Econ 101 Module 8 - Assignment Essays

question

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. When Silvio's uses 2 ovens and hires the 3rd worker, the marginal product of labor is ________ the average product of labor, and therefore the average product of labor ________.

answer

less than; decreases

question

When a firm is experiencing economies of scale

answer

the LRAC curve slopes downward

question

The average total cost curves for plants A, B, C, and D are shown in the above figure. It is possible that the long-run average cost curve runs through points

answer

a, b, and c.

question

The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

answer

greater than 25

question

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 1 and hires 3 workers. What is the firm's average fixed cost?

answer

$11.00

question

In the above figure, the long-run average cost curve exhibits diseconomies of scale

answer

between 20 and 25 units per hour.

question

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

answer

economies of scale.

question

Diseconomies of scale definitely means that as the firm increases its output, its

answer

long-run average total cost increases

question

In the short run

answer

no firm experiences economies of scale.

question

The table shows the average costs of production for various quantities, given three different amounts of capital. Each factory illustrates a(n) _____ average cost curve.

answer

U-shaped

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 400. The cost of capital is r = 80, and the wage rate is w = 10. The firm would use more labor to expand production only if the marginal product of labor is greater than _____

answer

question

Given the following data, what should the firm do?Current production = 1,000Current price = $10Marginal cost = $10Total costs = $15,000Fixed cost = $6,000

answer

Continue to produce in the short run, but close down in the long run.

question

In the long run, if a firm is on the downward-sloping portion of its LRAC curve, the firm is currently experiencing ______.

answer

economies of scale.

question

An efficient Nebraska corn farm decides to hire more workers and use fewer harvesting machines after learning of:I. An increase in corn commodity prices.II. A decrease in fuel prices.III. An increase in worker productivity.IV. An increase in harvesting machine maintenance costs.

answer

III and IV

question

Rising average product as inputs increase means that which of the following is happening to costs?

answer

Average costs alone are falling.

question

An economy is on its production possibilities frontier. If the economy faces diminishing marginal returns, what will happen to the opportunity cost as the production of one of the categories of goods increases?

answer

The opportunity cost will increase as it takes more to produce the good.

question

Suppose in the long run a firm's labor costs decrease. What will happen regarding the LRAC?

answer

The entire LRAC function will shift downward.

question

At Wisconsin's snowy Lambeau Field, a football stadium, snow removal is currently done by a mix of workers (equipped with shovels and paid minimum wage) and automated self-operating snowblower machines, which require no labor. The stadium is currently using the optimal combination of both snowblowers and workers. If Wisconsin's minimum wage rises, and nothing else changes, what should the stadium do?

answer

Utilize more machines and fewer workers.

question

Suppose a company with a single large factory expands to multiple locations. This would require the firm to hire more mid-level management positions and establish an HR department. This firm is likely experiencing ________ with this expansion.

answer

diseconomies of scale

question

A private psychiatrist's office is a business that will demonstrate ______________, as it will face increasing average costs in the long run.

answer

diseconomies of scale

question

Which of the following would be likely in a market with firms experiencing economies of scale?

answer

Most of the firms will tend to be large.

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 60. The cost of capital is r = 50. The firm would use more labor to expand production only if the wage rate is less than _____ dollars.

answer

question

Suppose in the long run a firm decides to grow in size and increase output. What will happen regarding the LRAC?

answer

The firm will move from one point to another point, from left to right, on the same LRAC.

question

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2.
The firm is planning their future inputs and can now adjust both labor and capital. How should they adjust inputs?

answer

Increase labor and decrease capital

question

In the long run, the total cost function will be:

answer

Upward sloping.

question

Consider the concepts of economies of scale and diseconomies of scale. What is meant by the word "scale" in these concepts?

answer

The size of the firm.

question

In order to maximize profits at any level of output, the firm must:

answer

Minimize production costs

question

A car manufacturing plant in Michigan employs the optimal combination of both unionized and non-unionized labor. The plant agrees to a new union contract that stipulates higher wages. As the plant re-adjusts its inputs, marginal product of non-unionized workers will:

answer

Decrease.

question

A small shirt factory in Taiwan doubles its labor inputs and experiences a tripling in output. A large catering kitchen in Tokyo increases its inputs by 30% and experiences a 50% increase in production. Which of the following is true?

answer

Both firms enjoy economies of scale.

question

Suppose that as a firm grows, it first experiences economies of scale, then constant returns to scale, then diseconomies of scale. The LRAC for this firm will be ______.

answer

shaped like a wide U.

question

Use the numbers to build the firm's LRAC function. In other words, assuming that at any level of output, the firm uses the proper factory size to get the lowest average cost of production. As this firm grows from 8,000 to 10,000 units, it will be experiencing:

answer

Constant returns to scale.

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 50. The cost of capital is r = 80, and the wage rate is w = 10. Should this firm employ more labor or more capital?

answer

Labor

question

Economies of scale occurs when long-run average costs are and diseconomies of scale occurs when long-run average costs are .

answer

decreasing / increasing

question

A restaurant employs 10 workers and has one oven. The firm hires an 11th worker. The week after, it hires a 12th worker. The marginal product of the 12th worker is less than the 11th worker because of _______.

answer

diminishing returns.

question

If the firm were to choose a permanent output level of Q = 4,000, the lowest average cost would be achieved with the _______.

answer

small factory.

question

In the typical short run model of the firm, we generally assume that labor is_______ and capital is________ .

answer

variable; fixed

question

Mimi wants to see if she should buy another oven for her restaurant. How might she use marginal analysis to make a decision?

answer

Examine the price of the oven and the marginal product of the oven.

question

In the long run, if a firm is operating with economies of scale, it is on the ______ portion of its LRAC.

answer

downward-sloping

question

answer

Economies of scale.

question

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

answer

Continue to produce in the short run; leave the industry in the long run.

question

If the firm were to choose a permanent output level of Q = 8,000, the lowest average cost would be achieved with the _______.

answer

large factory.

question

The key difference between the short-run and long-run model of the firm is that:

answer

We assume at least one fixed input in the short run and all variable inputs in the long run.

question

A pool-cleaning firm employs cleaning machines and cleaning workers. If local wages fall and robots become more effective, the firm should employ:

answer

One cannot tell.

question

Suppose a firm wants to do marginal analysis to see if it should employ more capital or more labor in order to increase output. The firm knows the prices of the inputs. Is this enough information to answer the question at hand?

answer

No, the firm also needs to know the marginal productivities of each of the inputs.

question

If a production process faces diminishing marginal returns, which of the following is most likely?

answer

Marginal costs are increasing.

question

Diminishing returns is most relevant when:

answer

None of the these.

question

If the firm were to choose a permanent output level of Q = 6,000, the lowest average cost would be achieved with the ______.

answer

medium factory.

question

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2.
They cannot adjust their capital, so are they in the short run or the long run?

answer

Short Run

1 of 48

question

answer

less than; decreases

question

When a firm is experiencing economies of scale

answer

the LRAC curve slopes downward

question

The average total cost curves for plants A, B, C, and D are shown in the above figure. It is possible that the long-run average cost curve runs through points

answer

a, b, and c.

question

The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

answer

greater than 25

question

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 1 and hires 3 workers. What is the firm's average fixed cost?

answer

$11.00

question

In the above figure, the long-run average cost curve exhibits diseconomies of scale

answer

between 20 and 25 units per hour.

question

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

answer

economies of scale.

question

Diseconomies of scale definitely means that as the firm increases its output, its

answer

long-run average total cost increases

question

In the short run

answer

no firm experiences economies of scale.

question

The table shows the average costs of production for various quantities, given three different amounts of capital. Each factory illustrates a(n) _____ average cost curve.

answer

U-shaped

question

answer

question

Given the following data, what should the firm do?Current production = 1,000Current price = $10Marginal cost = $10Total costs = $15,000Fixed cost = $6,000

answer

Continue to produce in the short run, but close down in the long run.

question

In the long run, if a firm is on the downward-sloping portion of its LRAC curve, the firm is currently experiencing ______.

answer

economies of scale.

question

answer

III and IV

question

Rising average product as inputs increase means that which of the following is happening to costs?

answer

Average costs alone are falling.

question

answer

The opportunity cost will increase as it takes more to produce the good.

question

Suppose in the long run a firm's labor costs decrease. What will happen regarding the LRAC?

answer

The entire LRAC function will shift downward.

question

answer

Utilize more machines and fewer workers.

question

answer

diseconomies of scale

question

A private psychiatrist's office is a business that will demonstrate ______________, as it will face increasing average costs in the long run.

answer

diseconomies of scale

question

Which of the following would be likely in a market with firms experiencing economies of scale?

answer

Most of the firms will tend to be large.

question

answer

question

Suppose in the long run a firm decides to grow in size and increase output. What will happen regarding the LRAC?

answer

The firm will move from one point to another point, from left to right, on the same LRAC.

question

answer

Increase labor and decrease capital

question

In the long run, the total cost function will be:

answer

Upward sloping.

question

Consider the concepts of economies of scale and diseconomies of scale. What is meant by the word "scale" in these concepts?

answer

The size of the firm.

question

In order to maximize profits at any level of output, the firm must:

answer

Minimize production costs

question

answer

Decrease.

question

answer

Both firms enjoy economies of scale.

question

Suppose that as a firm grows, it first experiences economies of scale, then constant returns to scale, then diseconomies of scale. The LRAC for this firm will be ______.

answer

shaped like a wide U.

question

answer

Constant returns to scale.

question

answer

Labor

question

Economies of scale occurs when long-run average costs are and diseconomies of scale occurs when long-run average costs are .

answer

decreasing / increasing

question

answer

diminishing returns.

question

If the firm were to choose a permanent output level of Q = 4,000, the lowest average cost would be achieved with the _______.

answer

small factory.

question

In the typical short run model of the firm, we generally assume that labor is_______ and capital is________ .

answer

variable; fixed

question

Mimi wants to see if she should buy another oven for her restaurant. How might she use marginal analysis to make a decision?

answer

Examine the price of the oven and the marginal product of the oven.

question

In the long run, if a firm is operating with economies of scale, it is on the ______ portion of its LRAC.

answer

downward-sloping

question

answer

Economies of scale.

question

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

answer

Continue to produce in the short run; leave the industry in the long run.

question

If the firm were to choose a permanent output level of Q = 8,000, the lowest average cost would be achieved with the _______.

answer

large factory.

question

The key difference between the short-run and long-run model of the firm is that:

answer

We assume at least one fixed input in the short run and all variable inputs in the long run.

question

A pool-cleaning firm employs cleaning machines and cleaning workers. If local wages fall and robots become more effective, the firm should employ:

answer

One cannot tell.

question

answer

No, the firm also needs to know the marginal productivities of each of the inputs.

question

If a production process faces diminishing marginal returns, which of the following is most likely?

answer

Marginal costs are increasing.

question

Diminishing returns is most relevant when:

answer

None of the these.

question

If the firm were to choose a permanent output level of Q = 6,000, the lowest average cost would be achieved with the ______.

answer

medium factory.

question

answer

Short Run

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