Multiple Choice (ECON111)

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QUESTION 1

1. At the minimum efficient scale

		marginal cost is at its minimum.
		all possible economies of scale have not been exhausted.
		any increases in the scale of operation will encounter further economies of scale.
		the firm has achieved the lowest possible average cost of production.

QUESTION 2

1. Diminishing marginal product of labor occurs when adding another unit of labor

		decreases output.
		changes output by an amount smaller than the output added by the previous unit of labor.
		decreases output by an amount smaller than the output added by the previous unit of labor.
		increases output by an amount larger than the output added by the previous unit of labor.

QUESTION 3

Figure 11-1

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Refer to Figure 11-1. The marginal product of the 7th worker is

1.	2.	1. 66.
3.	4.	2. 9.43.
5.	6.	3. 2.
7.	8.	4. -2.

QUESTION 4

Figure 11-7

Figure 11-7 shows the cost structure for a firm.

Refer to Figure 11-7. When output level is 100, what is the total cost of production?

		$20
		$1,000
		$1,200
		$2,000

QUESTION 5

1. If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

		less than minimum efficient scale.
		minimum capacity.
		more than minimum efficient scale.
		minimum efficient scale.

QUESTION 6

1. If another worker adds 9 units of output to a group of workers who had an average product of 7 units, then the average product of labor

		will increase.
		will decrease.
		will remain the same.
		and what will happen to it cannot be determined.

QUESTION 7

1. If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

		$1,000.
		$700.
		$300.
		impossible to determine without additional information.

QUESTION 8

1. If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

		$65
		$50
		$15
		It is impossible to determine without additional information.

QUESTION 9

1. If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

		diminishing returns.
		declining fixed costs.
		economies of scale.
		diseconomies of scale.

QUESTION 10

1. In the short run, if marginal product is at its maximum, then

		total cost is at its maximum.
		average cost is at its minimum.
		average variable cost is at its minimum.
		marginal cost is at its minimum.

QUESTION 11

1. Jayanthi moves her yoga studio from her home to a space she rents in Oakland, California. Holding everything else constant, as a result of this move

		her explicit cost falls and her implicit cost rises.
		her opportunity cost rises.
		her implicit cost falls and her explicit cost rises.
		her economic cost rises.

QUESTION 12

1. Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?

		The total product becomes negative.
		The average product of the sixth worker is negative.
		The marginal product of the sixth worker must be negative.
		The sixth worker is not as skilled as the fifth worker.

QUESTION 13

1. Table 11-1

Number of Workers	Mushrooms per Day (pounds)
1	12
2	30
3	45
4	50
5	54
6	56

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May.

2. Refer to Table 11-1. Diminishing marginal returns sets in when the ________ worker is hired.

		2nd
		3rd
		4th
		None of the above; the production function displays increasing marginal returns.

QUESTION 14

1. The shape of the average total cost curve is determined by the shape of

		the firm's production function.
		the average fixed cost curve.
		the average product curve.
		the marginal cost curve.

QUESTION 15

1. When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is

		impossible to determine with the information given.
		12,800.
		784.
		50.