Chapter 10 - Output and Costs - Sample Questions MULTIPLE ...

1 Chapter 10 - Output and Costs - Sample QuestionsMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the ) The short run is a period of time in whichA) nothing the firm does can be ) the amount of Output is ) prices and wages are ) the quantities of some resources the firm uses are )2) The short run is a period of time in whichA) Output prices are ) the quantity used of at least one resource is ) resource prices are ) the quantities used of all resource are )3) The short run is a time frame in whichA)

2 The quantities of some resources are fixed and the quantities of other resources can be ) the quantities of all resources are ) the quantities of all resources can be ) all Costs are sunk )4) An example of a variable resource in the short run isA) an ) capital ) ) a )5) A cost that has already been made and cannot be recovered is called aA) marginal ) fixed ) variable ) sunk )6) The long run is a time frame in whichA) the quantities of all resources are ) the quantities of all resources can be ) the quantities of some resources are fixed and the quantities of other resources can be ) all Costs are sunk )7) In the long run, a firm can varyA) its capital but not its ) its labor but not its )both its labor and its ) neither its labor nor its )8) The long run is distinguished from the short run in that, in the long run,A) Output prices can ) the firm no longer maximizes its ) resource prices can ) the quantities of all resources can be )19) The marginal product of labor is the increase in total product from aA)

3 One dollar increase in the wage rate, while holding the price of capital ) one unit increase in the quantity of labor, while also increasing the quantity of capital by ) one unit increase in the quantity of labor, while holding the quantity of capital ) one percent increase in the wage rate, while also increasing the price of capital by one )10) The marginal product of labor is the change in total product from a one-unit increase inA) the wage )both the quantity of labor and the quantity of capital ) the quantity of labor employed, holding the quantity of capital ) the quantity of capital employed, holding the quantity of labor )11) The marginal product of labor is theA) Output level above which the slope of the total product curve ) Output level above which the rate of total product per unit of labor ) maximum Output attainable with fixed factors when labor is the only variable ) change in Output resulting from a one-unit increase in )12) The average product of labor isA) the inverse of the average product of )

4 Total product divided by the total quantity of labor ) the slope of the curve showing the total product of ) the slope of the curve showing the marginal product of )13) Average product is theA) maximum Output attainable with fixed factors and one variable ) total product per unit of an ) change in total product due to a one unit change in ) total product divided by the total ) Total Product, Marginal Product, Average Product Labor (workers per day) Total product (units per day) Marginal product Average product0000122228312415516114) In the above table, the total product that is produced when the firm employs four workers isA) 8.

5 B) ) ) )15) In the above table, the marginal product of the third worker isA) ) ) ) )216) In the above table, the marginal product of the fourth worker isA) ) ) ) )17) In the above table, the marginal product is greatest when theA) third worker is ) second worker is ) fourth worker is ) first worker is )18) In the above table, the average product of three workers isA) ) ) ) )19) In the above table, the average product is less than the marginal productA) when the first worker is ) when the second worker is ) for the entire range of Output ) when the third worker is )20) Points below a firm's total product curve areA) technologically efficient but not )both attainable and technologically ) attainable but not technologically ) neither attainable nor technologically )21) Points on a firm's total product curve areA)both attainable and technologically ) neither attainable nor technologically ) technologically efficient but not ) attainable but not technologically )22)

6 When the total product curve is drawn in a figure that measures employment along the horizontalaxis, it is a graph that shows theA) maximum Output attainable for each quantity of labor ) minimum cost of producing a given amount of Output using different ) maximum profit attainable for each unit of Output sold per unit of labor ) minimum Output attainable for each quantity of labor )323) In the figure above, the marginal product of the second worker isA) 10 ) 2 ) 5 ) 1 )24) In the above figure, after the second worker is hired, the marginal product of labor isA) ) ) ) )25) At point d in the above figure, the average product of labor equalsA) approximately ) ) ) )26) In the above figure, the average product of labor at point cisA) ) ) ) None of the above answers are )27) In the figure above,A)f is an efficient )gis an efficient )d is an efficient ) there are no efficient )28) In the above figure, an inefficient point isA) ) ) ) )29) In the above figure, an unattainable point isA) )

7 30) In the above figure, the most efficient way to produce 10 units is to hireA) 1 ) 5 ) 2 ) 3 )31) In the above figure, the most efficient way to produce 15 units is to hireA) 5 ) 3 ) 4 ) 2 )432) In the above figure, the maximum number of units that 4 workers can produce isA) 15 ) more than 15 ) 5 ) 10 )33) In the above figure, the marginal product of labor is zero at pointA) ) ) ) )34) At point e in the above figure, the marginal product of labor definitelyA) is at its ) is less than the average product of ) equals the average product of ) is greater than the average product of )35) The steeper the slope of the total product curve, theA) more efficient is the technology employed.

8 B) higher is the level of the total cost ) larger is the marginal product of ) smaller is the marginal product of )36) Increasing marginal returns to labor might occur at low levels of labor input because ofA) differing factor ) decreasing use of machinery and increasing use of ) increasing average ) increasing specialization of )37) In general, increasing marginal returns occurA) as Output expands at high levels of ) whenever the slope of the total product curve is ) as Output expands at low levels of ) through the entire range of )38) "Diminishing marginal returns" refer to a situation in which theA) average cost of the last worker hired is less than the average cost of the previous worker ) marginal cost of the last worker hired is less than the marginal cost of the previous ) average product of the last worker hired is less than the average product of the previousworker ) marginal product of the last worker hired is less than the marginal product of the previousworker )39)

9 The law of diminishing returns implies that, with the use of capital fixed, as the use of labor rises,A) the marginal product of labor will fall ) total product will fall ) the production process will become technologically inefficient ) the total product of labor will fall below the marginal product of )540) The law of diminishing returns states that asA) a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average totalcost will decrease ) the size of a plant increases, the firm's fixed cost ) a firm uses more of a variable input, given the quantity of fixed inputs, the marginal productof the variable input eventually ) the size of a plant increases, the firm's fixed cost )41) If a firm's marginal product of labor is less than its average product of labor, then an increase in thequantity of labor it employs definitely willA) not change its average product of ) decrease its average product of )