AP Economics: Unit 3 Part I Test

question

Increasing returns to scale

answer

F&D manufacturing company increases all its inputs by 50% each. If F&D's output increases by 100%, then F&D is experiencing

question

Decreasing marginal returns in the short run and economies of scale in the long run

answer

If the firm produces Q1 units of output with two inputs, the firm will be experiencing which of the following in the short run and in the long run

question

A period during which some inputs in our firms production process cannot be changed

answer

In microeconomics, the short run is defined as which of the following?

question

Her accounting profits are less than her implicit costs

answer

An entrepreneur has earned enough total revenue to cover her accounting costs, but economic loss are being incurred. What must be true?

question

Second worker

answer

After which worker does diminishing marginal product first occur?

question

Oligopoly

answer

In which of the following market structures do firms recognize their mutual interdependence?

question

Operate in the short run, even though it will sustain a loss

answer

Assume that, for a perfectly competitive firm, marginal cost equals average variable cost at $10, marginal cost equals average total cost at $15, and marginal revenue equals marginal cost at $12. On the basis of the information, the firm should

question

$30

answer

The table above shows a firm's average variable cost and average total cost. Based on this table, the average fixed cost of producing four units of output is equal to

question

$60

answer

At 100 units of output, a firms total cost is $10,000. If a firm's total fixed cost is $4000, its average variable cost is

question

Marginal cost will increase

answer

Assume that a firm uses only one variable input. If a firm is experiencing diminishing returns, which of the following is true as more of the variable input is used?

question

Because it decreases at first with marginal product increasing due to specialization; however, once the value of labor diminishes, the cost will become higher. As marginal cost becomes greater, the total cost also becomes more. It hits both of the AVC and ATC curves at their minimum output is increasing at a decreasing rate

answer

Why is the MC shaped as it is?

question

The long run ATC falls as output increases

answer

Define economies of scale

question

Average Fixed Cost (AFC)

answer

What is the difference between the AVC and ATC represent?

question

A decreasing long-run average total cost curve as a firm produces more output

answer

Economies of scale can be illustrated by

question

At least one input is fixed and eventually diminishing returns will occur

answer

Beyond a certain level of output, the short run marginal cost will rise because

question

answer

Given the production schedule above what is the minimum number of workers that can hire before the effects of diminishing marginal returns set in?

question

answer

The table above shows a firms total cost of producing various units of output. What is the average variable cost of producing three units?

question

The price of variable input

answer

An increase in which of the following will cause a firms marginal cost curve to shift upward?

question

Constant returns to scale

answer

If the output of a firm doubles when the firm doubles all of its inputs, the firm must be experiencing

question

$50

answer

The table below is partially filled in with the different types of costs for a firm. Based on the information in the table, what is the marginal cost of producing the second unit?

question

answer

A perfectly competitive firm operates with a fixed amount of capital that costs $1000 per day. Labor is the only variable input. The firm hires labor in a perfectly competitive labor market at $100 per day per worker. The table below shows the firms production function. What is the marginal product of the third worker?

question

Decrease the level of production

answer

If a perfectly competitive firm is producing where marginal cost is rising and greater than marginal revenue, to maximize profits it should

question

Downward sloping

answer

A farmer grows wheat using two inputs: labor and land who is per unit prices are constant. If she doubled her inputs, she finds that the quantity of wheat produced more than doubles. Therefore it must be true that in this output range of her long-run average total cost curve is

question

answer

Given the information above, the average variable cost of 25 units of output is

question

Average total cost is at its minimum

answer

When marginal cost equals average total cost, which of the following must be true?

question

It is less than the marginal product of the third worker do to diminishing returns

answer

The table above shows the short run production function for picking apples. Based on the production data, which of the following statements about the marginal product of the fifth worker is true?

question

Diseconomies of scale

answer

If the firm's long-run average total cost increases in output increases, the firm is experiencing

question

Long-run average total cost decreases as the firms output increases

answer

Which of the following must be true if a firm is experiencing economies of scale?

question

This is a production function for a perfectly competitive firm

answer

All of the following can be concluded from the information in the table EXECPT:

question

Output increases at a decreasing rate, and thus the cost of producing each additional unit of output increases

answer

If labor is the only variable input in the production process, the short run marginal cost curve is upward sloping because of which of the following occurs as a more and more labor is added?

question

Monopolistically competitive

answer

And industrial consists of 100 small firms, and the largest firm accounts for only 2% of sales. Brand names are considered a signal of quality differentiation. The industry described is best classified as

question

It is equal to average fixed cost plus average variable cost

answer

In the short run, which of the following is true of a firms average total cost of production?

question

STV

answer

The graph above shows the cost curves facing May's fruit Farm, where MC is marginal cost, ATC is average total cost, and AVC is average variable cost. May's short run supply curve include which of the following points?

question

Shut down

answer

Assume a perfectly competitive firm is currently producing 100 units of output. Its marginal cost is $6 and rising at that output quantity. Its average variable cost is $7 and its average fixed cost is $3. If the product's price is $6, which of the following will the firm do in the short run to maximize its profit?

question

It intersects the average variable cost curve and the average total cost curve at each curve's minimum point.

answer

Which of the following is true of the marginal cost curve?

question

If the average total cost curve is rising, the marginal cost curve is above the average total cost curve.

answer

Which of the following best describes the relationship between the average total cost curve and the marginal cost curve in the short run?

question

$100

answer

According to the cost schedule in the table above, the firm's total fixed cost is

question

a decreasing long-run average total cost curve as a firm produces more outputThis

answer

Economies of scale can be illustrated by

question

This statement is false. The difference between ATC and AVC is AFC. Average fixed cost is equal to fixed cost divided by quantity, and if the fixed cost is constant, the quantity is increasing. As a result AFC is decreasing therefore it is not constant

answer

Is this statement true, false, or uncertain: Average total cost is always greater than average variable cost by a constant amount.

question

This statement is false. The firm maximizes profit where MR = MC, which would be at a quantity where ATC is not at minimum

answer

Is this statement true, false, or uncertain: In the short run, a firm always maximizes profits when average total cost is at minimum

question

This statement is false. Since the firm earns no revenue but must still pay fixed costs in the short run, the profit will be negative not zero

answer

Is this statement true, false, or uncertain: If a firm shuts down in the short run, its profits will equal zero

1 of 41

question

Increasing returns to scale

answer

F&D manufacturing company increases all its inputs by 50% each. If F&D's output increases by 100%, then F&D is experiencing

question

Decreasing marginal returns in the short run and economies of scale in the long run

answer

If the firm produces Q1 units of output with two inputs, the firm will be experiencing which of the following in the short run and in the long run

question

A period during which some inputs in our firms production process cannot be changed

answer

In microeconomics, the short run is defined as which of the following?

question

Her accounting profits are less than her implicit costs

answer

An entrepreneur has earned enough total revenue to cover her accounting costs, but economic loss are being incurred. What must be true?

question

Second worker

answer

After which worker does diminishing marginal product first occur?

question

Oligopoly

answer

In which of the following market structures do firms recognize their mutual interdependence?

question

Operate in the short run, even though it will sustain a loss

answer

question

$30

answer

The table above shows a firm's average variable cost and average total cost. Based on this table, the average fixed cost of producing four units of output is equal to

question

$60

answer

At 100 units of output, a firms total cost is $10,000. If a firm's total fixed cost is $4000, its average variable cost is

question

Marginal cost will increase

answer

Assume that a firm uses only one variable input. If a firm is experiencing diminishing returns, which of the following is true as more of the variable input is used?

question

answer

Why is the MC shaped as it is?

question

The long run ATC falls as output increases

answer

Define economies of scale

question

Average Fixed Cost (AFC)

answer

What is the difference between the AVC and ATC represent?

question

A decreasing long-run average total cost curve as a firm produces more output

answer

Economies of scale can be illustrated by

question

At least one input is fixed and eventually diminishing returns will occur

answer

Beyond a certain level of output, the short run marginal cost will rise because

question

answer

Given the production schedule above what is the minimum number of workers that can hire before the effects of diminishing marginal returns set in?

question

answer

The table above shows a firms total cost of producing various units of output. What is the average variable cost of producing three units?

question

The price of variable input

answer

An increase in which of the following will cause a firms marginal cost curve to shift upward?

question

Constant returns to scale

answer

If the output of a firm doubles when the firm doubles all of its inputs, the firm must be experiencing

question

$50

answer

The table below is partially filled in with the different types of costs for a firm. Based on the information in the table, what is the marginal cost of producing the second unit?

question

answer

question

Decrease the level of production

answer

If a perfectly competitive firm is producing where marginal cost is rising and greater than marginal revenue, to maximize profits it should

question

Downward sloping

answer

question

answer

Given the information above, the average variable cost of 25 units of output is

question

Average total cost is at its minimum

answer

When marginal cost equals average total cost, which of the following must be true?

question

It is less than the marginal product of the third worker do to diminishing returns

answer

The table above shows the short run production function for picking apples. Based on the production data, which of the following statements about the marginal product of the fifth worker is true?

question

Diseconomies of scale

answer

If the firm's long-run average total cost increases in output increases, the firm is experiencing

question

Long-run average total cost decreases as the firms output increases

answer

Which of the following must be true if a firm is experiencing economies of scale?

question

This is a production function for a perfectly competitive firm

answer

All of the following can be concluded from the information in the table EXECPT:

question

Output increases at a decreasing rate, and thus the cost of producing each additional unit of output increases

answer

If labor is the only variable input in the production process, the short run marginal cost curve is upward sloping because of which of the following occurs as a more and more labor is added?

question

Monopolistically competitive

answer

question

It is equal to average fixed cost plus average variable cost

answer

In the short run, which of the following is true of a firms average total cost of production?

question

STV

answer

question

Shut down

answer

question

It intersects the average variable cost curve and the average total cost curve at each curve's minimum point.

answer

Which of the following is true of the marginal cost curve?

question

If the average total cost curve is rising, the marginal cost curve is above the average total cost curve.

answer

Which of the following best describes the relationship between the average total cost curve and the marginal cost curve in the short run?

question

$100

answer

According to the cost schedule in the table above, the firm's total fixed cost is

question

a decreasing long-run average total cost curve as a firm produces more outputThis

answer

Economies of scale can be illustrated by

question

answer

Is this statement true, false, or uncertain: Average total cost is always greater than average variable cost by a constant amount.

question

This statement is false. The firm maximizes profit where MR = MC, which would be at a quantity where ATC is not at minimum

answer

Is this statement true, false, or uncertain: In the short run, a firm always maximizes profits when average total cost is at minimum

question

This statement is false. Since the firm earns no revenue but must still pay fixed costs in the short run, the profit will be negative not zero

answer

Is this statement true, false, or uncertain: If a firm shuts down in the short run, its profits will equal zero

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