Question 1

Which of the following is correct?

Accepted Answer

A)  AC = AFC/Q
B)  AC = AFC + AVC
C)  AC = MFC + MVC
D)  TFC + TMC = MFC + MVCE) B) and C)
F) A) and B)

Question 2

The expansion path of product indifference curves shows the cost-minimizing combination of inputs.

Accepted Answer

A) True 
 B)False

Question 3

If significant economies of scale are present,large firms will be much more efficient producers than small firms.

Accepted Answer

A) True 
 B)False

Question 4

Variable costs increase when output rises.

Accepted Answer

A) True 
 B)False

Question 5

If a firm has a U-shaped long-run average cost curve,

Accepted Answer

A)  its fixed cost rises as output rises.
B)  it must have increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production.
C)  it must have increasing returns to each input at low levels of production and decreasing returns to each input at high levels of production.
D)  the firm can maximize its output by operating at the point of minimum long-run average cost.E) A) and B)
F) A) and C)

Question 6

Figure 7-1
 
-In Figure 7-1,which graph best represents total physical product with diminishing returns?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) A) and B)
F) A) and C)

Question 7

Table 7-2
   Plastic (in pounds)  567 Widgets 141719\begin{array} { l c c c } 	ext { Plastic (in pounds)  } & 5 & 6 & 7 \\hline 	ext { Widgets } & 14 & 17 & 19\end{array} Plastic (in pounds)   Widgets ​514​617​719​​ 
-Table 7-2 contains information on widget production.The marginal physical product of the sixth pound of plastic is ____.

Accepted Answer

A)  (19/7)  - (17/6) 
B)  1/3
C)  2
D)  3 E) A) and B)
F) B) and C)

Question 8

Which of the following is a fixed cost to farmer McDonald?

Accepted Answer

A)  gasoline
B)  fertilizer
C)  insurance
D)  seedE) B) and C)
F) None of the above

Question 9

Table 7-1
   Workers  Toys 15212322430535\begin{array} { c c } 	ext { Workers } & 	ext { Toys } \1 & 5 \2 & 12 \3 & 22 \4 & 30 \5 & 35\end{array} Workers 12345​ Toys 512223035​ 
-In Table 7-1,the marginal physical product begins to diminish with the addition of the

Accepted Answer

A)  second worker.
B)  third worker.
C)  fourth worker.
D)  Marginal returns never diminish in Table 7-1. E) A) and B)
F) A) and C)

Question 10

Are returns to a single input and returns to scale one and the same? Explain.

Accepted Answer

No.
Returns to a single input refers to ...

Question 11

How long is the long run?

Accepted Answer

In the long run,all inputs are variable....

Question 12

The rule for the optimal use of any input says that

Accepted Answer

A)  when MRP is less than price, it pays to expand resource use.
B)  when MRP is greater than price, it pays to expand resource use.
C)  when MRP equals price, resource use should be cut back.
D)  resources should be used only if MRP exceeds price.E) None of the above
F) C) and D)

Question 13

Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-4
 
-Following a rash of airplane bombs,the airlines have been forced to increase security at a cost of $30 million per year.The number of inspectors and machines does not vary with the number of passengers-the airlines must have sufficient staff available to handle the full-capacity load.Which graph in Figure 7-4 best illustrates the impact of the security expenditures?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) None of the above
F) B) and D)

Question 15

A production indifference curve shows all combinations of input quantities capable of producing a given quantity of output.

Accepted Answer

A) True 
 B)False

Question 16

The short-run average cost curve shows the lowest possible average cost corresponding to each output level,assuming that all inputs are variable.

Accepted Answer

A) True 
 B)False

Question 17

If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs

Accepted Answer

A)  output will be below optimal.
B)  the MRP of the input will be below its price.
C)  costs will not be minimal.
D)  relative input prices need to change.E) A) and B)
F) A) and D)

Question 18

The marginal revenue product of an hour of labor used in steel production is equal to

Accepted Answer

A)  its marginal physical product times the hourly wage rate.
B)  its marginal physical product times the price of steel.
C)  the hourly wage rate.
D)  its marginal physical product divided by the price of steel.E) B) and C)
F) All of the above

Question 19

Firms should use a resource up to a point where MRP = P.

Accepted Answer

A) True 
 B)False

Question 20

In which case will the transition from short run to long run involve the shortest chronological time?

Accepted Answer

A)  a service that provides temporary secretaries to companies
B)  an automobile factory
C)  a farm
D)  an electric utilityE) None of the above
F) B) and D)

Exam 7: Production,Inputs,and Cost: Building Blocks for Supply Analysis

The short-run average cost curve shows the lowest possible average cost corresponding to each output level,assuming that all inputs are variable.

Correct Answer
verified

Firms should use a resource up to a point where MRP = P.

Correct Answer
verified

The rule for the optimal use of any input says that

Correct Answer
verified

If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs

Correct Answer
verified

Are returns to a single input and returns to scale one and the same? Explain.

Correct Answer
verified
No.
Returns to a single input refers to ...
View Answer

Table 7-2 $\begin{array} { l c c c } \text { Plastic (in pounds) } & 5 & 6 & 7 \\\hline \text { Widgets } & 14 & 17 & 19\end{array}$ -Table 7-2 contains information on widget production.The marginal physical product of the sixth pound of plastic is ____.

Correct Answer
verified

Correct Answer
verified

The expansion path of product indifference curves shows the cost-minimizing combination of inputs.

Correct Answer
verified

The marginal revenue product of an hour of labor used in steel production is equal to

Correct Answer
verified

How long is the long run?

Correct Answer
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In the long run,all inputs are variable....
View Answer

Variable costs increase when output rises.

Correct Answer
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Which of the following is correct?

Correct Answer
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Which of the following is a fixed cost to farmer McDonald?

Correct Answer
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Table 7-1 $\begin{array} { c c } \text { Workers } & \text { Toys } \\1 & 5 \\2 & 12 \\3 & 22 \\4 & 30 \\5 & 35\end{array}$ -In Table 7-1,the marginal physical product begins to diminish with the addition of the

Correct Answer
verified

In which case will the transition from short run to long run involve the shortest chronological time?

Correct Answer
verified

Figure 7-1 -In Figure 7-1,which graph best represents total physical product with diminishing returns?

Correct Answer
verified

If a firm has a U-shaped long-run average cost curve,

Correct Answer
verified

A production indifference curve shows all combinations of input quantities capable of producing a given quantity of output.

Correct Answer
verified

If significant economies of scale are present,large firms will be much more efficient producers than small firms.

Correct Answer
verified

Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.

Correct Answer
verified

Exam 7: Production,Inputs,and Cost: Building Blocks for Supply Analysis

The short-run average cost curve shows the lowest possible average cost corresponding to each output level,assuming that all inputs are variable.

Correct AnswerverifiedShow Answer

Firms should use a resource up to a point where MRP = P.

Correct AnswerverifiedShow Answer

The rule for the optimal use of any input says that

Correct AnswerverifiedShow Answer

If on a given product indifference curve a firm is using an insufficient (nonoptimal) amount of one of its inputs

Correct AnswerverifiedShow Answer

Are returns to a single input and returns to scale one and the same? Explain.

Correct AnswerverifiedNo.Returns to a single input refers to ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The expansion path of product indifference curves shows the cost-minimizing combination of inputs.

Correct AnswerverifiedShow Answer

The marginal revenue product of an hour of labor used in steel production is equal to

Correct AnswerverifiedShow Answer

How long is the long run?

Correct AnswerverifiedIn the long run,all inputs are variable....View AnswerShow Answer

Variable costs increase when output rises.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Which of the following is a fixed cost to farmer McDonald?

Correct AnswerverifiedShow Answer

Table 7-1 Workers Toys 15212322430535\begin{array} { c c } \text { Workers } & \text { Toys } \\1 & 5 \\2 & 12 \\3 & 22 \\4 & 30 \\5 & 35\end{array} Workers 12345​ Toys 512223035​ -In Table 7-1,the marginal physical product begins to diminish with the addition of the

Correct AnswerverifiedShow Answer

In which case will the transition from short run to long run involve the shortest chronological time?

Correct AnswerverifiedShow Answer

Figure 7-1 -In Figure 7-1,which graph best represents total physical product with diminishing returns?

Correct AnswerverifiedShow Answer

If a firm has a U-shaped long-run average cost curve,

Correct AnswerverifiedShow Answer

A production indifference curve shows all combinations of input quantities capable of producing a given quantity of output.

Correct AnswerverifiedShow Answer

If significant economies of scale are present,large firms will be much more efficient producers than small firms.

Correct AnswerverifiedShow Answer

Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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No.
Returns to a single input refers to ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In the long run,all inputs are variable....
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Table 7-1 $\begin{array} { c c } \text { Workers } & \text { Toys } \\1 & 5 \\2 & 12 \\3 & 22 \\4 & 30 \\5 & 35\end{array}$ -In Table 7-1,the marginal physical product begins to diminish with the addition of the

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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