Economic Quiz Question

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Question 1

In the table below, what are the marginal costs of the fourth unit of output?

Answer

$10,000

$20,000

$30,000

$40,000

4 points

Question 2

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

Answer

diseconomies of scale.

diminishing marginal product.

constant returns to scale.

economies of scale.

4 points

Question 3

When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a ________ decision.

Answer

plant-size

long-run

short-run

fixed-input

4 points

Question 4

In the long run, a firm can change

Answer

nothing.

only one input, such as plant size.

all inputs.

None of these are correct.

4 points

Question 5

In the above table, what is the marginal cost to produce the 2nd unit of output?

Answer

$30

$60

$55

$20

4 points

Question 6

The observation that beyond some point, successive increases in a variable factor of production added to a fixed factor of production lead to smaller and smaller increases in output is

Answer

the law of marginal utility.

the law of averages.

the law of diminishing marginal product.

the law of opportunity costs.

4 points

Question 7

In the above table, the marginal product of the second worker is

Answer

68.

98.

38.

It cannot be determined.

4 points

Question 8

If a firm is experiencing diseconomies of scale, then

Answer

proportional increases in all inputs result in proportional increases in output.

the long-run average cost curve is rising as output expands.

the long-run average cost curve is decreasing as output expands.

the firm should expand the size of its operation.

4 points

Question 9

A basic distinction between the long run and the short run is that

Answer

if a firm produces no output in the long run, it still incurs a cost.

in the long run, some inputs are fixed, while in the short run, all inputs are variable.

in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted.

the opportunity costs of production are lower in the short run than in the long run.

4 points

Question 10

In the above figure, for any output level less than Q2, this firm experiences

Answer

economies of scale.

diseconomies of scale.

constant economies of scale.

decreasing long run average costs.

4 points

Question 11

Production functions indicate the relationship between

Answer

factor costs and output prices.

factor inputs and the quantity of output.

the value of inputs and average costs.

factor inputs and factor prices.

4 points

Question 12

The shape of the short-run average total cost curve is a result of

Answer

economies of scale.

diseconomies of scale.

the law of diminishing marginal product.

falling profits.

4 points

Question 13

Suppose that a firm is currently producing 500 units of output. At this level of output, VC = $1,000 and FC = $2,500. What is the firms ATC?

Answer

$10

4 points

Question 14

In the above table, diminishing marginal product occurs after employing the

Answer

fourth worker.

third worker.

second worker.

first worker.

4 points

Question 15

Which of the following would be a fixed input to an automobile firm?

Answer

Steel

A factory in Detroit

Car batteries

Engineers

4 points

Question 16

When total product is increasing at a decreasing rate, marginal product is

Answer

positive and increasing.

positive and decreasing.

constant.

negative.

4 points

Question 17

If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making a

Answer

long-run decision.

short-run decision.

immediate-run decision.

variable-input decision.

4 points

Question 18

A decrease in the long-run average costs resulting from increasing output is referred to as

Answer

diseconomies of scale.

constant return to scale.

a scale invariant process.

economies of scale.

4 points

Question 19

Using the above table, we see that when output is 4 units, average total cost equals

Answer

$24.00.

$14.00.

$3.50.

$6.00.

4 points

Question 20

The planning curve is the

Answer

long-run average cost curve.

production function.

short-run marginal cost curve.

short-run average cost curve.

4 points

Question 21

Marginal costs are defined as

Answer

the change in total costs due to a one-unit change in production.

costs that are viewed as marginal; of little or small importance.

costs that represent a change, but one that cannot be measured correctly.

the change in the decisions that are made by households and firms.

4 points

Question 22

At an output at which MC is greater than ATC

Answer

the ATC curve is downward-sloping.

the ATC curve is upward-sloping.

the AFC curve is upward-sloping.

the AVC curve is downward-sloping.

4 points

Question 23

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines

Answer

maximum efficient scale.

minimum efficient scale.

allowable efficient scale.

short-run efficient scale.

4 points

Question 24

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

Answer

diminishing marginal product.

diminishing marginal utility.

diminishing marginal workforce.

diminishing marginal inputs.

4 points

Question 25

Which of the following is true with respect to specialization?

Answer

Adam Smith in The Wealth of Nations referred to specialization and division of labor.

With a given set of resources, specialization results in higher output.

Individuals and nations specialize in their areas of comparative advantage in order to reap the gains of specialization.

All of these are correct.