Microeconomics Final Exam

technology

The processes a firm uses to turn inputs into outputs of goods and services is called

opportunity costs of capital owned and used by the firm

Which of the following are implicit costs for a typical firm?

the cost of labor hired by the firm.

opportunity costs of capital owned and used by the firm

utilities cost

a business licensing fee

the marginal product curve

The curve labeled “E” is

the total product curve

the marginal product curve

the average product curve

the output supply curve

total fixed cost

Which of the following costs will not change as output changes?

average variable cost

total fixed cost

average fixed cost

marginal cost

total variable cost

AFC+AVC=ATC

Which of the following equations is correct?

AVC-ATC=AFC

AVC+ATC=AFC

AFC+AVC=ATC

ATC+AVC=AFC

constant returns to scale

When a firm’s long-run average cost curve is horizontal for a range of output, then that rage of production displays…

increasing returns to scale

constant returns to scale

decreasing returns to scale

constant average fixed costs

the firm is able to produce more output using the same inputs, or the same output using fewer inputs

When a firm experiences a positive technological change:

technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm’s ability to produce a given level of output with a given quantity of inputs

The difference between technology and technological change is that

$340

Vipsana’s Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day Calculate Vipsana’s total cost per day when she produces 50 gyros using two workers?

the maximum output that can be produced from a set of inputs

The production function shows

the non-monetary opportunity cost of using the firm’s own resources

Implicit costs can be defined as

changes output by an amount smaller than the output added by the previous unit of labor

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

extra output of an additional worker may rise at first, but eventually must fall

As a firm hires more labor in the short run, the

the change in output that a firm produces as a result of hiring one more worker

The marginal product of labor is defined as

L3

Short run output is maximized at

L2, L1, L3

marginal cost is at it minimum

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

the definition of marginal cost

The change in a firm’s total cost from producing one more unit of a good or service is

$1,157

What is the variable cost of production when that firm produces 115 lanterns?

TFC=TC-TVC

The formula for total fixed cost is

a firm’s long-run average total costs fall as it increases the quantity of output it produces

Economies of scale occur when

a long-run average total cost curve

A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is

the smallest level of operation where long-run costs are lowest

The minimum efficient scale is

Change in (TC-FC)/Change in Q

Average variable cost can be calculated using any of the formulas below except

(TC/Q)- AFC

TVC/Q

Change in(TC-FC)/ Change in Q

(TC-FC)/Q

$8

When the output is 100 units, average fixed cost is

dividing the change in total cost by the changes in output

Marginal cost is calculated for a particular increase in output by

marginal cost of production

The change in a firm’s total cost from producing one more unit of a good or service is a firm’s

-2

The marginal product of the 7th worker is

The average product of labor is at its maximum when the average product of labor equals the marginal product of labor

Which of the following statements is true?

 

The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.

 

Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing.

 

The average product of labor tells us how much output changes as the quantity of workers hired changes.

 

The average product of labor is at its minimum when the average product of labor equals the marginal product of labor.

decrease the size of its physical plant

Which of the following can a firm do in the long run but not in the short run?

increase its use of raw materials

increase its variable costs

decrease the size of its physical plant

reduce its rate of output by laying off workers

 

experiences positive technological change

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

experiences an increase in demand.

experiences positive technological change.

is operating in the short run.

will hire more workers in order to produce more output.

 

all inputs can be varied

A characteristic of the long run is

long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant

The long run refers to a time period

rent that could have been earned on a building owned and used by the firm

Which of the following is an implicit cost of production?

 

wages paid to labor plus the cost of carrying benefits for workers

interest paid on a loan to a bank

the utility bill paid to water, electricity, and natural gas companies

rent that could have been earned on a building owned and used by the firm

changes output by an amount smaller thatn the output added by the previous unit of labor

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

3

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?

the additional output that results when one more worker is hired, holding all other resources constant

The marginal product of labor is defined as

The marginal product of labor curve is represented by curve B and the average product of labor curve is represented by curve A.

Fancy Footwear manufactures shoes. Figure 11-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run.
Refer to Figure 11-3. Which of the following statements correctly describes the curves in the figure?

 

Curve A could represent either the average product curve or the marginal product curve. Curve B represents the total product curve.

 

Curve B could represent either the average product curve or the marginal product curve. Curve A represents the total product curve.

 

The marginal product of labor curve is represented by curve A and the average product of labor curve is represented by curve B.

 

The marginal product of labor curve is represented by curve B and the average product of labor curve is represented by curve A.

50

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

marginal costs can be either increasing or decreasing

If the average variable cost curve is above the marginal cost curve, then

economies of scale

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

diseconomies of scale

If, when a firm doubles all its inputs, its average cost of production increases, then production displays