Deck 8: Production and Cost in the Short Run

Question 1

short-run production function assumes that

A)the level of output is fixed.
B)at least one input is a fixed input.
C)all inputs are fixed inputs.
D)both a and b
E)both b and c

Answer 1

B

Question 2

For a short-run production function in which output is determined by the number of workers utilized capital stock held constant),which of the following is FALSE?

A)In general,when there are few workers the marginal product of labor will be increasing.
B)When the marginal product of labor is negative,total product is falling.
C)To determine the marginal product of labor,the capital stock must be held constant.
D)When diminishing returns set in,adding one more worker decreases output.
E)none of the above

Answer 2

D

Question 3

In the table above,how much does the third unit of labor ADD to total output?

A)100
B)125
C)150
D)300
E)none of the above

Answer 3

E

Question 4

out the table and answer the question below. Marginal product is negative when _____ units of labor are employed.

A)5 units of labor are employed.
B)6 units of labor are employed.
C)
C)7 units of labor are employed.
D)both b and

Question 5

In the table above,what is the maximum amount of output that can be produced with two workers?

A)50
B)125
C)150
D)250
E)320

Question 6

Given the table below,if capital is fixed at one unit,diminishing returns begin with the Amount of total output produced from various combinations of labor and capital.

A)first unit of labor.
B)second unit of labor.
C)third unit of labor.
D)fourth unit of labor.
E)none of the above

Question 7

Fill out the table and answer the question below. The average product of labor when 4 units of labor are employed is

A)22.
B)20.
C)19.
D)16.

Question 8

In the table above,what is the average product of four units of labor?

A)20
B)60
C)80
D)100
E)350

Question 9

Given the table below,if labor is fixed at three units,how much does the third unit of capital add to total output? Amount of total output produced from various combinations of labor and capital.

A)60
B)80
C)110
D)130
E)none of the above

Question 10

Suppose you run a pizza shop and currently have two employees.If you hire a third employee,your output of pizzas per day rises from 55 to 65.If you hire a fourth employee,output rises to 80 per day.A fifth and sixth employee would cause output to rise to 90 and 95 per day,respectively.Pick the correct statement:

A)Diminishing returns set in with the hiring of the fourth worker.
B)Diminishing returns set in with the hiring of the fifth worker.
C)Diminishing returns set in with the hiring of the sixth worker.
D)Diminishing returns set have not yet set in because output is still increases.

Question 11

out the table and answer the question below. Diminishing returns begin with the

A)first unit of labor.
B)third unit of labor.
C)fourth unit of labor.
D)sixth unit of labor.

Question 12

If average product is increasing,then marginal product

A)must be greater than average product.
B)must be less than average product.
C)must be increasing.
D)cannot be decreasing.
E)both a and c

Question 13

Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month.If you hire a third worker,6 houses can be painted per month.If you hire a fourth worker,9 houses can be painted,and a fifth and sixth worker will increase the number of houses painted to 13 and 15,respectively.Diminishing returns

A)set in when the fourth worker is hired.
B)set in when the fifth worker is hired.
C)set in when the sixth worker is hired.
D)have not yet set in because output is still increasing.

Question 14

out the table and answer the question below. The marginal product of the fifth unit of labor is

A)16.
B)10.
C)4.
D)-2.

Question 15

Given the table below,if capital is fixed at two units,what is the marginal product of the fourth unit of labor? Amount of total output produced from various combinations of labor and capital.

A)60
B)80
C)100
D)420
E)none of the above

Question 16

In the table above,diminishing returns

A)begin with the first unit of labor.
B)begin with the third unit of labor.
C)begin with the fourth unit of labor.
D)begin with the fifth unit of labor.
E)do not occur because output is positive for all levels of labor usage.

Question 17

If labor is fixed at 5 units,how much does the second unit of capital add to total output? Amount of total output produced from various combinations of labor and capital.

A)490
B)390
C)50
D)100
E)none of the above

Question 18

production function measures the relation between

A)input prices and output prices.
B)the quantity of inputs and the quantity of output.
C)input prices and the quantity of output.
D)the quantity of inputs and input prices.
E)none of the above

Question 19

In the table above,what is the marginal product of the fifth unit of labor?

A)20
B)50
C)80
D)-10
E)-30

Question 20

Which of the following statements is FALSE?

A)A firm plans in the long run and operates in the short run.
B)In the short run,a firm can change some but not all of its inputs.
C)In the long run all inputs are variable.
D)In the short run all inputs are fixed.

Question 21

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the amount of labor used increases from three to four units,the marginal product of the second unit of capital

A)increases by 8 units.
B)increases by 49 units.
C)decreases by 14 units.
D)decreases by 49 units.
E)none of the above

Question 22

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at one unit,how much does the third unit of labor add to total output?

A)20
B)40
C)60
D)80
E)none of the above

Question 23

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
Which of the following input combinations can produce the same level of output?

A)4K,2L and 3K,2L
B)3K,2L and 2K,3L
C)2K,3L and 4K,2L
D)all of the above

Question 24

The marginal product of labor

A)measures how output changes as the wage rate changes.
B)is less than the average product of labor when the average product of labor is decreasing.
C)is negative when adding another unit of labor decreases output.
D)both a and b
E)both b and c

Question 25

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at one unit,diminishing returns begin with the

A)first unit of labor.
B)second unit of labor.
C)third unit of labor.
D)fourth unit of labor.
E)fifth unit of labor.

Question 26

If a firm is producing a given level of output in an economically efficient manner,then it must be the case that

A)this is the lowest cost method of producing that output.
B)each input is producing its maximum marginal product.
C)this output level is the most that can be produced with the given level of inputs.
D)both a and c
E)none of the above

Question 27

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If labor is fixed at three units,how much does the second unit of capital add to total output?

A)100
B)150
C)210
D)360
E)none of the above

Question 28

A firm's cost of production is affected by changes in

A)the available technology.
B)input prices.
C)profits.
D)both a and b
E)both b and c

Question 29

If a firm is producing a given level of output in a technically efficient manner,then it must be the case that

A)this is the lowest cost method of producing that output.
B)each input is producing its maximum marginal product.
C)this output level is the most that can be produced with the given levels of inputs.
D)both a and c
E)all of the above

Question 30

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If capital is fixed at three units,how much does the fourth unit of labor add to total output?

A)16
B)28
C)34
D)36
E)none of the above

Question 31

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at four units and there are three units of labor,what is the average product of labor?

A)50
B)140
C)157.5
D)170
E)none of the above

Question 32

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the amount of capital increases from 3 to 4 units,the marginal product of the fourth unit of labor

A)decreases by 3 units.
B)increases by 8 units.
C)increases by 5 units.
D)decreases by 12 units.
E)none of the above

Question 33

Diminishing returns refers to the decrease in

A)profit that results from increases in output.
B)average total cost that results from decreases in input prices.
C)average product that results from increases in the variable input.
D)marginal product that results from increases in the variable input.
E)long-run average cost that results from increases in output.

Question 34

Given the table below,how much does the 13th worker add to total output?

A)28 units
B)29 units
C)130 units
D)420 units
E)none of the above

Question 35

Given the table below,diminishing returns begin with the

A)1st worker.
B)5th worker.
C)10th worker.
D)11th worker.
E)16th worker.

Question 36

Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
Diminishing marginal productivity

A)occurs when the marginal product curve begins to slope downward.
B)means that adding one more unit of the variable input will reduce total product.
C)occurs eventually because each additional unit of the variable unit has,on average,fewer units of the fixed input with which to work.
D)both a and c
E)both b and c

Question 37

Given the table below,the maximum amount that can be produced using 20 workers is

A)442 units.
B)530 units.
C)22 units.
D)420 units.
E)26.5 units.

Question 38

Given the table below,as the number of workers increases from 10 to 15,output per worker

A)increases from 290 to 420
B)increases from 28 to 29
C)decreases from 29 to 28
D)decreases from 30 to 26
E)none of the above

Question 39

If marginal product is decreasing,then it must be the case that

A)average product is decreasing.
B)average product is greater than marginal product.
C)average product is less than marginal product.
D)both a and c
E)none of the above.

Question 40

A firm is using a single variable input,labor,with a given amount of a fixed input,capital.If the level of capital is decreased,

A)the total product curve of labor curve shifts downward.
B)the average product curve of labor curve shifts downward.
C)the marginal product curve of labor shifts downward.
D)all of the above
E)none of the above

Question 41

Given the table below,what is the marginal cost of the 250th unit of output?

A)$0.14
B)$2.40
C)$4.00
D)$7.40
E)none of the above

Question 42

Given the table below,what is average total cost when 200 units of output are produced?

A)$2.30
B)$2.50
C)$4.00
D)$4.80
E)none of the above

Question 43

A firm is currently producing 10 units of output; marginal cost is $24 and average total cost is $6 at this level of output.The average total cost at 9 units of output is:

A)$4
B)$5
C)$6
D)$8
E)none of the above

Question 44

Average total cost

A)increases as output increases.
B)decreases as output increases.
C)increases if marginal cost is increasing.
D)increases if marginal cost is greater than average total cost.
E)both c and d

Question 45

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.When the firm uses 6 units of labor,what is marginal cost?

A)$0.25
B)$5
C)$6.67
D)$7.06
E)$10.25

Question 46

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.When the firm uses 4 units of labor,what is AVERAGE variable cost?

A)$10
B)$24
C)$124
D)$240
E)none of the above

Question 47

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.What is the marginal cost?

A)$0.63
B)$0.94
C)$1.60
D)$3.20
E)none of the above

Question 48

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.What is average variable cost?

A)$0.63
B)$1.60
C)$3.20
D)$10.00
E)none of the above

Question 49

Based on the following table,what is total variable cost when 100 units of output are produced?

A)$5
B)$10.50
C)$105
D)$1050
E)none of the above

Question 50

A short-run cost function assumes that

A)the level of output is fixed.
B)at least one input is fixed in supply.
C)all inputs are fixed in supply.
D)both a and b
E)both b and c

Question 51

Above is a firm's average product of labor and marginal product of labor curves.The price of labor is $60 per unit.Given this,diminishing returns set in with the

A)3rd unit of labor.
B)6th unit of labor.
C)10th unit of labor.
D)12th unit of labor.
E)14th unit of labor.

Question 52

Average fixed cost

A)increases as output increases.
B)decreases as output increases.
C)increases if marginal cost is increasing.
D)increases if marginal cost is greater than average fixed cost.

Question 53

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.What is average total cost?

A)$0.825
B)$0.63
C)$1.80
D)$4.10
E)none of the above

Question 54

Marginal cost

A)measures how total cost changes when input prices change.
B)measures how total cost changes when one more unit of output is produced.
C)is less than average cost when average cost is decreasing.
D)both a and b
E)both b and c

Question 55

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.Suppose that installation of a new assembly line increases the output produced per worker.The cost per unit of output

A)will increase.
B)will decrease.
C)will be unchanged.
D)is at its maximum.
E)is at its minimum

Question 56

Given the table below,what is average fixed cost when 300 units of output are produced?

A)$0.60
B)$3.00
C)$160
D)$500
E)none of the above

Question 57

Given the table below,what is the total fixed cost when 400 units of output are produced?

A)$500
B)$2000
C)$3500
D)$5000
E)none of the above

Question 58

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.Which of the following is true?

A)Average variable cost is increasing.
B)Marginal cost is increasing.
C)Average variable cost is decreasing.
D)Cannot determine without more information.

Question 59

A fixed cost is

A)the cost of any input with a fixed price per unit.
B)a cost which increases in a fixed proportion as output increases.
C)a cost the firm must pay even if output is zero.
D)both b and c
E)all of the above

Question 60

Based on the following table,what is average fixed cost when 150 units of output are produced?

A)$2
B)$9
C)$11
D)$16.50
E)none of the above

Question 61

A firm produces 4,000 units of output using 500 workers.Marginal cost is $10,the wage rate is $160,and total fixed cost is $100,000.When output is 4,000 units,

A)average variable cost is decreasing.
B)average variable cost is increasing.
C)average total cost is decreasing.
D)average total cost is increasing.
E)both a and c

Question 62

In the figure above,the wage rate is $600 and total fixed cost is $15,000.When there are 40 workers,what is average variable cost?

A)$0.23
B)$5.00
C)$4.10
D)$6.00
E)$12.00

Question 63

Based on the following table,the additional cost of producing the 60th unit of output is:

A)$5
B)$250
C)$8
D)$120
E)$80

Question 64

Suppose a firm is hiring 20 workers at a wage rate of $60.The average product of labor is 30,the last worker added 12 units of output,and total fixed cost is $3,600.What is average total cost?

A)$2
B)$8
C)$600
D)$1800
E)none of the above

Question 65

In the figure above,the wage rate is $600 and total fixed cost is $15,000.What is average variable cost at its minimum?

A)$3.75
B)$30
C)$0.94
D)$28
E)$2.80

Question 66

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. If the firm produces 180 units of output,what is total variable cost?

A)$1,200
B)$1,800
C)$14,400
D)$17,100
E)none of the above

Question 67

The capital stock is fixed at 5 units,the price of capital is $60 per unit,and the price of labor is $20 per unit. Based on the above,if the firm produces 60 units of output,what is average variable cost?

A)$5
B)$7.67
C)$20
D)$57.50
E)$2.67

Question 68

A firm produces 4,000 units of output using 500 workers.Marginal cost is $10,the wage rate is $160,and total fixed cost is $100,000.What is the marginal product of labor?

A)$8 per worker
B)8 units of output per worker
C)$16 per worker
D)16 units of output per worker
E)none of the above

Question 69

Based on the following table,the additional cost of producing the 170th unit of output is:

A)$10.50
B)$11.50
C)$13
D)$15
E)none of the above

Question 70

In the above figure,what is the TOTAL cost of producing 5 units of output?

A)$10
B)$60
C)$100
D)$225
E)$2,000

Question 71

Short-run average cost is

A)always greater than long-run average cost.
B)always less than long-run average cost.
C)less than short-run marginal cost when short-run marginal cost is decreasing.
D)both a and c
E)none of the above

Question 72

Based on the following table,what is average fixed cost when 200 units of output are produced?

A)$2.80
B)$80
C)$150
D)$1.50
E)none of the above

Question 73

Suppose a firm is hiring 20 workers at a wage rate of $60.The average product of labor is 30,the last worker added 12 units of output,and total fixed cost is $3,600.What is marginal cost?

A)$.20
B)$5
C)$240
D)$720
E)none of the above

Question 74

A firm produces 4,000 units of output using 500 workers.Marginal cost is $10,the wage rate is $160,and total fixed cost is $100,000.What is average variable cost?

A)$0.32
B)$16
C)$20
D)$1,280
E)none of the above

Question 75

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. If the firm produces 40 units of output,what is average fixed cost?

A)$7.50
B)$25
C)$120
D)$600
E)none of the above

Question 76

The capital stock is fixed at 5 units,the price of capital is $60 per unit,and the price of labor is $20 per unit. Based on the above,if the firm produces 80 units of output,what is its total cost of production?

A)$540
B)$1,600
C)$1,900
D)$5,040
E)none of the above

Question 77

In the figure above,the wage rate is $600 and total fixed cost is $15,000.How much output does the firm produce when average variable cost is at its minimum?

A)270
B)375
C)30
D)1,600
E)4,800

Question 78

The capital stock is fixed at 5 units,the price of capital is $60 per unit,and the price of labor is $20 per unit. Based on the above,how much does the 12th unit of output add to the firm's total variable cost?

A)$2.50
B)$4
C)$5
D)$20
E)$40

Question 79

Based on the following table,what is average variable cost when output is 200?

A)$2.00
B)$12.00
C)$10.50
D)$240
E)$210

Question 80

In the table below,the capital stock is fixed at 40 units,the price of capital is $15 per unit,and the price of labor is $80 per unit. How much does the 50th unit of output add to the firm's total cost?

A)$6.67
B)$10
C)$400
D)$600
E)none of the above