Sample Exam/Chapter 11
Use the following to answer question 1:
1. (Table: Production of Bagels) Look at the table Production of Bagels. Diminishing
marginal returns begin with the addition of the _____ worker.
A) sixth
B) third
C) fourth
D) fifth
Use the following to answer question 2:
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2. (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special
birthday cakes. She is trying to decide how many mixers to purchase. Her estimated
fixed and average variable costs if she purchases one, two, or three mixers are shown in
the table. Assume that average variable costs do not vary with the quantity of output. If
Pat purchases one mixer and bakes 200 cakes per day, what is her average total cost?
A) $1,000
B) $200
C) $5
D) $15
Use the following to answer question 3:
3. (Table: Production Function for Soybeans) Look at the table Production Function for
Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which
have a combined cost of $150 per day. The cost of labor is $100 per worker per day.
The total cost of producing 75 bushels of soybeans is:
A) $1,150.
B) $1,225.
C) $7,650.
D) $650.
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Use the following to answer question 4:
4. (Table: Cost Data) Look at the table Cost Data. The average fixed cost of producing 4
purses is:
A) $47.50.
B) $82.50.
C) $12.50.
D) $50.00.
5. If marginal cost is less than average total cost, then _____ cost is _____.
A) marginal; necessarily decreasing
B) marginal; necessarily increasing
C) average total; increasing
D) average total; decreasing
6. Average total cost is:
A) total cost times quantity.
B) the change in quantity divided by the change in labor costs.
C) the change in variable cost divided by the change in quantity.
D) total cost divided by quantity.
7. The fixed cost curve is:
A) vertical.
B) horizontal.
C) negatively sloped.
D) positively sloped.
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Use the following to answer question 8:
Table: Linda's Copy Shop Production
8. (Table: Linda's Copy Shop Production) Look at the table Linda's Copy Shop
Production. Linda's production runs into diminishing returns to her variable inputs when
she employs the _____ unit.
A) third
B) fourth
C) fifth
D) second
9. An input whose quantity CANNOT be changed in the short run is:
A) fixed.
B) incremental.
C) variable.
D) marginal.
10. When a firm produces a small amount of output, the spreading effect:
A) and diminishing returns effect are equal.
B) is stronger than the diminishing returns effect.
C) is zero.
D) is weaker than the diminishing returns effect.
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Use the following to answer question 11:
11. (Table: Production Function for Soybeans) Look at the table Production Function for
Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which
have a combined cost of $150 per day. The cost of labor is $100 per worker per day.
The variable cost of producing 45 bushels of soybeans is:
A) $200.
B) $4,500.
C) $100.
D) $350.
Use the following to answer question 12:
Table: Lindsay's Farm
The table provides information about the production function
for Lindsay's Farm, which uses labor and land to grow its
crops. The price of labor is $50 per worker per week and the
price of the land is $20 per acre.
Quantity of Land Quantity of Labor Quantity of Produce
(acres)
(workers)
(bushels)
10
0
0
10
1
50
10
2
100
10
3
140
10
4
170
10
5
190
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12. (Table: Lindsay's Farm) Look at the table Lindsay's Farm. Lindsay's fixed cost of
production is:
A) $2,500.
B) $2,700.
C) $450.
D) $200.
13. The total cost curve is:
A) vertical.
B) horizontal.
C) negatively sloped.
D) positively sloped.
Use the following to answer question 14:
Figure: The Total Product
14. (Figure: The Total Product) Look at the figure The Total Product. As labor is hired
between L1 and L2, the total product is _____ and the marginal product is _____.
A) rising; negative
B) rising; zero
C) falling; zero
D) rising; positive
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Use the following to answer question 15:
15. (Table: Output and Costs) Look at the table Output and Costs. When output is 3,
average total cost equals:
A) $10.
B) $8.
C) $17.
D) $13.
16. When a firm has diminishing marginal returns:
A) total product falls because marginal product is falling and positive.
B) its output is falling.
C) marginal product is always negative.
D) marginal product is falling but is likely to be still positive.
Use the following to answer question 17:
Figure: Short-Run Costs II
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17. (Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output,
average total cost is approximately:
A) $170.
B) $250.
C) $120.
D) $100.
Use the following to answer question 18:
18. (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special
birthday cakes. She is trying to decide how many mixers to purchase. Her estimated
fixed and average variable costs if she purchases one, two, or three mixers are shown in
the table. Assume that average variable costs do not vary with the quantity of output. If
Pat purchases three mixers, her average total cost _____ in the range of output between
100 and 400 cakes.
A) decreases
B) can't be calculated
C) increases
D) remains the same
19. The level of inputs a firm employs will determine a firm's:
A) location of production.
B) ability to produce output.
C) elasticity of demand.
D) stock price.
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Use the following to answer question 20:
20. (Figure and Table: Variable, Fixed, and Total Costs) Look at the figure and table
Variable, Fixed, and Total Costs. When 51 bushels of wheat is produced, the average
fixed cost is _____, average variable cost is _____, and average total cost is _____.
A) $133.33; $200.00; $333.33
B) $5.33; $13.33; $18.67
C) $7.84; $11.76; $19.60
D) $400.00; $600.00; $1,000.00
Use the following to answer question 21:
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21. (Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special
birthday cakes. She is trying to decide how many mixers to purchase. Her estimated
fixed and average variable costs if she purchases one, two, or three mixers are shown in
the table. Assume that average variable costs do not vary with the quantity of output. If
Pat purchases three mixers and bakes 100 cakes per day, what is her average fixed cost?
A) $10,000
B) $4
C) $25
D) $2,496
Use the following to answer question 22:
22. (Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume
that fixed costs are $10. What is the average variable cost of 5 cakes?
A) $50
B) $10
C) $250
D) $300
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Use the following to answer question 23:
23. (Table: Total Product and Marginal Product) Look at the table Total Product and
Marginal Product. The marginal product of the fourth worker is _____ units.
A) 50
B) 90
C) 22.5
D) 20
24. When all of a firm's inputs are doubled, input prices do not change, and this results in
the firm's level of production more than doubling, a firm is operating:
A) on the downward-sloping portion of its long-run average total cost curve.
B) at the minimum of its long-run average total cost curve.
C) on the upward-sloping portion of its marginal cost curve.
D) on the upward-sloping portion of its long-run average total cost curve.
25. A firm's marginal cost is:
A) total cost divided by output.
B) the ratio of the change in total cost to the change in the quantity of output.
C) the change in total cost divided by the change in labor input.
D) the slope of the average fixed cost curve.
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26. The rent for Oscar's sporting goods store is $2,500 per month. Oscar pays his staff $9
per hour, and his monthly electricity bill averages $700, depending on his total hours of
operation. Oscar's fixed costs of production equal:
A) $9 per hour multiplied by total hours of work plus $3,200.
B) $2,500 per month.
C) $3,200 per month.
D) $9 per hour multiplied by total hours of work plus $700.
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Answer Key
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C
D
D
C
D
D
B
B
A
B
A
D
D
D
C
D
A
A
B
C
C
B
D
A
B
B
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