Additional Chapter test - Chapter 22

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Write your name on the exam and the answer sheet. Answer each of the questions on the answer sheet provided. You may write on the exam.

1.
 OutputTotal cost0\$10120228338453573698 R-1 REF 22-60 (REF22058)

Refer to the above table. The average total cost of producing 3 units of output is:
 A. \$9.33.
 B. \$10.
 C. \$12.67.
 D. \$38.

2.
 OutputTotal cost0\$10120228338453573698 R-1 REF 22-60 (REF22058)

Refer to the above table. The marginal cost of producing the sixth unit of output is:
 A. \$10.
 B. \$16.33.
 C. \$25.
 D. \$98.

3.
 Plant sizes get larger as you move from ATC-1 to ATC-4.OutputATC-1ATC-2ATC-3ATC-41500\$10\$15\$20\$302000812172525009101520300012813183500156111640001810914450020127125000241511105500291913860003525159 R-2 REF 22-141 (REF22133)

Refer to the above table. Over what range of output are diseconomies of scale experienced by this firm?
 A. 3000 to 6000
 B. 3500 to 6000
 C. 4000 to 6000
 D. 4500 to 6000

4.
 Plant sizes get larger as you move from ATC-1 to ATC-4.OutputATC-1ATC-2ATC-3ATC-41500\$10\$15\$20\$302000812172525009101520300012813183500156111640001810914450020127125000241511105500291913860003525159 R-2 REF 22-141 (REF22133)

Refer to the above table. Over what range of output are economies of scale experienced by this firm?
 A. 1500 to 3000
 B. 1500 to 3500
 C. 2000 to 3500
 D. 2000 to 4000

5. Over the range of positive, but diminishing, marginal returns for an input, the total product curve:
 A. falls.
 B. rises at a constant rate.
 C. rises at a decreasing rate.
 D. rises at an increasing rate.

6. If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?
 A. None.
 B. Marginal cost would increase by 50 percent.
 C. Marginal cost would increase by less than 50 percent.
 D. Marginal cost would increase by more than 50 percent.

7. The following cost data are for a firm operating in the short run.

OutputTotal cost
0\$ 400
1900
21,300
31,600
42,000
52,500
63,100

Other things equal, diminishing returns begin to set in with the production of which unit of output?
 A. 2
 B. 3
 C. 4
 D. 5

8. In the short run, the average fixed costs of production:
 A. decrease as output increases.
 B. increase as output increases.
 C. decrease and then increase as output increases.
 D. may increase or decrease depending on average variable cost.

9. The long run is a period of time for which:
 A. all resources are fixed.
 B. the level of output is fixed.
 C. the amount of all resources can be varied.
 D. the sized of the production plant is fixed.

10. At an output level of 50 units per day a firm has average total costs of \$60 and average variable costs of \$35. Its total fixed costs are:
 A. \$925.
 B. \$1,250.
 C. \$1,750.
 D. \$3,000.

11. The short run is a time period in which:
 A. all resources are fixed.
 B. the level of output is fixed.
 C. the size of the production plant is variable.
 D. some resources are fixed and others are variable.

12. The primary reason why an introductory textbook costs less than an advanced textbook, even though the introductory textbook is several hundred pages longer and has fancier printing, is because of:
 A. the law of diminishing returns.
 B. constant returns to scale.
 C. economies of scale.
 D. sunk costs.

13. The marginal product of labor curve shows the change in total product resulting from a:
 A. One-unit increase in the quantity of a particular resource used, letting other resources vary.
 B. One-unit increase in the quantity of a particular resource used, holding constant other resources.
 C. change in the cost of a variable resource.
 D. change in the cost of a fixed resource.

14.
 R-3 REF 22-94

Based on the diagram above, which of the following statements is true?
 A. Average total cost at Q2 is the slope of line 0A.
 B. Average total cost at Q1 is the slope of line AB.
 C. Marginal cost at Q2 is the slope of line CB.
 D. Marginal cost at Q1 is the slope of line 0A.

15. If the total cost of 20 units is \$20, and the total cost of 21 units is \$21, then over the range 20 to 21 units:
 A. marginal cost is decreasing.
 B. marginal cost equals average total cost.
 C. marginal cost equals average variable cost.
 D. average total cost equals average variable cost.

16. Economic profit is:
 A. total revenues minus fixed costs.
 B. total revenues from sales minus the cost of materials.
 C. total revenues minus the opportunity cost of the inputs.
 D. gross profit minus selling and operating expenses.

17. The following cost data are for a firm in the short run:

OutputTotal cost
0\$400
1500
2550
3600
4650
5700

What is the firm's average variable cost at an output of 5 units?
 A. \$30
 B. \$60
 C. \$120
 D. \$140

18.
 R-4 REF 22-148

Which of the figures above correctly depicts a firm which does not experience diseconomies of scale?
 A. graph A
 B. graph B
 C. graph C
 D. graph D

19. The reason the marginal cost curve eventually increases as output increases for the typical firm is because:
 A. of diseconomies of scale.
 B. of minimum efficient scale.
 C. of the law of diminishing returns.
 D. normal profit exceeds economic profit.

20.
 Inputworkers)OutputTFCTVCTotal cost00500185040902205080328501201704355021054150200250 R-5 REF 22-86 (REF22082)

Refer to the above table. The total cost of producing 20 units of output is:
 A. \$50.
 B. \$80.
 C. \$120.
 D. \$130.

21. If the short-run average variable cost of production for a firm is decreasing, then it follows that:
 A. average variable cost must be above average fixed cost.
 B. marginal cost must be below average variable cost.
 C. average fixed cost must be constant.
 D. marginal cost must be decreasing.

22. When a firm is experiencing economies of scale:
 A. minimum efficient scale has been achieved.
 B. long-run average total cost is decreasing.
 C. an increase in long-run total cost is accompanied by a less-than-proportionate increase in output.
 D. a given percentage increase in all resource inputs results in a less-than-proportionate increase in output.

23. Which of the following is the best example of a fixed cost of production to a firm?
 A. depreciation of capital
 B. wages paid to workers
 C. electricity charges

24. Economies of scale are shown by a(n):
 A. increasing marginal cost curve.
 B. difference between total revenue and total cost.
 C. increasing segment of the average variable cost curve.
 D. decreasing segment of the long-run average cost curve.

25. The law of diminishing returns only applies in cases where:
 A. there is increasing scarcity of factors of production.
 B. the price of extra units of a factor is increasing.
 C. there is at least one fixed factor of production.
 D. capital is a variable input.

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