Question 1

Land,labor,capital and entrepreneurship are called:

Accepted Answer

A)   Factors of production.
B)   Factors of demand.
C)   Fixed costs.
D)   Variable costs.E) A) and D)
F) C) and D)

Question 2

Economic costs are greater than accounting costs:

Accepted Answer

A)   Only if implicit costs are greater than zero.
B)   Only if explicit costs are greater than implicit costs.
C)   Only in the long run.
D)   In the short run but not the long run.E) None of the above
F) All of the above

Question 3

A firm's production function will shift downward if worker productivity increases.

Accepted Answer

A) True 
 B)False

Question 4

If an additional unit of labor costs $30 and has an MPP of 50 units of output,the marginal cost is:

Accepted Answer

A)   $0.60.
B)   $1.66.
C)   $15.00.
D)   $1500.00.E) A) and B)
F) All of the above

Question 5

Marginal cost is equal to the change in variable costs divided by the change in output.

Accepted Answer

A) True 
 B)False

Question 6

Distinguish between explicit and implicit costs and give an example of each.Why would accounting profit be greater then or equal to economic profit?

Accepted Answer

a)Explicit costs are a monetary payment ...

Question 7

Figure 5.1: 
-In Figure 5.1,diminishing marginal returns first occur with the:

Accepted Answer

A)   Second worker.
B)   Third worker.
C)   Fifth worker.
D)   Sixth worker.E) A) and C)
F) All of the above

Question 8

The most desirable rate of output is the one that:

Accepted Answer

A)   Minimizes total costs.
B)   Maximizes total profit.
C)   Minimizes marginal costs.
D)   Maximizes total revenue.E) A) and B)
F) C) and D)

Question 9

A firm's rising factor costs can be offset by:

Accepted Answer

A)   Increases in productivity.
B)   Diminishing marginal product.
C)   Diminishing marginal utility.
D)   Rising marginal cost.E) A) and D)
F) A) and C)

Question 10

The best measure of the economic cost of doing your homework is:

Accepted Answer

A)   The tuition you pay for the class.
B)   The amount you would have to pay to get someone else to do it.
C)   Your instructor's salary.
D)   The best opportunity you give up when you do your homework.E) A) and B)
F) None of the above

Question 11

Table 5.1-Labor and output data 
-What is the marginal physical product of the first unit of labor in Table 5.1?

Accepted Answer

A)   0
B)   14
C)   16
D)   30E) All of the above
F) None of the above

Question 12

If the marginal physical product of an input is decreasing,output will also be decreasing.

Accepted Answer

A) True 
 B)False

Question 13

The reason the average total cost curve declines initially is because of:

Accepted Answer

A)   Falling average fixed cost.
B)   Falling average variable costs.
C)   Falling marginal cost.
D)   Falling average fixed cost and falling average variable costs.E) A) and B)
F) B) and C)

Question 14

The law of diminishing returns means that:

Accepted Answer

A)   The total product production function will eventually increase at a decreasing rate.
B)   The marginal product will increase at an increasing rate.
C)   Average total costs are rising and then falling as output is increased.
D)   Average fixed cost will fall as production increases.E) C) and D)
F) None of the above

Question 15

A production function shows the maximum amount of a particular good or service that can be produced with different combinations of resources.

Accepted Answer

A) True 
 B)False

Question 16

The change in total output that results from one additional unit of input is the:

Accepted Answer

A)   Marginal physical product.
B)   Average product of the input.
C)   Unit cost of the input.
D)   Input price.E) None of the above
F) A) and C)

Question 17

The main difference to an economist between "short-run" and "long-run" is that:

Accepted Answer

A)   Variable costs are short-run investment decisions where as fixed costs are long-run production decisions.
B)   In the short-run all resources are fixed where as in the long-run all resources are variable.
C)   In the long-run all resources are variable where as in the short-run at least one resource is fixed.
D)   Fixed costs are more important then variable costs in the short-run.E) A) and C)
F) A) and D)

Question 18

Which of the following is most likely a fixed cost?

Accepted Answer

A)   Raw materials
B)   Labor cost
C)   Shipping costs
D)   Property taxesE) B) and C)
F) A) and C)

Question 19

Investment decisions are long-run decisions.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following definitions is correct?

Accepted Answer

A)   Economic costs + accounting costs = Profit.
B)   Economic profit = accounting profit - implicit costs.
C)   Economic profit - implicit costs = accounting profits.
D)   Economic costs + explicit costs + implicit costs.E) None of the above
F) A) and D)

Exam 5: Supply Decisions

A production function shows the maximum amount of a particular good or service that can be produced with different combinations of resources.

Correct AnswerverifiedShow Answer

The change in total output that results from one additional unit of input is the:

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Marginal cost is equal to the change in variable costs divided by the change in output.

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Investment decisions are long-run decisions.

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A firm's rising factor costs can be offset by:

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The reason the average total cost curve declines initially is because of:

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Which of the following definitions is correct?

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Table 5.1-Labor and output data -What is the marginal physical product of the first unit of labor in Table 5.1?

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Figure 5.1: -In Figure 5.1,diminishing marginal returns first occur with the:

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The law of diminishing returns means that:

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The most desirable rate of output is the one that:

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If the marginal physical product of an input is decreasing,output will also be decreasing.

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Distinguish between explicit and implicit costs and give an example of each.Why would accounting profit be greater then or equal to economic profit?

Correct Answerverifieda)Explicit costs are a monetary payment ...View AnswerShow Answer

The best measure of the economic cost of doing your homework is:

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If an additional unit of labor costs $30 and has an MPP of 50 units of output,the marginal cost is:

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A firm's production function will shift downward if worker productivity increases.

Correct AnswerverifiedShow Answer

Land,labor,capital and entrepreneurship are called:

Correct AnswerverifiedShow Answer

The main difference to an economist between "short-run" and "long-run" is that:

Correct AnswerverifiedShow Answer

Economic costs are greater than accounting costs:

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Which of the following is most likely a fixed cost?

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a)Explicit costs are a monetary payment ...
View Answer

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