.
perfect competition graph
In the range of increasing marginal returns (increasing marginal product), total product is
a. decreasing at a decreasing rate
b. decreasing at an increasing rate
c. increasing at a constant rate
d. increasing at a decreasing rate
e. increasing at an increasing rate
As Product Co. adds the first four workers to its production process in the short run, its output rises from 0 to 12 to 25 to 35 to 43. Addition of the fifth worker will most likely lead to an an output rate
a. less than 51
b. None of these answers are correct
c. equal to 51
d. greater than 51
e. greater than 51 if the firm experiences diseconomies of scale
a. less than 51
e. diseconomies of scale
Movement from point b to point c in Exhibit 7-11 indicates the firm is experiencing
a. economies of cost
b. decreasing average plant size
c. economies of scale
d. decreasing average cost
e. diseconomies of scale
If fixed cost at Q=100 is $130, then
a. We do not have enough information to calculate fixed cost and
any other quantity
b. fixed cost at Q-200 is $260
c. fixed cost at Q=0 is less than $130
d. fixed cost at Q=200 is $130
e. fixed cost at Q=0 is $0
Given in the information in Exhibit 7-2, with the addition of which unit of labor do diminishing marginal returns start or set in?
a. between the first and second units of labor
b. between the fourth and fifth units of labor
c. between the third and fourth units of labor
d. before the first unit of labor
e. between the second and third units of labor
As output rises, marginal product eventually diminishes and
a. fixed cost is increasing
b. average cost falls
c. marginal cost increases
d. average product is negative
e. total cost falls
c. marginal cost increases
John moved his office from a building he was renting downtown to the carriage house he owns in the back of his house. How will his costs change?
a. no enough information if given
b. explicit and implicit costs will rise
c. explicit costs fall; implicit costs rise
d. explicit and implicit costs will fall
e. explicit costs rise; implicit costs fall
e. $50
Fixed cost in Exhibit 7-7 equals
a. $20
b. $30
c. I don't know
d. $280
e. $50
c. average fixed cost
In Exhibit 7-8, the vertical distance between curves B and C at any level of output represents
a. average marginal cost
b. marginal cost
c. average fixed cost
d. average variable cost
e. average total cost
When diminishing marginal returns (diminishing marginal product) sets in, marginal product is
a. zero
b. positive and decreasing
c. negative and increasing
d. negative and decreasing
e. positive and increasing
Suppose Guild produces 5,000 guitars per year. Its average total cost is $90 and its fixed cost is $250,000. What is its variable cost?
a. $250,000
b. $25,000
c. $200,000
d. $56,000
e. $450,000
If marginal cost exceeds average variable costs
a. average variable cost is negative
b. average fixed cost is increasing
c. average variable cost is increasing
d. average variable cost is decreasing
e. marginal cost is greater than average total cost
In exhibit 7-5, what are the variable costs at 15 units of output?
a. $30
b. $1
c. impossible to calculate with given information
d. $10
e. $20
b. $24,000
Sally owns a small business that she operates in a small building she owns. Given the information in the table below, Sally's economic profit is
a. $35,000
b. $24,000
c. $65,000
d. $80,000
e. $50,000
Which of the following is an adjustment that would happen in the long-run?
a. General Motors increases its orders for steel
b. Texaco buys more crude oil to refine into gasoline
c. A new economics professor is hired on campus
d. Glow Electric disassembles one of its nuclear power plants
e. Microsoft cuts back on hiring of new graduates
d. Glow Electric disassembles one of its nuclear power
plants
c. 2
If the firm represented in Exhibit 7-9 wants to produce output level q, then in long run it should build a plant size with and average total cost curve of
a. 1
b. 3
c. 2
d. I don't know
e. 4
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