Page 78
352.
(Table: Tonya’s Production Function for Apples) Use Table: Tonya’s Production
Function for Apples. In the short run, Tonya’s variable input(s) is/are:
A)
land.
B)
labor.
C)
land and labor.
D)
neither land nor labor.
353.
(Table: Tonya’s Production Function for Apples) Use Table: Tonya’s Production
Function for Apples. As she hires more labor, Tonya’s production function shows that
the number of apples picked increases at a decreasing rate because of:
A)
diminishing returns.
B)
increasing returns.
C)
constant returns.
D)
workers becoming lazier.
Page 79
354.
(Table: Tonya’s Production Function for Apples) Use Table: Tonya’s Production
Function for Apples. The marginal product of the fourth worker is _____ apples.
A)
7
B)
26
C)
5
D)
21
355.
With one input fixed, a firm will find that as it attempts to produce more, the total
product curve increases at a decreasing rate and its marginal product curve is:
A)
downward sloping.
B)
upward sloping.
C)
constant and horizontal at the marginal product axis.
D)
constant and vertical at the quantity axis.
356.
(Table: Linda’s Copy Shop Production) Use Table: Linda’s Copy Shop Production.
Linda’s production runs into diminishing returns to her variable inputs when she
employs the _____ unit.
A)
second
B)
third
C)
fourth
D)
fifth
Page 80
357.
Janet’s poodle grooming salon has a total cost curve expressed by the equation TC = 100
+ 3Q2, where Q is the quantity of dogs groomed. Given this expression, Janet is
operating in the:
A)
long run.
B)
short run, and her fixed costs are $100.
C)
long run, and her fixed costs are $100.
D)
short run, and there are no fixed costs.
358.
Janet’s poodle grooming salon has a total cost curve expressed by the equation TC = 100
+ 3Q2, where Q is the quantity of dogs groomed. Given this expression, if Janet grooms
five dogs, her total costs will be:
A)
$100.
B)
$175.
C)
$225.
D)
$75.
359.
Janet’s poodle grooming salon has a total cost curve expressed by the equation TC = 100
+ 3Q2, where Q is the quantity of dogs groomed. Janet notices that, as she grooms more
dogs, her total cost curve:
A)
becomes steeper.
B)
becomes flatter.
C)
stays constant.
D)
becomes steeper and then becomes horizontal.
360.
A firm’s total fixed cost:
A)
stays constant in the short run.
B)
falls as the firm produces more output in the short run.
C)
falls as the firm produces more output in the long run.
D)
increases as the firm produces more output.
Page 81
361.
(Table: Lindsay’s Farm) Use Table: Lindsay’s Farm. Lindsay’s fixed cost of production
is:
A)
$200.
B)
$450.
C)
$2,500.
D)
$2,700.
362.
(Table: Lindsay’s Farm) Use Table: Lindsay’s Farm. Lindsay’s variable costs of
production:
A)
stay constant.
B)
are equal to 10.
C)
are zero when she produces no crops.
D)
fall as soon as she starts producing.
Page 82
363.
(Table: Lindsay’s Farm) Use Table: Lindsay’s Farm. When Lindsay produces 140 units
of produce, her total cost is:
A)
$200.
B)
$150.
C)
$350.
D)
$500.
364.
(Table: Lindsay’s Farm) Use Table: Lindsay’s Farm. When Lindsay produces 50 units of
produce, her total cost is:
A)
$250.
B)
$50.
C)
$200.
D)
$350.
Page 83
365.
(Table: Bonnie’s Production Function for Good Z) Use Table: Bonnie’s Production
Function for Good Z. The marginal product of labor of the second worker is _____ units
of good Z.
A)
150
B)
225
C)
75
D)
250
366.
(Table: Bonnie’s Production Function for Good Z) Use Table: Bonnie’s Production
Function for Good Z. Diminishing returns to labor begin to kick in after Bonnie hires
the _____ worker.
A)
second
B)
third
C)
fourth
D)
fifth
Page 84
367.
(Table: Bonnie’s Production Function for Good Z) Use Table: Bonnie’s Production
Function for Good Z. Suppose Bonnie spends $300 per month to rent the building, $100
per month on insurance, and $100 per worker per month. Given this information,
Bonnie’s monthly fixed costs equal:
A)
$400.
B)
$300.
C)
$500.
D)
$100.
368.
(Table: Bonnie’s Production Function for Good Z) Use Table: Bonnie’s Production
Function for Good Z. The costs that vary with Bonnie’s level of production are her:
A)
fixed costs.
B)
variable costs.
C)
rent and insurance.
D)
costs that remain the same regardless of what she produces.
Page 85
369.
Diminishing returns are a reason that:
A)
the marginal cost curve is downward sloping.
B)
fixed costs remain constant.
C)
the marginal cost curve is upward sloping.
D)
the average fixed cost curve is downward sloping.
370.
When a firm produces a small amount of output, the spreading effect:
A)
is stronger than the diminishing returns effect.
B)
is weaker than the diminishing returns effect.
C)
and the diminishing returns effect are equal.
D)
is zero.
371.
As production increases and the fixed cost is divided by larger quantities of output,
average fixed cost drops. This is referred to as the _____ effect.
A)
diminishing returns
B)
spreading
C)
constant cost
D)
increasing returns
372.
The eventual increase in AVC as output increases is the _____ effect.
A)
diminishing returns
B)
spreading
C)
constant cost
D)
increasing returns
373.
If ATC is equal to MC, then the firm is operating:
A)
at the minimum point of ATC.
B)
on the downward-sloping portion of ATC.
C)
on the upward-sloping portion of ATC.
D)
with increasing returns to scale.
374.
The curve that illustrates the relationship between output and average total cost when
the fixed cost has been chosen to minimize average total cost for each level of output is
the _____ curve.
A)
short-run average total cost
B)
long-run average total cost
C)
marginal cost
D)
total product
Page 86
375.
When all of a firm’s inputs are doubled, input prices do not change, and this results in
the firm’s level of production more than doubling, a firm is operating:
A)
on the upward-sloping portion of its long-run average total cost curve.
B)
on the downward-sloping portion of its long-run average total cost curve.
C)
at the minimum of its long-run average total cost curve.
D)
on the upward-sloping portion of its marginal cost curve.
376.
A firm’s long-run average total costs increase as it produces more output. This firm has:
A)
economies of scale.
B)
constant returns to scale.
C)
diseconomies of scale.
D)
a spreading effect.
377.
Economies and diseconomies of scale are associated with the:
A)
long-run average total cost curve and the long run.
B)
short-run average total cost curve and the short run.
C)
marginal cost curve and both the long and short run.
D)
average fixed cost curve and the short run.
Answer Key
Page 88
45.
C
46.
D
47.
A
48.
D
49.
B
50.
A
51.
A
52.
A
53.
A
54.
A
55.
D
56.
B
57.
B
58.
B
59.
A
60.
B
61.
D
62.
D
63.
C
64.
B
65.
B
66.
B
67.
A
68.
C
69.
B
70.
B
71.
D
72.
C
73.
C
74.
A
75.
C
76.
B
77.
D
78.
B
79.
C
80.
D
81.
B
82.
C
83.
A
84.
A
85.
D
86.
A
87.
B
88.
D
89.
B
90.
A
Page 89
91.
A
92.
D
93.
D
94.
C
95.
B
96.
B
97.
C
98.
C
99.
D
100.
B
101.
A
102.
B
103.
A
104.
D
105.
C
106.
C
107.
B
108.
A
109.
A
110.
D
111.
B
112.
A
113.
B
114.
A
115.
D
116.
D
117.
A
118.
A
119.
D
120.
A
121.
C
122.
D
123.
A
124.
D
125.
B
126.
A
127.
B
128.
C
129.
B
130.
A
131.
D
132.
C
133.
B
134.
B
135.
B
136.
C
Page 90
137.
C
138.
D
139.
C
140.
B
141.
C
142.
D
143.
B
144.
D
145.
D
146.
A
147.
A
148.
C
149.
D
150.
A
151.
C
152.
A
153.
B
154.
C
155.
D
156.
C
157.
B
158.
A
159.
C
160.
A
161.
B
162.
B
163.
B
164.
B
165.
D
166.
A
167.
C
168.
C
169.
A
170.
D
171.
C
172.
C
173.
A
174.
D
175.
A
176.
A
177.
D
178.
C
179.
B
180.
A
181.
D
182.
C
Page 91
183.
A
184.
D
185.
D
186.
A
187.
B
188.
C
189.
C
190.
D
191.
B
192.
C
193.
B
194.
C
195.
B
196.
D
197.
D
198.
A
199.
D
200.
C
201.
B
202.
D
203.
C
204.
B
205.
A
206.
B
207.
B
208.
D
209.
B
210.
A
211.
B
212.
B
213.
C
214.
B
215.
B
216.
C
217.
D
218.
D
219.
B
220.
B
221.
B
222.
B
223.
B
224.
B
225.
C
226.
D
227.
C
228.
D
Page 92
229.
A
230.
B
231.
B
232.
A
233.
B
234.
C
235.
B
236.
B
237.
A
238.
A
239.
C
240.
A
241.
C
242.
A
243.
B
244.
C
245.
B
246.
A
247.
B
248.
C
249.
B
250.
C
251.
B
252.
A
253.
B
254.
A
255.
A
256.
C
257.
C
258.
D
259.
A
260.
B
261.
D
262.
C
263.
D
264.
A
265.
B
266.
A
267.
C
268.
A
269.
D
270.
D
271.
C
272.
B
273.
C
274.
B
Page 93
275.
C
276.
C
277.
B
278.
D
279.
A
280.
C
281.
B
282.
C
283.
D
284.
D
285.
A
286.
D
287.
B
288.
C
289.
C
290.
B
291.
C
292.
B
293.
B
294.
A
295.
B
296.
B
297.
A
298.
B
299.
A
300.
A
301.
A
302.
A
303.
A
304.
A
305.
B
306.
A
307.
B
308.
B
309.
B
310.
A
311.
B
312.
A
313.
A
314.
B
315.
B
316.
A
317.
B
318.
B
319.
A
320.
B
Page 94
321.
A
322.
A
323.
B
324.
A
325.
B
326.
A
327.
B
328.
A
329.
A
330.
A
331.
B
332.
B
333.
B
334.
A
335.
B
336.
337.
338.
339.
340.
341.
342.
343.
344.
345.
346.
347.
348.
B
349.
A
350.
B
351.
A
352.
B
353.
A
354.
C
355.
A
356.
C
357.
B
358.
B
359.
A
360.
A
361.
A
362.
C
363.
C
364.
A
365.
C
366.
C
Page 95
367.
A
368.
B
369.
C
370.
A
371.
B
372.
A
373.
A
374.
B
375.
B
376.
C
377.
A