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) 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)

2 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) 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 ) total product divided by the total quantity of labor ) the slope of the curve showing the total product of )

3 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 .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 )

4 Technologically efficient but not ) attainable but not technologically )22) 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) ) ) ) )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.

5 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) 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)

6 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 ) increase its marginal product of ) decrease its total )42) Total cost is the sum of fixed Costs andA) implicit ) accounting ) explicit ) variable )43) A firm has fixed costsA) in the short run but not in the long ) in the long run but not in the short ) in the short run and in the long ) neither in the long run nor in the short )44) Total fixed cost is the sum of allA) Costs associated with the production of ) explicit ) Costs of the firm's fixed ) Costs that rise as Output )45) Total variable cost is the sum of allA) implicit ) Costs of the firm's fixed ) Costs that rise as Output ) Costs associated with the production of )46) A firm's marginal cost is the increase in its total cost divided by the increase in itsA) ) average ) average ) quantity of )47) Marginal cost isA) all the Costs of production of ) all the Costs of the fixed ) the change in the total cost resulting from a one-unit change in ) all the Costs that vary with )648) Marginal cost is calculated asA) the increase in total cost divided by the increase in labor, given the amount of ) total cost minus total fixed ) total cost divided by ) the increase in total cost divided by the increase in )49) A company could produce 99 units of a good for $316 or produce 100 units of the same good for$320.

7 The marginal cost of the 100th unitA) is $ ) is $ ) is $ ) cannot be calculated with this )50) A company could produce 100 units of a good for $320 or produce 101 units of the same good for$324. The $4 difference in Costs isA) the marginal benefit of producing the 101st ) the marginal cost of producing the 101st )both the marginal benefit and the marginal cost of producing the 101st ) neither the marginal benefit nor the marginal cost of producing the 101st )51) As Output increases, marginal cost willA) eventually decrease because of the law of diminishing ) eventually increase because of the law of diminishing ) eventually decrease because of the law of increasing ) eventually increase because of the law of increasing )52) By using more labor to produce more Output , a firm can always reduce itsA) average fixed ) marginal fixed cost of ) marginal fixed cost of ) average cost of )53) By using more labor to produce more Output , a firm can always reduce itsA) average total ) average fixed ) average variable ) marginal )54) Average total Costs are total Costs divided byA) total fixed ) total )

8 The total number of workers ) total variable )55) Average total Costs areA) the change in Output divided by the change in total ) total Costs divided by total ) the change in total Costs divided by the change in ) total Output divided by total )7 Cost schedule Labor (workers) Output (units per day) Total fixed cost (dollars) Total variable cost (dollars)0020014202529205031320754162010 05182012556) In the above table, the total cost of producing 9 units of Output isA) $ ) $ ) $ ) $ )57) The above table shows a firm'sA) short-run and long-run ) long-run ) short-run ) More information is needed to determine if the Costs are long-run Costs or short-run )58) In the above table, the total variable cost of producing 16 units of Output isA) $ ) $ ) $ ) $ )59) Using the data in the above table, when Output increases from 4 to 9 units, the marginal cost of oneof those 5 units isA) $ ) $ ) $ ) $ )60) Using the data in the above table, the average fixed cost of producing 9 units per day isA) $ ) $ ) $ ) $ )61) Using the data in the above table, the average total cost of producing 16 units per day isA) $ ) $ ) $ ) $ )Cost schedule Labor (workers) Output (units per day) Total variable cost (dollars) Total cost (dollars)00 030132050284070312 60904148011051510013062) In the above table, the total fixed cost isA) $ ) $ ) $ ) $ )863) In the above table, the total fixed cost at 3 units of Output isA) $ ) $ ) $ ) $ )64) In the above table, when Output increases from 8 to 12 units, the marginal cost of one of those 4units isA) $ ) $ ) $ ) $ )65) In the above table, the average fixed cost of producing 15 units of Output isA) $ ) $ ) $ ) $ )66) In the above table, the average variable cost of producing 14 units of Output isA) $ ) $ ) $ ) $ )67)

9 In the above table, the average total cost of producing 14 units of Output isA) $ ) $ ) $ ) $ )68) A firm's average total cost is $100, its average variable cost is $90, and its total fixed cost is $1, Output isA)between 70 and 120 ) less than 70 ) more than 170 )between 120 and 170 )69) A firm's average total cost is $80, its average variable cost is $75, and its Output is 50 units. Its totalfixed cost isA) less than $ ) more than $ )between $200 and $ )between $100 and $ )70) A firm's average variable cost is $60, its total fixed cost is $3,000, and its Output is 600 units. Itsaverage total cost isA) more than $ )between $58 and $ )between $62 and $ ) less than $ )71) A firm's average variable cost is $90, its total fixed cost is $10,000, and its Output is 1,000 units. Itstotal cost isA) more than $105, ) less than $85, )between $95,000 and $105, )between $85,000 and $95, )72) A firm's average total cost is $80, its fixed cost is $1000, and its Output is 100 units.

10 Its averagevariable costA) is between $40 and $ ) is more than $ ) is less than $ ) cannot be determined without more )973) A firm's marginal cost is $30, its average total cost is $50, and its Output is 800 units. Its total cost ofproducing 801 units isA)between $40,050 and $40, ) greater than $40, ) less than $40, )between $40,000 and $40, )74) A firm's marginal cost is $82, its average total cost is $50, and its Output is 800 units. Its total cost ofproducing 801 units isA) greater than $40, )between $40,050 and $40, ) less than $40, )between $40,000 and $40, )75) A firm's Output is 80 units, its marginal cost is $42, its average variable cost is also $42, and itsaverage fixed cost is $10. The slope of its average fixed cost curve isA) positive but the precise slope cannot be ) positive and the slope is between 0 and ) ) not a