# Quiz 8: Production and Cost in the Short Run

Business

Q 1Q 1

the above table, the average product of labor when 4 units of labor are employed is
A) 22.
B) 20.
C) 19.
D) 16.

Free

Multiple Choice

C

Q 2Q 2

the above table, the marginal product of the fifth unit of labor is
A) 16.
B) 10.
C) 4.
D) 2.

Free

Multiple Choice

C

Q 3Q 3

the above table, 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.

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Multiple Choice

B

Q 4Q 4

the above table, 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

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Multiple Choice

Q 5Q 5

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

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Multiple Choice

Q 6Q 6

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

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Multiple Choice

Q 7Q 7

Questions 7 through 10 refer to the following:
Amount of total output produced from various combinations of labor and capital.
-capital is fixed at two units, what is the marginal product of the fourth unit of labor?
A) 60
B) 80
C) 100
D) 420
E) none of the above

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Multiple Choice

Q 8Q 8

Questions 7 through 10 refer to the following:
Amount of total output produced from various combinations of labor and capital.
-capital 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) none of the above

Free

Multiple Choice

Q 9Q 9

Questions 7 through 10 refer to the following:
Amount of total output produced from various combinations of labor and capital.
-labor is fixed at three units, how much does the third unit of capital add to total output?
A) 60
B) 80
C) 110
D) 130
E) none of the above

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Multiple Choice

Q 10Q 10

Questions 7 through 10 refer to the following:
Amount of total output produced from various combinations of labor and capital.
-labor is fixed at 5 units, how much does the second unit of capital add to total output?
A) 490
B) 390
C) 50
D) 100
E) none of the above

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Multiple Choice

Q 11Q 11

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

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Multiple Choice

Q 12Q 12

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.

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Multiple Choice

Q 13Q 13

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.

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Multiple Choice

Q 14Q 14

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

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Multiple Choice

Q 15Q 15

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.

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Multiple Choice

Q 16Q 16

Questions 16 through 20 refer to the following:
-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

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Multiple Choice

Q 17Q 17

Questions 16 through 20 refer to the following:
-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.

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Multiple Choice

Q 18Q 18

Questions 16 through 20 refer to the following:
-the table above, what is the average product of four units of labor?
A) 20
B) 60
C) 80
D) 100
E) 350

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Multiple Choice

Q 19Q 19

Questions 16 through 20 refer to the following:
-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

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Multiple Choice

Q 20Q 20

Questions 16 through 20 refer to the following:
-the table above, what is the marginal product of the fifth unit of labor?
A) 20
B) 50
C) 80
D) 10
E) 30

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Multiple Choice

Q 21Q 21

Questions 21 through 24 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

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Multiple Choice

Q 22Q 22

Questions 21 through 24 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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.

Free

Multiple Choice

Q 23Q 23

Questions 21 through 24 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

Free

Multiple Choice

Q 24Q 24

Questions 21 through 24 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

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Multiple Choice

Q 25Q 25

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

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Multiple Choice

Q 26Q 26

Questions 26 through 30 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

Free

Multiple Choice

Q 27Q 27

Questions 26 through 30 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

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Multiple Choice

Q 28Q 28

Questions 26 through 30 refer to the following:
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

Free

Multiple Choice

Q 29Q 29

Questions 26 through 30 refer to the following:
The amount of total output produced from various combinations of labor and capital.
-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

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Multiple Choice

Q 30Q 30

Questions 26 through 30 refer to the following:
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

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Multiple Choice

Q 31Q 31

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.

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Multiple Choice

Q 32Q 32

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

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Multiple Choice

Q 33Q 33

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

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Multiple Choice

Q 34Q 34

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

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Multiple Choice

Q 35Q 35

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.

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Multiple Choice

Q 36Q 36

Questions 36 through 39 refer to the following:
-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

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Multiple Choice

Q 37Q 37

Questions 36 through 39 refer to the following:
-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

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Multiple Choice

Q 38Q 38

Questions 36 through 39 refer to the following:
-Diminishing returns begin with the
A) 1st worker.
B) 5th worker.
C) 10th worker.
D) 11th worker.
E) 16th worker.

Free

Multiple Choice

Q 39Q 39

Questions 36 through 39 refer to the following:
-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.

Free

Multiple Choice

Q 40Q 40

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

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Multiple Choice

Q 41Q 41

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

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Multiple Choice

Q 42Q 42

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

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Multiple Choice

Q 43Q 43

Questions 43 through 46 refer to the following:
-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

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Multiple Choice

Q 44Q 44

Questions 43 through 46 refer to the following:
-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

Free

Multiple Choice

Q 45Q 45

Questions 43 through 46 refer to the following:
-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

Free

Multiple Choice

Q 46Q 46

Questions 43 through 46 refer to the following:
-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

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Multiple Choice

Q 47Q 47

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.

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Multiple Choice

Q 48Q 48

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
Questions 49 through 53 refer to the following:
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.

Free

Multiple Choice

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Multiple Choice

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Multiple Choice

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Multiple Choice

Q 52Q 52

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.

Free

Multiple Choice

Q 53Q 53

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

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Multiple Choice

Q 54Q 54

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

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Multiple Choice

Q 55Q 55

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

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Multiple Choice

Q 56Q 56

Questions 56 through 58 refer to the following:
Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit.
-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.

Free

Multiple Choice

Q 57Q 57

Questions 56 through 58 refer to the following:
Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit.
-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

Free

Multiple Choice

Q 58Q 58

Questions 56 through 58 refer to the following:
Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit.
-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

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Multiple Choice

Q 59Q 59

Questions 59 through 64 refer to the following:
-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

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Multiple Choice

Q 60Q 60

Questions 59 through 64 refer to the following:
-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

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Multiple Choice

Q 61Q 61

Questions 59 through 64 refer to the following:
-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

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Multiple Choice

Q 62Q 62

Questions 59 through 64 refer to the following:
-is average variable cost when output is 200?
A) $2.00
B) $12.00
C) $10.50
D) $240
E) $210

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Multiple Choice

Q 63Q 63

Questions 59 through 64 refer to the following:
-additional cost of producing the 60th unit of output is:
A) $5
B) $250
C) $8
D) $120
E) $80

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Multiple Choice

Q 64Q 64

Questions 59 through 64 refer to the following:
-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
Questions 65 and 66 refer to the following:
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.

Free

Multiple Choice

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Multiple Choice

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Multiple Choice

Q 67Q 67

Questions 67 through 69 refer to the following:
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.
-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

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Multiple Choice

Q 68Q 68

Questions 67 through 69 refer to the following:
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.
-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

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Multiple Choice

Q 69Q 69

Questions 67 through 69 refer to the following:
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.
-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

Free

Multiple Choice

Q 70Q 70

Questions 70 through 72 refer to the following:
The wage rate is $600 and total fixed cost is $15,000.
-there are 40 workers, what is average variable cost?
A) $0.23
B) $5.00
C) $4.10
D) $6.00
E) $12.00

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Multiple Choice

Q 71Q 71

Questions 70 through 72 refer to the following:
The wage rate is $600 and total fixed cost is $15,000.
-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

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Multiple Choice

Q 72Q 72

Questions 70 through 72 refer to the following:
The wage rate is $600 and total fixed cost is $15,000.
-is average variable cost at its minimum?
A) $3.75
B) $30
C) $0.94
D) $28
E) $2.80

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Multiple Choice

Q 73Q 73

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

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Multiple Choice

Q 74Q 74

Questions 74 through 76 refer to the following:
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.
-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

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Multiple Choice

Q 75Q 75

Questions 74 through 76 refer to the following:
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.
-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

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Multiple Choice

Q 76Q 76

Questions 74 through 76 refer to the following:
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.
-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
Questions 77 through 79 refer to the following:
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.

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Multiple Choice

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Multiple Choice

Q 78Q 78

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

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Multiple Choice

Q 79Q 79

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

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Multiple Choice

Q 80Q 80

Questions 80 through 82 refer to the following:
-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

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Multiple Choice

Q 81Q 81

Questions 80 through 82 refer to the following:
-the above figure, what is the AVERAGE total cost of producing 10 units of output?
A) $4
B) $8
C) $12
D) $50
E) $360

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Multiple Choice

Q 82Q 82

Questions 80 through 82 refer to the following:
-the above figure, what is the AVERAGE variable cost of producing 5 units of output?
A) $12
B) $20
C) $40
D) $60
E) $80
Questions 83 and 84 refer to the following:
"Ford built 18 vehicles per auto employee in North America last year, while GM could only manage 12." (The Wall Street Journal)

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Multiple Choice

Q 83Q 83

comparison with GM, Ford had a higher
A) average product of labor.
B) average product of capital.
C) marginal product of labor.
D) marginal product of capital.

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Multiple Choice

Q 84Q 84

comparison with GM, Ford had
A) higher average variable cost.
B) lower average variable cost.
C) higher total variable cost.
D) both a and c
E) none of the above
Questions 85 and 86 refer to the following:
"At Huffy's ... bicycle factory, 1,700 employees turn out 15,000 bicycles a day (in 1987). Five years ago, it required 2,200 workers to make 10,000 bikes daily." (The Wall Street Journal).

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Multiple Choice

Q 85Q 85

1987,
A) total product was 15,000 bicycles per day.
B) the average product of labor was 0.11.
C) the marginal product of labor was 8.8.
D) both a and b
E) both a and c

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Multiple Choice

Q 86Q 86

Holding all else equal, we can conclude that, over the past five years,
A) Huffy's average variable cost decreased.
B) Huffy's average variable cost increased.
C) Huffy's marginal cost decreased.
D) Huffy's marginal cost increased.
E) both a and c

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Multiple Choice

Q 87Q 87

Questions 87 through 90 refer to the following:
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
-the firm produces 40 units of output, what is total variable cost?
A) $1.50
B) $60
C) $100
D) $2,400
E) none of the above

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Multiple Choice

Q 88Q 88

Questions 87 through 90 refer to the following:
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
-the firm produces 20 units of output, what is average fixed cost?
A) $1.50
B) $50
C) $150
D) $600
E) none of the above

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Multiple Choice

Q 89Q 89

Questions 87 through 90 refer to the following:
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
-much does the 23rd unit of output add to the firm's total cost?
A) $75
B) $135
C) $750
D) $1,350
E) none of the above

Free

Multiple Choice

Q 90Q 90

Questions 87 through 90 refer to the following:
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
-the firm produces 30 units of output, how many units of labor does the firm use?
A) 30
B) 45
C) 54
D) 60
E) none of the above

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Multiple Choice

Q 91Q 91

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-what output does the firm reach minimum average variable cost?
A) 7,400
B) 8,000 units
C) 100 units
D) 6,000
E) 600

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Multiple Choice

Q 92Q 92

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-is AVC at its minimum?
A) $80
B) $100
C) $8
D) $50
E) $35

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Multiple Choice

Q 93Q 93

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 40 units of labor, how much output does it produce?
A) 1,600 units
B) 400 units
C) 4,000 units
D) 2,800 units
E) none of the above

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Multiple Choice

Q 94Q 94

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 40 units of labor, what is AVC at this level of output?
A) $120
B) $400
C) $40
D) $70
E) $86

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Multiple Choice

Q 95Q 95

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 40 units of labor, what is marginal cost at this level of output?
A) $70
B) $35
C) $60
D) $280
E) $55

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Multiple Choice

Q 96Q 96

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 40 units of labor, what is average total cost at this output?
A) $140
B) $40
C) $70
D) $170
E) none of the above

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Multiple Choice

Q 97Q 97

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 120 units of labor, how much output does it produce?
A) 7,000 units
B) 70 units
C) 8,400 units
D) 9,200 units
E) 7,500 units

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Multiple Choice

Q 98Q 98

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 120 units of labor, what is its AVC at this output?
A) $40
B) $70
C) $60
D) $56
E) none of the above

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Multiple Choice

Q 99Q 99

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-the firm uses 120 units of labor, what is its marginal cost at this output?
A) $65
B) $70
C) $50
D) $56
E) $120

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Multiple Choice

Q 100Q 100

Questions 91 through 100 refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
-When the firm uses 120 units of labor, what is average total cost at this output?
A) $59
B) $40
C) $190
D) $84
E) $120

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Multiple Choice

Q 101Q 101

A plans to produce 500 units per day of good X. The firm can choose either of the following two input combination t produce 500 units per day.
To obtain the services of labor and capital for a day, firm A must pay wages of $100 per unit of labor and $80 per unit of capital. For firm A, process ________ (1, 2) is economically efficient because the efficient process costs $___________ compared with $__________ for the inefficient process. Show your work here:

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Short Answer

Q 102Q 102

Use the following table, showing the total output produced with various levels labor and each of two levels of capital to answer the next 4 questions.
-capital is fixed at 2 units
a. AP decreases after the ______ unit of labor. MP decreases after the ______ unit of labor.
b. At L = 2, AP = ______ and MP = ______.
c. At L = 3, AP = ______ and MP = ______.
d. At L = 4, AP = ______ and MP = ______.

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Essay

Q 103Q 103

Use the following table, showing the total output produced with various levels labor and each of two levels of capital to answer the next 4 questions.
-capital is fixed at 4 units.
a. AP decreases after ______ units of labor. MP decreases after ______ units of labor.
b. At L = 2, AP = ______ and MP = ______.
c. At L = 3, AP = ______ and MP = ______.
d. At L = 4, AP = ______ and MP = ______.

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Essay

Q 104Q 104

Assume capital is fixed at 2 units and the wage rate of labor is $200.
a. As labor is increased from 1 to 2 units, AVC ______ (rises, falls) from $______ to $______.
b. As labor is increased from 1 to 2 units, MC ______ (rises, falls) from $______ to $______.
c. As labor is increased from 3 to 4 units, AVC ______ (rises, falls) from $______ to $______.
d. As labor is increased from 3 to 4 units, MC ______ (rises, falls) from ______ to ______.

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Essay

Q 105Q 105

Assume capital is fixed at 4 units and the wage rate of labor is $600.
a. As labor is increased from 1 to 2 units, AVC ______ (rises, falls) from $______to $______.
b. As labor is increased from 1 to 2 units, MC ______ (rises, falls) from $______ to $______.
c. As labor is increased from 3 to 4 units, AVC ______ (rises, falls) from $______ to $______.
d. As labor is increased from 3 to 4 units, MC ______ (rises, falls) from $______ to $______.

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Essay

Q 106Q 106

order to answer this question you should fill in the blanks in the following table.
a. At 2 units of labor, TP = ______ and AP = ______.
b. At 3 units of labor, AP = ______ and MP = ______.
c. At 4 units of labor, TP = ______ and AP = ______.

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Essay

Q 107Q 107

in the blank.
a. The definition of the long run is _________________________________.
b. The definition of the short run is ________________________________.

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Essay

Q 108Q 108

law of diminishing returns states that, as a variable input is increased, there comes a point at which ____________________.

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Short Answer