ECON Microeconomics Ch 8 Quiz

Refer to Exhibit 22-5. The minimum efficient scale is at

A. point A.
B. point B.
C. point C.
D. point D.
E. points B and C.

Refer to Exhibit 22-11. Marginal cost of the first unit of output is

A. $170.
B. $150.
C. $70.
D. $90.83.

Refer to Situation 22-4. Is Joe earning a normal profit?

A. No, he is earning an above-normal profit.
B. No, but he is earning an accounting profit and that is all that matters.
C. Yes, but his economic profit is $0 and that is not good.
D. We cannot be sure, because "normal" profit is a subjective judgment.
E. No, his economic profit is negative.

According to economists Alchian and Demsetz, firms are formed when

A. the sum of what individuals can produce as a team is greater than the sum of what individuals can produce working alone.
B. the sum of what individuals can produce working alone is greater than the sum of what individuals can produce as a team.
C. what each individual can produce as a member of a team is less than what each individual can produce working alone.
D. the sum of what individuals can produce as a team is equal to the sum of what individuals can produce working alone.
E. none of the above

At any output of both 100 units and 120 units, unit costs are the same. Unit costs are higher at output levels lower than 100 units and at output levels higher than 120 units. It follows that minimum efficient scale exists

A. somewhere between 100 and 120 units.
B. at 100 units.
C. at 120 units.
D. below 100 units.
E. above 100 units

Refer to Exhibit 22-7. The average total cost of producing 4 units of output is

A. $11.25.
B. $5.00.
C. $3.50.
D. $27.50.
E. There is not enough information to answer this question.

A fixed input is an input whose quantity

A. can be changed as output changes in the short run.
B. cannot be changed as output changes in the short run.
C. cannot be changed as output changes in the long run.
D. a and c
E. b and c

Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?

A. Wilson paid $120 for an outside laundry service to clean the towels used at the club.
B. Wilson paid $100 for the pest control exterminator to spray the health club.
C. Wilson previously worked as an accountant, earning $3,000 a month.
D. Wilson usually eats four hamburgers a day, priced at $3 each.

Which of the following is correct?

A. Changes in marginal productivity change marginal cost, which changes average variable and average total cost.
B. Changes in marginal cost change marginal productivity, which changes average variable and average total cost.
C. Changes in average variable cost change marginal cost, which changes average total cost, which changes marginal productivity.
D. Changes in average variable and average total cost change marginal cost, which changes marginal productivity.
E. none of the above

An economist might say, "The market guides and coordinates individuals' actions." Which of the following is an example of this happening?

A. An employer tells an employee to get to work early.
B. As the price of oranges rises, more individuals begin to produce oranges.
C. The manager of a plant issues a directive that there will be no more smoking in the cafeteria.
D. a and c
E. a, b, and c

Carol works for Firm X. She takes long breaks and often daydreams when she is being paid to work. Carol is

A. satisfying.
B. shirking.
C. monitoring.
D. separating ownership from control.

The owner of a firm signs a binding one-year lease on a factory for $10,000 rent a month and pays the first month's rent. The $10,000 rent is

A. a fixed cost but not a sunk cost.
B. a sunk cost but not a fixed cost.
C. both a fixed cost and a sunk cost.
D. neither a fixed cost nor a sunk cost.
E. none of the above

Suppose a given marginal cost curve starts out downward sloping and at some level of output turns upward and becomes upward sloping. The point at which it turns upward is the point at which

A. marginal physical product increases.
B. total cost rises.
C. average fixed cost declines.
D. average variable cost is below marginal cost.
E. diminishing marginal returns set in.

The change in total cost that results from a change in output is __________ cost.

A. average fixed
B. average variable
C. average total
D. marginal

Refer to Exhibit 22-2. What is the average total cost of producing 140 units of output?

A. $1.79
B. $7.33
C. $4.23
D. $10.00
E. There is not enough information provided to answer the question.

Economies of scale are relevant to the __________, whereas the law of diminishing marginal returns is relevant to the __________.

A. long run; short run
B. short run; long run
C. industry; firm
D. firm; industry
E. firm in the short run; industry in the long run

Which of the following is an example of market coordination?

A. Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples rises, and consumers cut back on their purchases of pineapples.
B. The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler.
C. The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily.
D. a and b
E. a, b, and c

Refer to Exhibit 22-1. The numbers that go in blanks (E) and (F) are, respectively,

A. 25 and 20.
B. 20 and 22.
C. 15 and 10.
D. 22 and 20.
E. none of the above

Refer to Exhibit 22-3. The average fixed cost of producing 25 units of output is

A. $500.00.
B. $20.00.
C. $50.00.
D. $2.50.
E. indeterminable with the information given.

A fixed input, X, and a variable input, Y, are used to produce good A. If the marginal physical product (MPP) of Y is constant, it follows that the

A. marginal cost curve is upward sloping.
B. total fixed cost curve is vertical.
C. total variable cost curve is downward sloping.
D. b and c
E. none of the above