Question 1

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than
(i)his cumulative GPA.
(ii)he ever performed before.
(iii)he did last semester.
A)(i) and (ii) only
B)(i) and (iii) only
C)(ii) and (iii) only
D)(i), (ii), and (iii)

Accepted Answer

Johnny's cumulative GPA will decrease if his performance next semester is below his current cumulative GPA of 1.5. It does not necessarily depend on his past performances or last semester's performance.

Question 2

Consider the following information about bread production at Beth's Bakery:  Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost
A)declines as output increases from 0 to 33, but increases after that.
B)declines as output increases from 0 to 11, but increases after that.
C)increases as output increases from 0 to 11, but declines after that.
D)is constant.

Accepted Answer

The answer of Consider the following information about bread production...

Question 3

Figure 13-4 
-Refer to Figure 13-4. Which of the above marginal cost curves reflects diminishing marginal product?
A)A
B)B
C)C
D)D

Accepted Answer

The answer of Figure 13-4 
-Refer to Figure 13-4. Which...

Question 4

Diminishing marginal product suggests that the marginal
A)cost of an extra worker is unchanged.
B)cost of an extra worker is less than the previous worker's marginal cost.
C)product of an extra worker is less than the previous worker's marginal product.
D)product of an extra worker is greater than the previous worker's marginal product.

Accepted Answer

Diminishing marginal product occurs when adding a new unit of input (such as hiring an extra worker) leads to a decrease in the marginal product of that input. This means that the additional output added by each subsequent worker decreases as more workers are added. Therefore, the correct answer is C since the product of an extra worker is less than the previous worker's marginal product.

Question 5

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average total cost will be
A)rising at all points.
B)falling at all points.
C)constant.
D)U-shaped.

Accepted Answer

With decreasing marginal product of labor, the firm will experience higher costs as additional workers are hired. This will lead to a U-shaped average total cost curve, where average costs will decrease initially but start to rise again as diminishing returns set in.

Question 6

Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the following statements is correct?
A)If Randy gets between 27 and 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting average to 0.300.
B)If Randy gets 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting average to 0.300.
C)Randy must get more than 30 hits out of his next 100 at bats in order to raise his cumulative batting average to 0.300.
D)Either b or c could be correct.

Accepted Answer

The answer of Randy is a minor-league baseball player. His...

Question 7

Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,
A)the marginal cost of an extra worker is large.
B)the marginal cost of one more glass of lemonade is smaller than if output were high.
C)the marginal product of an extra worker is small.
D)her lemonade stand is likely to be crowded with workers.

Accepted Answer

When Thelma is producing a low quantity of lemonade, her equipment is not being fully utilized and she has idle resources. This means that the marginal cost of one more glass of lemonade is smaller than if output were high. In other words, her costs are not increasing as quickly as her output, so it is more efficient for her to produce more lemonade at a lower cost.

Question 8

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will be better next semester if he
(i)performs better than he did last semester.
(ii)performs better than his cumulative GPA.
(iii)gives an average performance.
A)(ii) only
B)(iii) only
C)(i) and (ii)
D)(ii) and (iii)

Accepted Answer

To improve his cumulative GPA, Johnny needs to perform better than his current cumulative GPA of 1.5.

Question 9

If Franco's Pizza Parlor knows that the marginal cost of the 500^th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then A)average total costs are rising at Q = 500. B)average total costs are falling at Q = 500. C)total costs are falling at Q = 500. D)average variable costs must be falling.

Accepted Answer

The answer of If Franco's Pizza Parlor knows that the...

Question 10

The fundamental reason that marginal cost eventually rises as output increases is because of
A)economies of scale.
B)diseconomies of scale.
C)diminishing marginal product.
D)rising average fixed cost.

Accepted Answer

The answer of The fundamental reason that marginal cost eventually...

Question 11

Marginal cost increases as the quantity of output increases. This reflects the property of
A)increasing total cost.
B)diminishing total cost.
C)increasing marginal product.
D)diminishing marginal product.

Accepted Answer

Diminishing marginal product occurs when more and more units of a variable input are added to a fixed input, resulting in each additional unit of the variable input leading to a smaller increase in output. This causes the marginal cost to increase as the quantity of output increases since more units of the variable input are needed to produce each additional unit of output.

Question 12

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average variable cost will be
A)rising at all points.
B)falling at all points.
C)U-shaped.
D)constant.

Accepted Answer

Since the marginal product of labor is decreasing, the cost of producing additional units of output will be increasing with each additional worker. As a result, the average variable cost, which includes the cost of labor, will also be increasing. Therefore, the correct answer is A, rising at all points.

Question 13

Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7. Which of the following statements is correct?
A)If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7.
B)If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7.
C)Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7.
D)Either b or c could be correct.

Accepted Answer

Jennifer's current cumulative GPA is 3.5, and in order to raise it to a 3.7, she must earn higher than a 3.7 in her senior year. This is because the cumulative GPA represents the average of all the grades she has earned, including the grades she has already earned in her previous semesters. Therefore, if she only earns a 3.7 in her senior year, it will not be enough to raise her cumulative GPA to a 3.7.

Question 14

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the marginal cost of production when the firm hires the 7th worker?
A)$1.50
B)$2.50
C)$5
D)$10

Accepted Answer

To find the marginal cost of production when the firm hires the 7th worker, we need to use the formula:

Marginal Cost = (Change in Total Cost) / (Change in Quantity)

We know that the variable cost per unit of labor is $10, so hiring the 7th worker will increase variable costs by $10.

To calculate the change in total costs, we need to know the total cost of producing 6 units and 7 units of output, respectively.

Total cost for 6 units of output = fixed costs + (variable cost per unit of labor * quantity of labor) 
Total cost for 6 units of output = $6 + ($10 * 6) 
Total cost for 6 units of output = $66

Total cost for 7 units of output = fixed costs + (variable cost per unit of labor * quantity of labor) 
Total cost for 7 units of output = $6 + ($10 * 7) 
Total cost for 7 units of output = $76

Therefore, the change in total cost is $10 ($76 - $66).

The change in quantity is 1 (from 6 workers to 7 workers).

So, the marginal cost of production when the firm hires the 7th worker is:

Marginal Cost = (Change in Total Cost) / (Change in Quantity)
Marginal Cost = $10 / 1
Marginal Cost = $10

Therefore, the best choice is B, $2.50.

Question 15

The average-fixed-cost curve
A)is constant.
B)is always decreasing.
C)intersects marginal cost at the minimum of average fixed cost.
D)intersects marginal cost at the minimum of marginal cost.

Accepted Answer

The answer of The average-fixed-cost curve
A)is constant.
B)is always decreasing.
C)intersects marginal...

Question 16

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average variable cost of production when the firm hires 7 workers?
A)$12.67
B)$11
C)81 cents
D)75 cents

Accepted Answer

The answer of Suppose that a firm has only one...

Question 17

The average-total-cost curve intersects
A)average fixed cost at the minimum of average total cost.
B)average variable cost at the minimum of average total cost.
C)marginal cost at the minimum of average total cost.
D)marginal cost at the minimum of marginal cost.

Accepted Answer

The answer of The average-total-cost curve intersects
A)average fixed cost at...

Question 18

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average fixed cost will be
A)rising at all points.
B)falling at all points.
C)U-shaped.
D)constant.

Accepted Answer

The answer of Scenario 13-20
Suppose that a given firm experiences...

Question 19

If marginal cost is rising,
A)average variable cost must be falling.
B)average fixed cost must be rising.
C)marginal product must be falling.
D)marginal product must be rising.

Accepted Answer

If marginal cost is rising, it means that each additional unit of production is becoming more costly to produce. This indicates that the marginal product of the variable input (such as labor or raw materials) is falling. Therefore, choice C is the correct answer. Choices A and B are not necessarily true and may depend on the specific cost and production structure. Choice D is incorrect as a rising marginal cost indicates a falling marginal product, not a rising one.

Question 20

Diminishing marginal product suggests that
A)additional units of output become less costly as more output is produced.
B)marginal cost is upward sloping.
C)the firm is at full capacity.
D)adding additional workers will lower total cost.

Accepted Answer

Diminishing marginal product occurs when adding an additional unit of input (such as labor) to a fixed amount of other inputs (such as capital) results in a smaller increase in output than the previous unit of input. This means that the additional units of input become less productive and therefore more costly, leading to an upward sloping marginal cost curve. Thus, the correct answer is B.

Quiz 13: The Costs of Production

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) . Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) his cumulative GPA. (ii) he ever performed before. (iii) he did last semester.

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

Figure 13-4 -Refer to Figure 13-4. Which of the above marginal cost curves reflects diminishing marginal product?

Diminishing marginal product suggests that the marginal

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average total cost will be

Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the following statements is correct?

Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) . Johnny's cumulative GPA will be better next semester if he (i) performs better than he did last semester. (ii) performs better than his cumulative GPA. (iii) gives an average performance.

If Franco's Pizza Parlor knows that the marginal cost of the 500^th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then

The fundamental reason that marginal cost eventually rises as output increases is because of

Marginal cost increases as the quantity of output increases. This reflects the property of

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average variable cost will be

Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7. Which of the following statements is correct?

The average-fixed-cost curve

The average-total-cost curve intersects

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average fixed cost will be

If marginal cost is rising,

Diminishing marginal product suggests that