Download Microeconomics - Testbank 1 (Hubbard/O`Brien)

Microeconomics - Testbank 1 (Hubbard/O'Brien)
Chapter 10 Technology, Production, and Costs
c1) The average total cost of production is the:
A extra cost required to produce one more unit.
)
B total cost of production.
)
C total cost of production divided by the level of
) output.
D total cost of production multiplied times the level of
) output.
d2) Among the potential sources of an advance in
technology for a producing firm is:
A better trained workers.
)
B more efficient physical capital.
)
C higher skill level of managers.
)
D all of the above.
)
d3) The short run is:
A one day.
)
B one week.
)
C six months.
)
D as long it takes a particular firm to change its plant
) capacity.
c4) A factor of production that is not fixed in the short run
is:
A physical capital.
)
B technology.
)
C labor.
)
D land.
)
d5) A characteristic of the long run is:
A there are no fixed inputs.
)
B all inputs can be varied.
)
C plant capacity can be increased or decreased.
)
D all of the above.
)
b6) Economics cost of production differ from those in
accounting in that:
A economics includes expenditures for hired resources
) while accounting does not.
B economics adds the opportunity cost of a firm using
) its own resources.
C
)
accounti includes expenditures for hired resources while
ng
economics does not.
D accounting costs are always larger than economic
) costs.
d7) Which of the following is an implicit cost of production?
A Interest paid on a loan to a bank.
)
B Wages paid to labor plus the cost of carrying benefits
) for workers.
C The utility bill paid to water, electricity, and natural
) gas companies.
D Rent that could have been earned on a building
) owned and used by the firm.
d8) Implicit costs of production are also called:
A overhead.
)
B variable costs.
)
C direct costs.
)
D opportunity costs.
)
c9) A factor of production that generally is fixed in the short
run is:
A raw materials.
)
B labor.
)
C a building.
)
D water.
)
c10 The relationship between different amounts of inputs
) and the resulting level of output is a:
A total cost schedule.
)
B production possibilities frontier.
)
C production function.
)
D production quota.
)
d1 If the firm is producing nothing in the short run, then:
1)
A total costs are zero.
)
B variable costs are low but positive.
)
C marginal costs are negative.
)
D fixed costs are positive.
)
c12 As a firm hires more labor in the short run, the:
)
A level of total product stays constant.
)
B output per worker rises.
)
C extra output of another worker may rise at first, but
) eventually must fall.
D costs of production are increasing at a fixed rate per
) unit of output.
Refer to Figure 10.1 for the questions below.
Figure 10.1
a13 In figure 10.1, diminishing returns to labor set in after:
)
A L1.
)
B L2.
)
C L3.
)
D none of the above.
)
c14 In figure 10.1, short run output is maximized at:
)
A L1.
)
B L2.
)
C L3.
)
D none of the above.
)
a15 In figure 10.1, AP of labor declines after L2 because:
)
A MP of labor is below AP of labor.
)
B MP of labor is falling.
)
C MP of labor is negative.
)
D MP of labor is positive.
)
c16 If four workers can produce 18 chairs a day and five can
) produce 20 chairs a day, the marginal product of the
fifth worker is:
A four chairs.
)
B five chairs.
)
C two chairs.
)
D 38 chairs.
)
d1 The short run marginal product of labor increasing at
7) first and then falling is an example of the law of:
A demand.
)
B supply.
)
C diminishing marginal utility.
)
D diminishing returns.
)
b1 The reason the marginal product of labor in the short
8) run increases at first and then falls is because:
A as more labor is hired, they are not as skilled as the
) first ones hired.
B there are fewer opportunities for division of labor
) and specialization.
C the management is inefficient.
)
D the extra workers have busy work piled on them.
)
d1 If 11 workers can produce a total of 54 units of a product
9) and another worker has a marginal product of six, then
the average product of 12 workers is:
A 60.
)
B
)
54.
C 48.
)
D 5.
)
b2 If another worker adds nine units of output to a group
0) of workers who had an average product of seven units,
then the average product of labor:
A will remain the same.
)
B will increase.
)
C will decrease.
)
D and what will happen to it can not be determined.
)
c21 If average product is decreasing, we know that:
)
A total product is negative.
)
B marginal product is negative.
)
C marginal product is smaller than average product.
)
D marginal product is at its positive.
)
d2 If all we know is all workers' marginal product, then
2) total and average product can be found by:
A
)
dividing marginal costs by the number of workers.
B multiplying the average marginal product times the
) number of workers.
C summing the marginal values to find the total and
) multiplying it times the number of workers to get the
average.
D summing the marginal values to find the total and
) dividing it by the number of workers to get the
average.
a23 If we know that marginal product is equal to average
) product, then:
A average product is at a maximum.
)
B total product is at a maximum.
)
C marginal product is at a maximum.
)
D average product must be falling.
)
c24 Marginal cost is U-shaped because of the:
)
A law of demand.
)
B law of diminishing marginal utility.
)
C law of diminishing returns.
)
D law of increasing costs.
)
b2 Average total cost is equal to:
5)
A average fixed costs minus average variable costs.
)
B total costs divided by the level of output.
)
C marginal costs plus variable costs.
)
D total costs divided by the number of workers.
)
Refer to Figure 10.2 for the questions below.
Figure 10.2
a26 In figure 10.2, the difference between average total costs
) and average variable costs is:
A average fixed costs.
)
B marginal costs.
)
C fixed costs.
)
D sunk costs.
)
b2 In figure 10.2, average variable costs approach average
7) total costs as output rises because:
A marginal costs are above average variable costs.
)
B average fixed costs are falling.
)
C fixed costs are falling.
)
D total costs are falling.
)
d2 In the long run:
8)
A all inputs in production are variable.
)
B there are no fixed costs.
)
C total costs equal variable costs.
)
D all of these are correct.
)
c29 Long run costs are U-shaped because:
)
A of the law of demand.
)
B of the law of diminishing returns.
)
C of economies and diseconomies of scale.
)
D of the law of supply.
)
b3 If average total cost is $50 and average fixed cost is $15
0) when output is 20 units, then the firm's total variable
cost at that level of output is:
A $1,000.
)
B $700.
)
C $300.
)
D impossible to determine without additional
) information.
b3 If average total cost is $50 and average fixed cost is $15
1) when output is 20 units, then the firm's average variable
cost at that level of output is:
A $45.
)
B $35.
)
C $30.
)
D impossible to determine without additional
) information.
d3 When the average total cost is $16, the level of total cost
2) is $800, then the number of units the firm is producing
is:
A impossible to determined with the information
) given.
B 784.
)
C 12,800.
)
D 50.
)
c33 If a firm doubles all its inputs in the long run and it
) finds its average cost of production has decreased, then
it has:
A diminishing returns.
)
B economies of scale.
)
C diseconomies of scale.
)
D declining fixed costs.
)
d3 Economies of scale exist because as a firm increases its
4) size in the long run:
A the firm can afford more sophisticated technology in
) production.
B labor and management can specialize their activities
) more.
C
)
as a
larger
input buyer the firm can purchase inputs at a lower
per unit cost.
D all of these.
)
b3 In natural monopolies such as the generation of
5) electricity, long-run average costs continue to decrease
as the plant size gets larger, because:
A diminishing returns are not present.
)
B diseconomies of scale are very minor but economies
) of scale continue.
C someone must have made a mistake at lower levels
) of output.
D there are no fixed costs.
)
b3 When a firm's long-run average cost curve is horizontal
6) for a range of output, then in that range the firm has:
A increasing returns to scale.
)
B constant returns to scale.
)
C decreasing returns to scale.
)
D constant average fixed costs.
)
b3 An isoquant shows:
7)
A the combinations of two goods that yield the same
) total satisfaction.
B the combinations of two inputs that yield the same
) total product.
C the combinations of two inputs that cost the same
) total quantity of money.
D the combination of two goods that cost the same
) amount of money.
b3 The typical shape of isoquants is:
8)
A concave towards the origin.
)
B convex towards the origin.
)
C straight downsloping line.
)
D straight upsloping line.
)
b3 As a firm substitutes labor for capital, more labor is
9) required to equal one less unit of capital because:
A capital is always more productive than labor.
)
B as less capital is used, diminishing returns to labor
) become more pronounced.
C diseconomies of scale.
)
D the price of each input changes.
)
b4 An isocost line shows:
0)
A
)
all the combinations of two inputs the firm can use.
possible
B all the possible combinations of two inputs the firm
) can use that have the same total cost.
C all the possible combinations of two inputs the firm
) can use that have the same marginal cost.
D all the possible combinations of two inputs with
) constant returns to scale.
c41 The position of the isocost line is determined by the:
)
A prices of the two inputs.
)
B productivities of the two inputs.
)
C level of total cost.
)
D price of the product.
)
c42 On an isoquant/isocost graph the least cost combination
) of producing a given output is:
A any point on the isoquant curve.
)
B any point on the isocost curve.
)
C the tangency point between the isoquant curve and
) the isocost line.
D only on one of the axes of the graph.
)
d4 Different economies might use different combinations
3) of inputs like labor and capital to produce the same
goods because of:
A different technologies.
)
B differences in the productivity of the inputs.
)
C differences in the prices of the inputs.
)
D all of the above.
)
a44 If labor is the horizontal axis input and physical capital
) is the vertical axis input, then at the least costs output:
A the marginal rate of technical substitution is equal to
) the wage rate divided by the cost of capital.
B the marginal rate of technical substitution is
) multiplied times the wage rate divided by the cost of
capital.
C the marginal rate of technical substitution is divided
) by the wage rate multiplied times the cost of capital.
D the marginal rate of technical substitution is equal to
) the amount of capital divided by the amount of
labor.
b4 If the amount of labor being used has a marginal
5) product of 12 units of output per worker at a wage rate
of $6 per worker and the current capital amount being
used has a marginal product of 20 units per machine,
then for this to be a least cost combination of inputs the
cost of capital must be:
A $2.
)
B $10.
)
C $20.
)
D Impossible to determine with the information given.
)