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| 1 | |
Which one of the following short-run cost curves would not be affected by an increase in the wage paid to a firm's labor? |
| | A) | Average variable cost |
| | B) | Average fixed cost |
| | C) | Average total cost |
| | D) | Marginal cost |
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| 2 | |
Economies of scale are reflected in the downward-sloping segment of the firm's: |
| | A) | long-run average cost curve |
| | B) | short-run marginal cost curve |
| | C) | short-run average total cost curve |
| | D) | average fixed cost curve |
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| 3 | |
Use the following data to answer the next question. The letters A, B, and C designate three successively larger plant sizes.
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Refer to the data. In the long run, the firm should use plant size "C" for: |
| | A) | all possible levels of output |
| | B) | 100 to 300 units of output |
| | C) | 400 to 600 units of output |
| | D) | 600 or more units of output |
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| 4 | |
Which of the following is a source of economies of scale? |
| | A) | Spreading overhead |
| | B) | Managerial specialization |
| | C) | Falling wage rates |
| | D) | Diminishing marginal product |
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| 5 | |
"The increase in total output arising from the employment of an additional worker" describes: |
| | A) | marginal cost |
| | B) | marginal revenue |
| | C) | total product |
| | D) | marginal product |
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| 6 | |
Use the following diagram to answer the next question.
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Refer to the diagram. Which of the following explains the shape of the curve over the output range from Q1 to Q3? Over this range: |
| | A) | capital is constant |
| | B) | total labor cost is constant |
| | C) | there are constant returns to scale |
| | D) | the law of diminishing returns does not apply |
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| 7 | |
Which one of the following must increase if output decreases? |
| | A) | Marginal cost |
| | B) | Average fixed cost |
| | C) | Average variable cost |
| | D) | Average total cost |
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| 8 | |
Use the following diagram to answer the next question.
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Refer to the diagram. Marginal cost and average variable cost are equal to each other when the firm hires: |
| | A) | Q1 workers |
| | B) | Q2 workers |
| | C) | Q3 workers |
| | D) | between Q2 and Q3 workers |
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| 9 | |
If marginal product is positive but falling: |
| | A) | marginal cost must also be falling |
| | B) | average product must be falling |
| | C) | total product is increasing at a decreasing rate |
| | D) | total product is falling |
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| 10 | |
At a firm's minimum efficient scale (MES) of operations, the corresponding value on its long-run average cost curve is $5 per unit. If the firm chooses to produce the output corresponding to MES: |
| | A) | its cost per unit will be less than $5, but that would imply declining average fixed cost |
| | B) | its cost per unit may exceed $5, but that would imply an inefficient use of resources |
| | C) | its cost per unit may exceed $5 even if it is employing all its resources efficiently |
| | D) | it could reduce its cost per unit to less than $5 by expanding output |
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