Practice MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Transcription

1 Practice MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An example of a variable resource in the short run is A) an employee. B) land. C) a building. D) capital equipment. 1) 2) In the long run, a firm can vary A) its labor but not its capital. B) both its labor and its capital. C) its capital but not its labor. D) neither its labor nor its capital. 2) 3) The marginal product of labor is the increase in total product from a A) one dollar increase in the wage rate, while holding the price of capital constant. B) one unit increase in the quantity of labor, while holding the quantity of capital constant. C) one percent increase in the wage rate, while also increasing the price of capital by one percent. D) one unit increase in the quantity of labor, while also increasing the quantity of capital by one unit. 3) 4) The marginal product of labor is the A) maximum output attainable with fixed factors when labor is the only variable factor. B) output level above which the slope of the total product curve falls. C) change in output resulting from a one-unit increase in labor. D) output level above which the rate of total product per unit of labor falls. 4) 5) The average product of labor is A) the slope of the curve showing the total product of labor. B) total product divided by the total quantity of labor employed. C) the slope of the curve showing the marginal product of labor. D) the inverse of the average product of capital. 5) Total Product, Marginal Product, Average Product Labor (workers per day) Total product (units per day) Marginal product Average product ) In the above table, the marginal product of the second worker is A) 3. B) 4. C) 1. D) 2. 6) 7) In the above table, the marginal product of the third worker is A) 2. B) 3. C) 4. D) 1. 7) 8) In the above table, the marginal product of the fourth worker is A) 1. B) 6. C) 4. D) 3. 8) 1

2 9) In the above table, the marginal product is greatest when the A) second worker is hired. B) third worker is hired. C) first worker is hired. D) fourth worker is hired. 9) 10) In the above table, the average product of three workers is A) 3. B) 4. C) 2. D) 1. 10) Labor (workers per day) Quantity (T shirts per day) ) The table above shows some data that describe Tomʹs T-Shirtsʹ total product when Tom has 1 sewing machine. An increase in the number of workers from 1 to 2 a day increases average product of labor from T shirts per worker and marginal product of labor is T shirts per worker. A) 10 to 22; 12 B) 10 to 22; 22 C) 10 to 11; 12 D) 10 to 11; 22 11) 12) The table above shows some data that describe Tomʹs T-Shirtsʹ total product when Tomʹs has 1 sewing machine. Diminishing marginal returns begin when the is employed. A) second worker B) third worker C) fourth worker D) fifth worker 12) 13) Total cost is the sum of fixed costs and A) accounting costs. B) explicit costs. C) variable costs. D) implicit costs. 13) 14) A firm has fixed costs A) neither in the long run nor in the short run. B) in the short run but not in the long run. C) in the long run but not in the short run. D) in the short run and in the long run. 14) 2

3 Labor (workers) Output (units per day) Cost schedule Total fixed cost Total variable cost ) In the above table, the total cost of producing 9 units of output is A) $50. B) $30. C) $20. D) $70. 15) Output (pies) Total variable cost Total cost , , ,800 16) The above table gives some of the costs of the Delicious Pie Company. What is the total fixed cost of producing 100 pies? A) $700 B) $300 C) $400 D) More information is needed to calculate the total fixed cost. 16) 17) The above table gives some of the costs of the Delicious Pie Company. The marginal cost of increasing pie output from 200 to 300 pies equals per pie. A) $8 B) $1.800 C) $6 D) $1,000 17) 18) The above table gives some of the costs of the Delicious Pie Company. What is the average variable cost of producing 300 pies? A) $6 B) $5 C) $1,800 D) More information is needed to calculate the average variable cost. 18) 19) The above table gives some of the costs of the Delicious Pie Company. What is the average total cost of producing 200 pies? A) $5.00 B) $6.50 C) $650 D) More information is needed to calculate the average variable cost. 19) 3

4 Output (units) Total cost Average variable cost Marginal cost ) The above (incomplete) table provides information about the relationships between output and various cost measures. The total fixed cost (TFC) for the firm is A) zero. B) $10. C) $45. D) None of the above answers is correct. 20) 21) The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is A) $190. B) $180. C) $20. D) None of the above answers is correct. 21) 22) The above (incomplete) table provides information about the relationships between output and various cost measures. The marginal cost per unit when increasing output from 14 to 17 units is A) $380. B) $30. C) $20. D) None of the above answers is correct. 22) 23) In the above figure, the total fixed cost curve is curve A) A. B) B. C) C. D) none of the curves in the figure 23) 4

5 24) In the above figure, the total variable cost curve is curve A) A. B) B. C) C. D) none of the curves in the figure 24) 25) In the above figure, the total cost curve is curve A) A. B) B. C) C. D) none of the curves in the figure 25) 26) In the above figure, the marginal cost curve is curve A) A. B) B. C) C. D) D. 26) 27) In the above figure, the average fixed cost curve is curve A) A. B) B. C) C. D) D. 27) 28) In the above figure, the average variable cost curve is curve A) A. B) B. C) C. D) D. 28) 29) In the above figure, the average total cost curve is curve A) A. B) B. C) C. D) D. 29) 30) Patʹs Catering finds that when it caters 20 meals a week, its total cost is $6,000. If Pat has total variable cost of $5,000, what is Patʹs total fixed cost? A) $1,000 B) $250 C) $50 D) $6,000 30) 31) A farmer discovers that the total cost of growing 50 acres of eggplant is $50,000 and that the total cost of growing 51 acres of eggplant is $52,000. The marginal cost of the 51st acre of eggplant is A) $1,000. B) $52,000. C) $2,000. D) $50, ) 32) Which curve intersects the AVC curve at its minimum point? A) the MC curve B) the ATC curve C) the MP curve D) the AFC curve 32) 5

6 33) In the above figure, which of the following statements is FALSE? A) The vertical gap between curves B and C gets smaller as AFC decreases. B) The vertical gap between curves B and C equals marginal fixed cost. C) Curve A is the marginal cost curve. D) Average fixed cost decreases as output decreases. 33) 34) The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 20 units per day? A) plant A B) plant B C) plant C D) plant D 34) 6

7 35) The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 60 units per day? A) plant A B) plant B C) plant C D) plant D 35) 36) When long-run average costs decrease as output increases, there are A) diseconomies of scale. B) economies of scale. C) constant returns to scale. D) constant marginal costs. 36) 37) In the above figure, the long-run average cost curve exhibits economies of scale A) between 10 and 20 units per hour. B) between 5 and 10 units per hour. C) along the entire curve. D) between 20 and 25 units per hour. 37) 7

8 38) The figure above shows Claraʹs demand for CDs. If the market price for a CD is $15, then Clara A) receives a total of $40 of consumer surplus. B) will buy no CDs. C) receives no consumer surplus on the 6th CD she buys. D) receives a total of $10 of consumer surplus. 38) 39) In the figure above, when production is 3 units with a price of $3, the consumer surplus equals A) a + b. B) a + b + f + g + h + l. C) a + b + f + g. D) a + b + f + g + h + l + i + m. 39) 8

9 40) The figure tells us about the market for red roses. The consumer surplus is a day. A) $20 B) $200 C) $800 D) $1,000 40) 41) In the above figure, if the market price is $100 per ton, then the firmʹs producer surplus on the second ton of wheat is A) $50. B) $100. C) $75. D) $25. 41) 9

10 42) In the figure above, when production is 3 units with a price of $3, the producer surplus in this market equals A) b + g. B) a + b + f + g + h + i. C) a + b + f + g. D) f + g. 42) 43) In the above figure, the efficient quantity of magazines to produce per day is A) more than 300,000 magazines. B) 0, because that is where the marginal social benefit exceeds the marginal social cost by as much as possible. C) more than 0 and less than 300,000 magazines. D) 300,000 magazines. 43) 10

11 44) In the above figure, the deadweight loss is zero if output is A) 0 units. B) 30 units. C) 10 units. D) 20 units. 44) 45) In the above figure, if output is 10 units, then the total deadweight loss is A) $20. B) $60. C) $10. D) $5. 45) 11

12 46) The figure above shows Claraʹs demand for CDs. The market price for a CD is $15. Which statement is true? A) When Clara buys 6 CDs, she receives a total of $15 of consumer surplus. B) When Clara buys 6 CDs, she receives a total of $45 of consumer surplus. C) When Clara buys 6 CDs, she receives $15 of consumer surplus on her 6th CD. D) When Clara buys 6 CDs, she receives a total of $30 of consumer surplus. 46) 12

13 Answer Key Testname: UNTITLED1 1) A 2) B 3) B 4) C 5) B 6) B 7) C 8) D 9) A 10) B 11) C 12) B 13) C 14) B 15) D 16) B 17) A 18) B 19) B 20) B 21) A 22) B 23) C 24) B 25) A 26) A 27) D 28) C 29) B 30) A 31) C 32) A 33) B 34) A 35) B 36) B 37) B 38) C 39) A 40) B 41) D 42) D 43) D 44) D 45) C 46) B 13