Eco201, Fall 2007, Quiz 6
Prof. Bill Even
Name______________________________________________
Assigned Seat______
MULTIPLE CHOICE. Put all answers in the space provided at the end of the quiz.
1) A cost that has already been made and cannot be recovered is called a
A) fixed cost.
B) sunk cost.
C) variable cost.
D) marginal cost.
2) The long run is distinguished from the short run because only in the long run
A) the firm no longer maximizes its profit.
B) resource prices can vary.
C) the quantities of all resources can be varied.
D) output prices can vary.
3) In the short run,
A) the size of the plant is fixed.
B) some firms experience increasing returns to scale.
C) all inputs are fixed.
D) all inputs are variable.
Total Product, Marginal Product, Average Product
Labor
Total product
Marginal
Average
(workers per day) (units per day)
product
product
0
0
0
0
1
2
2
2
2
8
3
12
4
15
5
16
1
4) In the above table, the marginal product of the third worker is
A) 4.
B) 3.
C) 2.
D) 1.
5) In the above table, the average product of three workers is
A) 4.
B) 1.
D) 2.
C) 3.
6) ʺDiminishing marginal returnsʺ refer to a situation in which the
A) marginal cost of the last worker hired is less than the marginal cost of the previous worker hired.
B) marginal product of the last worker hired is less than the marginal product of the previous worker hired.
C) average product of the last worker hired is less than the average product of the previous worker hired.
D) average cost of the last worker hired is less than the average cost of the previous worker hired.
7) The average product of labor exceeds the marginal product of labor
A) when the average product of labor is at its maximum.
B) when the marginal product of labor is at its maximum.
C) when the average product of labor is rising.
D) when the average product of labor is falling.
1
8) In the figure above, the marginal product of the second worker is
A) 2 units.
B) 10 units.
C) 5 units.
D) 1 units.
9) At point d in the above figure, the average product of labor equals
A) 3.75.
B) 15.
C) 4.
D) approximately 1.
10) Sticky Cakes is a bakery. A decrease in the wage rate that Sticky Cakes pays its workers
A) shifts both its MC curve and its ATC curve downward.
B) shifts its MC curve downward but not its ATC curve.
C) does not shift its MC curve or its ATC curve.
D) does not shift its MC curve but shifts its ATC curve downward.
Cost schedule
Labor
(workers)
0
1
2
3
4
5
Output
Total fixed cost
(units per day)
(dollars)
0
4
9
13
16
18
20
20
20
20
20
20
Total variable
cost
(dollars)
0
25
50
75
100
125
11) In the above table, the total cost of producing 9 units of output is
A) $30.
B) $50.
C) $20.
D) $70.
12) Using the data in the above table, the average fixed cost of producing 9 units per day is
A) $5.00.
B) $20.00.
C) $5.55.
D) $2.22.
2
Output
(units)
Total cost
(dollars)
0
3
9
14
17
10
Average
variable cost
(dollars)
Marginal cost
(dollars)
80
20
290
380
13) The above (incomplete) table provides information about the relationships between output and various cost
measures. The total cost (TC) of producing 9 units of output is
A) $180.
B) $20.
C) $190.
D) None of the above answers is correct.
14) The above (incomplete) table provides information about the relationships between output and various cost
measures. The marginal cost per unit when increasing output from 14 to 17 units is
A) $380.
B) $30.
C) $20.
D) None of the above answers is correct.
Cost schedule
Labor
(workers)
0
1
2
3
4
5
Output
Total fixed cost
(units per day)
(dollars)
0
4
9
13
16
18
20
20
20
20
20
20
Total variable
cost
(dollars)
0
25
50
75
100
125
15) Using the data in the above table, the average total cost of producing 16 units per day is
A) $7.00
B) $1.25.
C) $7.50.
D) $6.25.
3
16) In the above figure, the marginal cost curve is curve
B) B.
A) A.
Labor
(workers)
Output
(units)
0
1
2
3
4
5
0
4
9
13
16
18
Total fixed
cost, TFC
(dollars)
20
20
20
20
20
20
C) C.
Total variable
cost, TVC
(dollars)
0
25
50
75
100
125
D) D.
Total cost, TC
(dollars)
20
45
70
95
120
145
17) Using the data in the above table, the average fixed cost of producing 16 units is
A) $1.11 a unit.
B) $1.25 a unit.
C) $2.22 a unit.
4
D) $1.54 a unit.
18) The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use
to produce 60 units per day?
A) plant A
B) plant B
C) plant C
D) plant D
19) In the above figure, the long-run average cost curve exhibits economies of scale
B) along the entire curve.
A) between 20 and 25 units per hour.
C) between 10 and 20 units per hour.
D) between 5 and 10 units per hour.
5
20) In the above figure, the average variable cost curve is curve
B) B.
C) C.
A) A.
D) D.
21) A firm experiences ________ when its ________ downward at larger outputs.
A) diseconomies of scale; average total cost curve slopes
B) diminishing marginal returns; average total cost curve shifts
C) diminishing marginal returns; long-run average cost curve slopes
D) economies of scale; long-run average cost curve slopes
Labor
(workers)
Output
(units)
0
1
2
3
4
5
0
4
9
13
16
18
Total fixed
cost, TFC
(dollars)
20
20
20
20
20
20
Total variable
cost, TVC
(dollars)
0
25
50
75
100
125
Total cost, TC
(dollars)
20
45
70
95
120
145
22) Using the data in the above table, when the firm increases its output from 4 to 9 units, the marginal cost of a
unit is
A) $4.00 a unit.
B) $7.00 a unit.
C) $6.00 a unit.
D) $5.00 a unit.
6
Record all your answers in the space below.
23)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
7
Answer Key
Testname: Q6F1F07
1) B
2) C
3) A
4) A
5) A
6) B
7) D
8) C
9) A
10) A
11) D
12) D
13) C
14) B
15) C
16) A
17) B
18) B
19) D
20) C
21) D
22) D
23)
8