CHAPTER 22 – MYLAB STUDY PLAN – Flashcards
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The academic calendar for a university is August 15 through May 15. A professor commits to a contract that binds her to a teaching position at this university for this period. Based on this information, the short run for the professor: A) will be the calendar year between January 1 and December 31; any time period longer than this will be long run for her. B) will be the time period between August 15 of the current year and August 14 of the following year; any time period longer than this will be long run for her. C) will be the nine month period between August 15 and May 15; any time period longer than this will be long run for her. D) will be the time period between August 15 and December 31; any time period longer than this will be long run for her.
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C
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From the perspective of the firm, what is the difference between the short run and the long run: A) In the long run, at least one input is fixed, while in the short-run all inputs are variable. B) There is no difference between the short run and the long-run from the perspective of the firm. C) In the short run, at least one input is fixed, while in the long run all inputs are variable. D) The short run is a period of less than a year while the long run is a period of one year or more.
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C
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The short run is defined as: A) the period of time in which all factors of production are variable. B) the period of time it takes the firm to make its first economic profit. C) a period of time of five years or less. D) the period of time in which at least one factor of production is fixed.
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D
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In the long run: A) economic profits are always positive. B) all factors of production are fixed. C) some factors are fixed and some are variable. D) all factors of production are variable.
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D
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In the long run there: A) are only variable inputs. B) is only one level of capacity at which the firm can operate. C) are only fixed inputs. D) are both fixed and variable inputs.
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A
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The short run is any time period where: A) no inputs can be changed. B) at least one input cannot be changed. C) at least two inputs cannot be changed. D) all inputs can be changed.
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B
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The long run is any time period where: A) no inputs can be changed. B) all inputs can be changed. C) at least one input cannot be changed. D) at least two inputs cannot be changed.
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B
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If total product is increasing at a decreasing rate, then marginal product is: A) increasing at a decreasing rate. B) constant. C) decreasing. D) increasing at an increasing rate
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C
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If a firm hires an additional worker and discovers that its total output has fallen, then it must be true that: A) marginal product is negative. B) marginal cost is negative. C) average total cost is negative. D) marginal product is minimized and marginal cost is maximized.
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A
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Why does the marginal product of labor eventually decline as more labor is used with another fixed input: A) The labor will have, on average, fewer units of the other inputs to combine with and the increases to total output obtained from more labor will increase. B) The labor will have, on average, fewer units of the other inputs to combine with and the increases to total output obtained from more labor will decrease. C)The labor will have, on average, more units of the other inputs to combine with and the increases to total output obtained from more labor will decrease. D) The labor will have, on average, more units of the other inputs to combine with and the increases to total output obtained from more labor will decrease.
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B
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The law of diminishing marginal returns shows the relationship between: A) inputs and outputs for a firm in the long run. B) accounting and economic profits. C) inputs and outputs for a firm in the short run. D) short run inputs and long run outputs for a firm.
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C
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The law of diminishing marginal returns is caused by: A) insufficient amounts of the variable input. B) the existence of a fixed input that must be combined with increasing amounts of the variable input. C) poor quality fixed inputs. D) some workers performing poorly on the job.
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B
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The marginal product of labor is equal to total product divided by the number of worker-weeks: A) True B) False
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B
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The production function: A) specifies the maximum possible output that can be produced with a given amount of inputs. B) depends on the technology available to the firm. C) specifies the minimum amount of inputs necessary to produce a given level of output. D) All of the above.
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D
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At the point of saturation, total product has reached its maximum: A) True B) False
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A
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If marginal product is increasing, total product ________, and if marginal product is decreasing, total product ________: A) may be increasing or decreasing; may be increasing or decreasing B) must be increasing, may be increasing or decreasing C) must be increasing; must be decreasing D) must be positive; must be negative
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B
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The technological relationship between output and inputs is called the ________ function. It relates ________ per time period to several inputs, such as capital and labor:
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PRODUCTION OUTPUT
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Because "additive manufacturing" has proved to be most readily adaptable to production of relatively small quantities of products, most additive-manufacturing firms experience: A) economies of scale over all ranges of output. B) diseconomies of scale over all ranges of output. C) economies of scale only over a low range of output before diseconomies of scale begin to arise. D) economies of scale only over a wide range of output before diseconomies of scale begin to arise.
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C
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Additive-manufacturing firms have found that they can utilize certain technologies at lowest long-run average cost via: A) small devices in a number of relatively small plants. B) providing specialized training to all employees. C) large devices in a number of relatively small plants. D) cooperation with partners.
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B
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For most industries that utilize additive manufacturing, the minimum efficient scale tends to be: A) smaller than has been true of traditional service industries. B) larger than has been true of traditional manufacturing industries. C) larger than has been true of traditional service industries. D) smaller than has been true of traditional manufacturing industries.
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D
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When the total product function begins to increase at a decreasing rate: A) the law of diminishing returns has set in. B) marginal product is falling. C) marginal cost is rising. D) All of the above.
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D
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The wage rate divided by marginal product equals: A) marginal cost. B) average product. C) average total cost. D) average variable cost.
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A
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When marginal cost is falling: A) marginal product is at a minimum. B) marginal product is at a maximum. C) marginal product must be rising. D) marginal product must be falling.
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C
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The shape of the short-run cost curves are the result of: A) the law of diminishing returns. B) diseconomies of scale. C) falling profits. D) economies of scale.
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A
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Fixed costs do not depend on the rate of production: A) True B) False
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A
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Total variable costs vary inversely with the rate of production: A) True B) False
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B
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AVC + AFC = ATC: A) True B) False
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A
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Total costs divided by output equals: A) marginal costs. B) average total costs. C) average fixed costs. D) average variable costs.
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B
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If the production of 25 sets of binoculars per day costs a firm $1,500.00 and the production of 26 sets of binoculars per day costs a firm $1,550.00, the marginal cost of producing 26 rather than 25 sets of binoculars per day is: A) $50.00. B) $60.00. C) $55.00. D) $59.62.
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A
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The marginal cost curve intersects the average variable cost curve and the average total cost curve at their maximum points: A) True B) False
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A
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When marginal costs are greater than average costs, average costs must: A) be negative. B) be at their minimums. C) rise. D) fall.
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C
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When marginal cost is below average total cost, average total cost falls: A) True B) False
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A
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Average variable cost ________ when average product ________: A) reaches its maximum; reaches its maximum B) reaches its minimum; reaches its minimum C) reaches its minimum; reaches its maximum D) is zero; reaches its maximum
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C
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Marginal cost ________ when marginal product ________: A) is zero; reaches its minimum B) decreases; decreases C) increases; decreases D) increases; increases
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C
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Which of the following statements describes a firm's long-run average cost curve: A) A U-shaped curve that represents the lowest point on a series of short-run total cost curves. B) A U-shaped curve that represents the minimum point on a series of marginal cost curves. C) A U-shaped curve that represents the lowest point on a series of short-run variable cost curves. D) A U-shaped curve that represents the minimum unit cost of producing any given rate of output.
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D
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Which of the following is true about the long-run average cost curve: A) The long-run average cost curve is the envelope of the firm's short-run average cost curves. B) The long-run average cost curve is the locus of points of the minimum points of the firm's short-run average variable cost curves. C) The long-run average cost curve is the locus of points of the minimum points of the firm's short-run average total cost curves. D) The shape of the long-run average cost curves is determined by the law of diminishing marginal returns.
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A
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The minimum possible short-run average costs are equal to long-run average costs when: A) the long-run curve is at a minimum point. B) short-run and long-run costs are declining. C) production is at any point on the long-run average cost curve. D) the plant is producing at its short-run minimum point.
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A
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In economics, the planning horizon is defined as: A) the period of time for which technology is fixed. B) 10 years. C) the long run, during which all inputs are variable. D) the longest time period over which the firm can make decisions.
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C
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When the long-run average cost curve is falling: A) the firm needs to contract the scale of their operations to produce more efficiently. B) the firm is experiencing economies of scale. C) the firm is experiencing constant returns to scale. D) the firm is experiencing diseconomies of scale.
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B
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Economies of scale in production: A) indicate that as a firm expands, its long-run per-unit costs fall. B) cause the long-run average cost to increase as the firm grows larger. C) in the short run are a miniature version of long-run production. D) occur when the marginal product of labor increases in the short run.
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A
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What is a firm's minimum efficient scale: A) The lowest rate of output at which the firm achieves minimum long-run average cost. B) The lowest rate of output at which the firm achieves minimum short-run average cost. C) All ranges of output at which the firm achieves minimum long-run average cost. D) All outputs where the firm achieves the minimum marginal cost.
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A
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The firm's minimum efficient scale occurs: A) when diseconomies of scale are falling. B) when economies of scale are rising. C) when constant returns to scale end and diseconomies of scale begin. D) when economies of scale end and constant returns to scale begin.
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D
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In choosing the appropriate plant size for a single-plant firm during the long run, the firm will pick the size whose short-run average cost curve generates an average cost that is lowest for the expected rate of output: A) True B) False
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A
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The long-run average cost curve is also called the marginal cost curve: A) True B) False
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B
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The long-run average cost curve is vertical: A) True B) False
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B
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If a firm's long-run average costs increase as its output increases, the firm is experiencing: A) positive returns to scale. B) economies of scale. C) constant returns to scale. D) diseconomies of scale.
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D
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Minimum efficient scale refers to the ________ rate of output per unit time at which long-run average costs for a particular firm are at a ________: A) lowest; maximum B) highest; maximum C) highest; minimum D) lowest; minimum
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D
