D
Expenditure on shoes is ______. A. an expenditure on plant B. an unnecessary expenditure C. a short-run cost D. a sunk cost
D
If marginal cost exceeds average total cost and output increases, average total cost _______ and average variable cost _______. A. increases; decreases B. decreases; increases C. decreases; decreases D. increases; increases
D
January 31, 2008: Starbucks will open 75 more stores abroad than originally predicted, for a total of 975. February 25, 2008: For three hours on Tuesday, Starbucks will shut down every single one of its 7,100 stores so that baristas can receive a refresher course. June 2, 2008: Starbucks replaces baristas with vending machines. July 18, 2008: Starbucks is closing 616 stores by the end of March. The decisions made on ______ are short-run decisions because they ______. A. January 31 and July 18; change the number of stores but not necessarily the number of employees B. June 2 and July 18; are the most recent decisions C. February 25 and June 2; change a variable factor of production but not a fixed factor of production D. February 25, June 2, and July 18; deal with stores located in the United States
C
Marginal product eventually diminishes because _______. A. workers become lazy after they have worked at the same task for a long period of time B. workers are promoted and their replacements are not as familiar with the required tasks C. more and more workers are using the same capital and working in the same space D. capital becomes obsolete and workers cannot be as productive as when the capital is new
C
The AFC curve has this shape because _______. A. when output increases, total fixed cost increases B. when output increases, total fixed cost decreases C. when output increases, the firm spreads its total fixed cost over a larger output D. it reflects diminishing returns
C
Which of the following is an example of sunk cost? A. The government has regulated a minimum wage rate for all fast food employees. B. Nancy uses her own laptop at work. C. Ned spent $50,000 to train employees at his start-up firm. D. Rachel buys her groceries from Winco as it is much cheaper.
C
______ are features of a firm's technology that lead to rising long-run average cost as output increases that arise because of _______. A. Diseconomies of scale; comparative advantage B. Economies of scope; greater specialization of both labor and capital C. Diseconomies of scale; the challenge of managing a large enterprise D. Output diseconomies; free markets
C
That law of diminishing returns states that as a firm uses more of a _______ factor eventually diminishes. A. fixed factor of production with a given quantity of the variable factor of production, the marginal product of the fixed B. variable factor of production with a given quantity of the fixed factor of production, the marginal product of the fixed C. variable factor of production with a given quantity of the fixed factor of production, the total product of the variable D. variable factor of production with a given quantity of the fixed factor of production, the marginal product of the variable
D