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

Transcription

1 Chapter 11 practice set Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A firm has successfully adopted a positive technological change when 1) A) it can pay its workers less yet increase its output. B) it sees an increase in worker productivity. C) it can produce more output using the same inputs. D) it produces less pollution in its production process. 2) If a producer is not able to expand its plant capacity immediately, it is 2) A) operating in the long run. B) bankrupt. C) losing money. D) operating in the short run. 3) The marginal product of labor is defined as 3) A) the additional number of workers required to produce one more unit of output. B) the cost of hiring one more worker. C) the additional output that results when one more worker is hired, holding all other resources constant. D) the additional sales revenue that results when one more worker is hired. 4) 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) 2 chairs. B) 3 chairs. C) 4 chairs. D) 38 chairs. 4) 5) The law of diminishing marginal returns states 5) A) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. B) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. C) that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. D) that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. 1

2 Figure ) Refer to Figure The marginal product of the 3rd worker is 6) A) 57. B) 19. C) 15. D) 11. 7) Refer to Figure The marginal product of the 7th worker is 7) A) 66. B) C) 2. D) -2. 8) Refer to Figure The average product of the 4th worker 8) A) is 68. B) is 17. C) is 11. D) cannot be determined. 9) Refer to Figure Diminishing marginal productivity sets in after 9) A) the 2nd worker is hired. B) the 3rd worker is hired. C) the 4th worker is hired. D) the 5th worker is hired. 10) Refer to Figure In a diagram that shows the marginal product of labor on the vertical axis and labor on the horizontal axis, the marginal product curve A) never intersects the horizontal axis. B) intersects the horizontal axis at a point corresponding to the 5th worker. C) intersects the horizontal axis at a point corresponding to the 6th worker. D) intersects the horizontal axis at a point corresponding to the 8th worker. 10) 2

3 Table 11-1 Number of Workers Mushrooms per Day (pounds) Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. 11) Refer to Table What is the marginal product of the 4th worker? 11) A) 137 pounds B) 50 pounds C) 12.5 pounds D) 5 pounds 12) Refer to Table What is the average product of labor when the farm hires 5 workers? 12) A) 4 pounds B) 10.8 bushels C) 38.2 pounds D) 54 pounds 13) Refer to Table Diminishing marginal returns sets in when the worker is hired. 13) A) 2nd B) 3rd C) 4th D) None of the above; the production function displays increasing marginal returns. 14) Marginal cost is equal to the 14) A) change in average total costs divided by the change in output. B) change in total cost divided by the change in output. C) change in total product divided by the change in output. D) change in average product divided by the change in output. 15) Which of the following equations is correct? 15) A) AVC + ATC = AFC B) AFC + AVC = ATC C) ATC + AVC = AFC D) AVC - ATC = AFC Table 11-7 Quantity of Lanterns Fixed Cost Variable Cost Total Cost Average Total Cost Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. 16) Refer to Table What is the variable cost of production when the firm produces 115 lanterns? 16) A) $1,556 B) $1,157 C) $956 D) $

4 17) Refer to Table What is the average total cost of production when the firm produces 120 lanterns? A) $1,680 B) $72 C) $14 D) $ ) Refer to Table What is the average variable cost per unit of production when the firm produces 90 lanterns? A) $490 B) $33.67 C) $7.67 D) $ ) Refer to Table What is the marginal cost per unit of production when the firm produces 100 lanterns? A) $420 B) $32 C) $11.1 D) $8.1 17) 18) 19) Figure ) Refer to Figure Identify the curves in the diagram. 20) A) E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve B) E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve C) E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve D) E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve. 21) Refer to Figure The vertical difference between curves F and G measures 21) A) marginal costs. B) fixed costs. C) average fixed costs. D) sunk costs. 22) Refer to Figure Curve G approaches curve F because 22) A) fixed cost falls as capacity rises. B) total cost falls as more and more is produced. C) average fixed cost falls as output rises. D) marginal cost is above average variable costs. 4

5 Figure 11-7 Figure 11-7 shows the cost structure for a firm. 23) Refer to Figure When the output level is 100 units average fixed cost is 23) A) $10. B) $8. C) $5. D) This cannot be determined from the diagram. 24) Refer to Figure When output level is 100, what is the total cost of production? 24) A) $20 B) $1,000 C) $1,200 D) $2,000 25) Refer to Figure If output is 100 units what is the fixed cost of production? 25) A) $8 B) $800 C) $1,000 D) This cannot be determined from the diagram. 5

6 Answer Key Testname: UNTITLED1 1) C 2) D 3) C 4) A 5) A 6) C 7) D 8) B 9) A 10) B 11) D 12) B 13) B 14) B 15) B 16) B 17) C 18) D 19) B 20) D 21) C 22) C 23) B 24) D 25) B 6