Deck 7: Production and Cost in the Firm

Question 1

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and move into a storage building that he owns and currently rents to his brother for $6,000 a year.His estimated expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.The chef's implicit costs are equal to _____.

A)$26,000
B)$66,000
C)$78,000
D)$52,000
E)$72,000

Answer 1

A

Question 2

To hire a resource,a firm must pay at least the resource's _____

A)opportunity cost.
B)explicit cost.
C)implicit cost.
D)fixed costs.
E)marginal cost.

Answer 2

A

Question 3

The opportunity cost of a resource _____

A)includes both explicit and implicit costs.
B)includes explicit cost only.
C)includes implicit cost only.
D)is equal to the market price of the resource.
E)is not related to the market price of the resource.

Answer 3

A

Question 4

Maryann and Don want to open their own deli.To do so,Maryann must give up her job,where she earns $20,000 per year,and Don must give up his part-time job,where he earns $10,000 per year.They must liquidate their money market fund,which earns $1,000 in interest annually.The rent on the building is $10,000 per year,and the expenses of necessities such as utilities,corned beef,and pickles are $35,000 annually._____ is the explicit cost per year of operating the deli.

A)$10,000
B)$35,000
C)$45,000
D)$31,000
E)$76,000

Question 5

A firm's opportunity costs of using resources provided by the firm's owners are called _____

A)sunk costs.
B)fixed costs.
C)explicit costs.
D)implicit costs.
E)entrepreneurial costs.

Question 6

Explicit costs are _____

A)not part of opportunity costs.
B)the only costs considered in opportunity costs.
C)exactly the same as implicit costs.
D)actual cash payments for resources purchased.
E)the opportunity costs of using resources owned by the firm.

Question 7

Cash payments for steel to be used in the production process would be an example of _____

A)sunk costs.
B)fixed costs.
C)explicit costs.
D)implicit costs.
E)entrepreneurial costs.

Question 8

Which of the following is not an explicit cost?

A)salaries
B)sales taxes
C)the cost of utilities, such as gas and electricity
D)insurance premiums
E)the value of a firm owner's time

Question 9

If Domino's Pizza pays $3 per pound for cheese,then the $3 represents the producer's _____

A)substitutes.
B)explicit costs only.
C)implicit costs only.
D)opportunity cost.
E)competitive cost.

Question 10

Which of the following would not appear on a firm's accounting statement?

A)sunk costs
B)fixed costs
C)explicit costs
D)implicit costs
E)insurance costs

Question 11

Unlike implicit costs,explicit costs _____

A)reflect opportunity costs.
B)include the value of the owner's time.
C)are not included in a firm's accounting statements.
D)are actual cash payments.
E)do not change as a firm's output changes.

Question 12

Suppose Ripco owns the building from which it operates.If _____

A)the firm pays no rent, there is no opportunity cost.
B)the firm does not rent the building to anyone else, there is no opportunity cost.
C)the firm pays rent, there is an opportunity cost.
D)its usage of the building precludes it from renting to anyone else, there is an opportunity cost.
E)the firm can use the building for other things, there is no opportunity cost.

Question 13

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and move into a building that he owns and currently rents to his brother for $6,000 a year.His estimated expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.The chef's explicit costs are equal to _____

A)$26,000.
B)$66,000.
C)$78,000.
D)$52,000.
E)$72,000.

Question 14

Which of the following are implicit costs for a typical firm?

A)insurance costs
B)electricity costs
C)the opportunity costs of the capital owned and used by the firm
D)the cost of the labor hired by the firm
E)the cost of raw materials

Question 15

The reason economists assume that firms try to maximize economic profit is that _____

A)firms that don't earn profits will, over time, have difficulty securing financing to survive.
B)firms in the real world always maximize profit.
C)profit is easier to calculate than revenue.
D)if a firm fails to earn a profit in its first year, it will go out of business.
E)profit maximization is easier for firms than revenue maximization.

Question 16

Two friends,Diane and Sam,own and run a bar.Diane tends the bar on Mondays,Wednesdays,and Fridays and receives a wage in addition to tips.Sam tends the bar on Tuesdays,Thursdays,and Saturdays and receives only tips.Which of the following represents an implicit cost of operating the bar?

A)Diane's wages
B)Sam's time
C)Diane's tips
D)Sam's tips
E)Both Diane's and Sam's tips

Question 17

An implicit cost is _____

A)any cost a firm cannot avoid in the short run.
B)any expenditure a firm makes.
C)an opportunity cost.
D)accurately measured in accounting statements.
E)ignored by economists.

Question 18

Accounting profit equals _____

A)explicit costs minus implicit costs.
B)economic profit minus implicit costs.
C)economic profit minus explicit costs.
D)economic profit minus explicit costs and implicit costs.
E)economic profit plus implicit costs.

Question 19

Amanda,aged 6,opens a lemonade stand.She makes all the lemonade from a mix she found in her parents' pantry.Her stand is an old box she found in the garage.The pitcher and paper cups were taken from the kitchen.Which of the following is true?

A)The opportunity cost of the lemonade is zero.
B)The only opportunity cost of the lemonade is Amanda's time.
C)Amanda's explicit costs are zero.
D)The implicit costs of Amanda's lemonade are zero.
E)Whatever revenue Amanda gets will be pure economic profit.

Question 20

John moved his office from a building he was renting downtown to the carriage house he owns behind his house.Which of the following statements shows how his costs change?

A)Both his explicit and implicit costs will rise.
B)His explicit costs will rise, while his implicit costs will fall.
C)Both his explicit and implicit costs will fall.
D)His explicit costs will fall, while his implicit costs will rise.
E)His explicit costs will rise, while his implicit costs will remain the same.

Question 21

Accounting profit is _____

A)always less than economic profit.
B)never less than economic profit.
C)equal to economic profit if a normal profit is earned.
D)less than economic profit only when implicit costs are greater than explicit costs.
E)greater than economic profit only when implicit costs are greater than explicit costs.

Question 22

Suppose Ernie gives up his job as a financial advisor to P.E.T.S.,where he earned $30,000 per year,to open up a store selling pet-care products.He invested $10,000 in the store,which was originally savings that earned 5 percent interest.This year,the revenue from the new business was $50,000 and the explicit costs were $10,000.The economic profit earned by Ernie was _____

A)$10,000.
B)$50,000.
C)$20,000.
D)$40,000.
E)$9,500.

Question 23

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.If downloads generate $45,000 in revenue during the first year,then his business _____

A)has an accounting profit but an economic loss.
B)has an accounting loss and an economic profit.
C)has both accounting and economic profits.
D)has both an accounting and an economic loss.
E)has a normal profit.

Question 24

Maryann and Don want to open their own deli.To do so,Maryann must give up her job,where she earns $20,000 per year,and Don must give up his part-time job,where he earns $10,000 per year.They must liquidate their money market fund,which earns $1,000 interest annually.The rent on the building is $10,000 per year,and the expenses of such necessities as utilities,corned beef,and pickles are $35,000 annually.The minimum amount of revenue per year that would make it worthwhile,financially,for Maryann and Don to run the deli is _____

A)$10,000.
B)$35,000.
C)$45,000.
D)$31,000.
E)$76,000.

Question 25

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What are his explicit costs?

A)$37,000
B)$50,000
C)$43,000
D)$93,000
E)$130,000

Question 26

Which of the following would be shown on a firm's accounting statement?

A)revenue, implicit costs, explicit costs, and economic profit
B)revenue, implicit costs, explicit costs, and accounting profit
C)revenue, explicit costs, and economic profit
D)revenue, explicit costs, and accounting profit
E)revenue, implicit costs, and accounting profit

Question 27

Suppose Ben buys out Jerry's ownership in a firm but retains him as a salaried employee.Jerry gets a salary equal to the value of the share that he held in the firm.In this case,which of the following statements is true?

A)The firm's economic profit increases.
B)The firm's economic profit decreases.
C)There is no change in the economic profit of the firm.
D)There is no change in the accounting profit of the firm.
E)The firm's accounting profit increases.

Question 28

Economic profit is defined as _____

A)total fixed cost plus total variable cost.
B)total revenue minus marginal costs.
C)average revenue minus average variable cost.
D)total revenue minus total costs.
E)marginal revenue minus opportunity costs.

Question 29

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What is his accounting profit?

A)$37,000
B)$50,000
C)$43,000
D)$93,000
E)$130,000

Question 30

Normal profit is defined as _____

A)cost of production minus revenue from sales.
B)economic profit plus accounting profit.
C)the profit necessary to ensure that opportunity costs are covered.
D)accounting profit minus economic profit.
E)economic profit minus accounting profit.

Question 31

A firm's accounting profit is equal to _____

A)total revenue minus opportunity costs.
B)total revenue plus opportunity costs.
C)total revenue minus imputed costs.
D)total revenue minus explicit costs.
E)total revenue minus explicit and implicit costs.

Question 32

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What are his implicit costs?

A)$37,000
B)$50,000
C)$43,000
D)$93,000
E)$130,000

Question 33

Economic profit is defined as _____

A)total revenue minus the cost of the goods produced.
B)the price of the goods sold minus the quantity of goods sold.
C)total revenue minus what must be paid to resources to attract them from their best alternative use.
D)total revenue divided by what must be paid to resources to attract them from their best alternative use.
E)total revenue plus what must be paid to resources to attract them from their best alternative use.

Question 34

Suppose Ernie gives up his job as a financial advisor to P.E.T.S.,where he earned $30,000 per year,to open up a store selling pet-care products.He invested $10,000 in the store,which was originally savings that earned 5 percent interest.This year,the revenue from the new business was $50,000,and the explicit costs were $10,000.The accounting profit earned by Ernie was _____

A)$10,000.
B)$50,000.
C)$20,000.
D)$40,000.
E)$9,500.

Question 35

Opportunity cost usually _____

A)cannot be measured.
B)applies to labor but not to capital.
C)is involved in calculating economic profit.
D)is greater than the cash payment made to a resource.
E)is less than the cash payment made to a resource.

Question 36

A firm's economic profit is equal to _____

A)total revenue minus accounting profit.
B)total revenue minus explicit costs.
C)total revenue plus accounting profit.
D)total revenue plus opportunity costs.
E)accounting profit minus implicit costs.

Question 37

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.If downloads generate $50,000 in revenue during the first year,then his business _____

A)has an accounting profit but an economic loss.
B)has an accounting loss and an economic profit.
C)has both accounting and economic profits.
D)has both an accounting and an economic loss.
E)has a normal profit.

Question 38

Economic profit is defined as _____

A)total revenue minus implicit costs.
B)total revenue plus explicit costs.
C)total revenue plus implicit costs.
D)wages plus interest minus rent.
E)total revenue minus implicit and explicit costs.

Question 39

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What is his economic profit?

A)$37,000
B)$50,000
C)$43,000
D)$93,000
E)$130,000

Question 40

The difference between a firm's total revenue and what must be paid to attract resources from their best alternative use is called _____

A)total revenue.
B)utility.
C)economic profit.
D)cost.
E)production efficiency.

Question 41

Suppose a professor gives up her teaching job to devote her time to writing textbooks.Soon after,salaries for professors rise.As a result,_____

A)her accounting profit will rise.
B)her accounting profit will fall.
C)her explicit costs will rise.
D)her economic profit from textbooks will fall.
E)her economic profit from textbooks will rise.

Question 42

Suppose a lawyer leaves his $50,000-a-year job and starts his own firm breeding pit bulls.In the first year,his accounting profit is $70,000.The lawyer finances his new business with $100,000 from his savings account,which had earned 10 percent interest.From his new business,the lawyer earns an economic profit of _____

A)$10,000.
B)$60,000.
C)$70,000.
D)−$80,000.
E)−$90,000.

Question 43

Suppose Bob leaves his $50,000-a-year job as a financial advisor to P.E.T.S.and starts his own business selling pet-care products.In the first year,his accounting profit is $70,000.Based on this level of success,Bob should _____

A)return to his old job because his economic profit is negative.
B)return to his old job because his economic profit is smaller than his accounting profit.
C)return to his old job because his economic profit is less than his old salary.
D)stay with his new firm because his economic profit is positive.
E)stay with his new firm because accounting profit is positive.

Question 44

Resources that can be increased or decreased in the short run are called _____

A)fixed resources.
B)variable resources.
C)economic resources.
D)accounting resources.
E)normal resources.

Question 45

If a shoe store earns more than a normal profit,its _____

A)economic profit must be greater than its accounting profit.
B)economic profit is positive.
C)economic profit is, therefore, equal to its accounting profit.
D)accounting profit is zero.
E)accounting profit is less than its economic profit.

Question 46

Suppose Joan uses her savings to purchase computer equipment for her new consulting business.Soon after this,the market interest rate rises.As a result,her _____

A)explicit costs rise immediately.
B)accounting profit falls immediately.
C)accounting profit rises immediately.
D)economic profit rises immediately.
E)economic profit falls immediately.

Question 47

If a pizza joint earns only a normal profit this year,its _____

A)economic profit is equal to its accounting profit.
B)economic profit is zero.
C)economic profit is equal to the average accounting profit in other industries.
D)accounting profit is zero.
E)accounting profit is less than its economic profit.

Question 48

If a firm has explicit costs of $100,000 and implicit costs of $30,000,and generates $150,000 in revenue,then its accounting profit is _____

A)$20,000.
B)$30,000.
C)$50,000.
D)$100,000.
E)$130,000.

Question 49

The short run is a period of time _____

A)equal to or less than six months.
B)during which all resources may be varied.
C)during which all resources are fixed.
D)during which at least one resource is fixed.
E)during which at least one resource may be varied.

Question 50

Table 7.1
?
$$\begin{array} { l r } \text { Total Revenue } & \$ 100,000 \\\hline \text { Assistant's sal ary } & \$ 20,000 \\\text { Material \& equipment } & \$ 15,000 \\\text { Forgone salary } & \$ 30,000 \\\text { Forgone interest } & \$ 1,000 \\\text { Forgone building rental } & \$ 10,000\end{array}$$

-Refer to Table 7.1,which shows revenue and cost information for Sally's small business.Sally owns a small business that she operates in a building she owns.Given the information in the table below,Sally's accounting profit is equal to _____

A)$80,000.
B)$50,000.
C)$65,000.
D)$35,000.
E)$24,000.

Question 51

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and take over a storage building he owns and currently rents for $6,000 a year.His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity._____ is the minimum revenue he must earn per year in order for it to be worth his while to open his sushi bar.

A)$26,000
B)$66,000
C)$78,000
D)$52,000
E)$72,000

Question 52

Table 7.1
?
$$\begin{array} { l r } \text { Total Revenue } & \$ 100,000 \\\hline \text { Assistant's sal ary } & \$ 20,000 \\\text { Material \& equipment } & \$ 15,000 \\\text { Forgone salary } & \$ 30,000 \\\text { Forgone interest } & \$ 1,000 \\\text { Forgone building rental } & \$ 10,000\end{array}$$

-Refer to Table 7.1,which shows revenue and cost information for Sally's small business.Sally owns a small business that she operates in a building she owns.Given the information in the table below,Sally's economic profit is equal to _____

A)$80,000.
B)$50,000.
C)$65,000.
D)$35,000.
E)$24,000.

Question 53

Which of the following is most likely to be a fixed resource for a word processing firm?

A)a laptop
B)a worker
C)the building
D)a month's electricity bill
E)a bundle of paper

Question 54

Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make soccer shoes.If his revenue from the sale of these shoes is $50,000 and his materials cost $20,000,then his economic profit is equal to _____

A)$5,000.
B)$25,000.
C)$30,000.
D)$50,000.
E)$80,000.

Question 55

Which of the following would most likely reach the long run the soonest?

A)a nuclear power plant
B)a college
C)a lumber mill
D)a shopping mall
E)a hot dog stand

Question 56

The length of time that represents the long run _____

A)is greater than one year.
B)is greater than six months.
C)is longer in service industries than in manufacturing.
D)is the same for all industries.
E)varies from industry to industry.

Question 57

John moved his office from a building he was renting downtown to the carriage house he owns behind his house.How will his profit change?

A)Implicit costs will fall.
B)Explicit costs will remain unchanged, while implicit costs will rise.
C)Economic profit will fall.
D)Explicit costs will rise.
E)Accounting profit will rise.

Question 58

A firm earns normal profit _____

A)when economic profit equals implicit costs.
B)when accounting profit is less than implicit costs.
C)when accounting profit equals explicit costs.
D)when economic profit equals explicit costs.
E)when explicit costs equal implicit costs.

Question 59

If a firm has explicit costs of $100,000 and implicit costs of $30,000,and generates $150,000 in revenue,then its economic profit is _____

A)$20,000.
B)$30,000.
C)$50,000.
D)$100,000.
E)$130,000.

Question 60

A firm has explicit costs of $100,000 and implicit costs of $30,000,and generates $150,000 in revenue.How much revenue does it need to have a normal profit?

A)$20,000
B)$30,000
C)$50,000
D)$100,000
E)$130,000

Question 61

Total product is defined as _____

A)a firm's total output.
B)the increase in output that occurs when all resources are increased by the same proportion.
C)the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant.
D)the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount.
E)the amount of additional money needed to increase output by one unit when all resources are held constant.

Question 62

Table 7.4
$$\begin{array} { c c c } \begin{array} { c } \text { Units of } \\\text { Labor }\end{array} & \begin{array} { c } \text { Total } \\\text { Product }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & - \\1 & 6 & 6 \\2 & 14 & 8 \\3 & 24 & 10 \\4 & 36 & 12 \\5 & 42 & 6 \\6 & 46 & 4\end{array}$$

-Refer to Table 7.4,which shows labor,total product,and marginal product for a firm.Marginal returns increase with the hiring of up to _____ workers.

A)six
B)two
C)five
D)four
E)three

Question 63

If a firm is experiencing diminishing marginal returns to labor,then which of the following statements is true?

A)The first workers the firm hired were better than the workers hired later on.
B)The firm is experiencing decreasing returns to scale.
C)The positive effect of specialization in production is being offset by the negative effect of crowding of inputs.
D)Output is decreasing with decreasing inputs.
E)The firm should buy more non-labor inputs.

Question 64

The production function is defined as _____

A)a firm's total output.
B)the increase in output that occurs when all resources are increased by the same proportion.
C)the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant.
D)the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount.
E)The relationship between the amount of resources employed and total product.

Question 65

Table 7.3
$$\begin{array} { c c } \begin{array} { c } \text { Number } \\\text { of Workers }\end{array} & \begin{array} { c } \text { Total } \\\text { Output }\end{array} \\\hline 0 & 0 \\1 & 10 \\2 & 40 \\3 & 100 \\4 & 140 \\5 & 160 \\6 & 170 \\7 & 150\end{array}$$

-Refer to Table 7.3,which shows the number of workers and total output produced in a firm.The total product of four workers is _____

A)0.
B)10.
C)20.
D)140/4.
E)140.

Question 66

When diminishing marginal returns set in,total product _____

A)is negative.
B)decreases at an increasing rate.
C)decreases at a decreasing rate.
D)increases at an increasing rate.
E)increases at a decreasing rate.

Question 67

The law of diminishing marginal returns states that _____

A)long-run average cost declines as output increases.
B)if the marginal product is above the average product, the average will rise.
C)as units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable input eventually diminishes.
D)as a person consumes more of a good, the marginal satisfaction from that good eventually diminishes.
E)if marginal product is positive, total product rises.

Question 68

Table 7.2
$$\begin{array} { c c } \text { Labor } & \begin{array} { c } \text { Total Froduct } \\\text { (pairs of shoes) }\end{array} \\\hline 0 & 0 \\1 & 20 \\2 & 50 \\3 & 75 \\4 & 80 \\5 & 75\end{array}$$

-Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.What is the marginal product of the third unit of labor?

A)45 pairs of shoes
B)25 pairs of shoes
C)15 pairs of shoes
D)75 pairs of shoes
E)50 pairs of shoes

Question 69

The short run is a period of time _____

A)less than one year.
B)greater than one year.
C)during which all resources are variable.
D)during which at least one resource is fixed.
E)during which at least one resource is variable.

Question 70

Table 7.4
$$\begin{array} { c c c } \begin{array} { c } \text { Units of } \\\text { Labor }\end{array} & \begin{array} { c } \text { Total } \\\text { Product }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & - \\1 & 6 & 6 \\2 & 14 & 8 \\3 & 24 & 10 \\4 & 36 & 12 \\5 & 42 & 6 \\6 & 46 & 4\end{array}$$

-Refer to Table 7.4,which shows labor,total product,and marginal product for a firm.Marginal returns begin to diminish with the hiring of the _____ worker.

A)second
B)third
C)fourth
D)fifth
E)sixth

Question 71

The additional output obtained by adding another unit of labor to the production process is called _____

A)the marginal cost of labor.
B)the average output of labor.
C)a variable cost.
D)the marginal product of labor.
E)the marginal utility of labor.

Question 72

Table 7.2
$$\begin{array} { c c } \text { Labor } & \begin{array} { c } \text { Total Froduct } \\\text { (pairs of shoes) }\end{array} \\\hline 0 & 0 \\1 & 20 \\2 & 50 \\3 & 75 \\4 & 80 \\5 & 75\end{array}$$

-Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.At which points do negative marginal returns set in?

A)before the first unit of labor
B)between the first and second units of labor
C)between the second and third units of labor
D)between the third and fourth units of labor
E)between the fourth and fifth units of labor

Question 73

In the range of increasing marginal returns,total product is _____

A)increasing at a constant rate.
B)increasing at an increasing rate.
C)increasing at a decreasing rate.
D)decreasing at an increasing rate.
E)decreasing at a decreasing rate.

Question 74

Table 7.3
$$\begin{array} { c c } \begin{array} { c } \text { Number } \\\text { of Workers }\end{array} & \begin{array} { c } \text { Total } \\\text { Output }\end{array} \\\hline 0 & 0 \\1 & 10 \\2 & 40 \\3 & 100 \\4 & 140 \\5 & 160 \\6 & 170 \\7 & 150\end{array}$$

-Refer to Table 7.3,which shows the number of workers and total output produced in a firm.Diminishing marginal returns set in with the addition of the _____

A)first worker.
B)third worker.
C)fourth worker.
D)fifth worker.
E)seventh worker.

Question 75

When diminishing marginal returns set in,marginal product is _____

A)positive and increasing.
B)positive and decreasing.
C)negative and increasing.
D)negative and decreasing.
E)zero.

Question 76

Marginal product is defined as _____

A)the increase in revenue that occurs when an additional unit of a resource is added.
B)the increase in output that occurs when all resources are increased by the same proportion.
C)the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant.
D)the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount.
E)the amount of additional money needed to increase output by one unit when all resources are held constant.

Question 77

Table 7.2
$$\begin{array} { c c } \text { Labor } & \begin{array} { c } \text { Total Froduct } \\\text { (pairs of shoes) }\end{array} \\\hline 0 & 0 \\1 & 20 \\2 & 50 \\3 & 75 \\4 & 80 \\5 & 75\end{array}$$

-Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.At which point do diminishing marginal returns set in?

A)before the first unit of labor
B)between the first and second units of labor
C)between the second and third units of labor
D)between the third and fourth units of labor
E)between the fourth and fifth units of labor

Question 78

Table 7.3
$$\begin{array} { c c } \begin{array} { c } \text { Number } \\\text { of Workers }\end{array} & \begin{array} { c } \text { Total } \\\text { Output }\end{array} \\\hline 0 & 0 \\1 & 10 \\2 & 40 \\3 & 100 \\4 & 140 \\5 & 160 \\6 & 170 \\7 & 150\end{array}$$

-Refer to Table 7.3,which the number of workers and total output produced in a firm.The marginal product of the third worker is _____

A)20.
B)100/3.
C)60.
D)50.
E)140.

Question 79

Table 7.2
$$\begin{array} { c c } \text { Labor } & \begin{array} { c } \text { Total Froduct } \\\text { (pairs of shoes) }\end{array} \\\hline 0 & 0 \\1 & 20 \\2 & 50 \\3 & 75 \\4 & 80 \\5 & 75\end{array}$$

-Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.What is the marginal product of the fourth unit of labor?

A)5 pairs of shoes
B)10 pairs of shoes
C)20 pairs of shoes
D)50 pairs of shoes
E)80 pairs of shoes

Question 80

Increasing marginal returns are generally the result of _____

A)diseconomies of scale.
B)increasing costs.
C)the specialization and division of labor.
D)labor unions.
E)changes in technology.