Econ 101 - Microeconomics » Summer 2021 » iVAT Chapter 11

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Question #1
Implicit costs refer to:
A.   Opportunity costs of the next best alternative that must be estimated.
B.   None of the available answers.
C.   Marginal costs divided by output.
D.   Variable costs.
E.   Total costs plus explicit costs.
Question #2
Alex withdrew $500,000 from an account that paid 5 percent annual interest and used the funds to purchase real estate. After one year he sold the property for $550,000. Alex's economic profit on this deal was:
A.   50,000
B.   Not enough information provided.
C.   500,000
D.   120,000
E.   25,000
Question #3
In the long run:
A.   The firm is constrained in regard to what production decisions it can make.
B.   Some inputs are fixed.
C.   All output is fixed.
D.   All inputs are variable.
E.   Some inputs are variable and some are fixed.
Question #4
In the short run:
A.   The size of the factory is variable.
B.   The amount of labor employed is not variable.
C.   The number of factories is variable.
D.   The amount of labor employed is variable.
Question #5
Refer to the graph shown. Within which section(s) of the production function is marginal product decreasing?
A.   A
B.   B
C.   A and B
D.   B and C
Question #6
If the total product line slopes downwards:
A.   Marginal product is negative.
B.   Marginal product is equal.
C.   Average product is increasing.
D.   Marginal product is positive.
Question #7
During periods of increasing marginal productivity:
A.   Average product is increasing.
B.   Average product is decreasing.
C.   Average product is constant, which leads to an increase in average product.
D.   Marginal product is decreasing.
Question #8
Average total cost is equal to:
A.   Total cost divided by total output.
B.   Fixed cost divided by number of workers.
C.   Total cost divided by marginal cost.
D.   Total variable cost divided by total fixed cost.
E.   Fixed cost divided by total output.
Question #9
Total Cost is comprised of:
A.   Fixed costs, but variable costs are excluded.
B.   Variable costs.
C.   Fixed costs and variable costs.
D.   Marginal costs plus variable costs.
Question #10
Average variable cost:
A.   Is total fixed costs divided by total output.
B.   Is total variable costs divided by total output.
C.   Is output plus variable costs.
D.   Is total output divided by variable costs.
Question #11
All else being equal, when marginal productivity falls:
A.   Marginal costs must rise.
B.   Marginal costs must fall.
C.   Average costs decline rapidly.
D.   Average costs must rise.
E.   Average costs must fall.
Question #12
The change or increase in cost associated with a one unit increase in output is called:
A.   Average cost.
B.   Total cost.
C.   Marginal cost.
D.   Declining relative costs.
E.   Variable cost.
Question #13
Declining marginal productivity is associated with increasing marginal costs:
A.   Because per-unit labor costs rise due to decreases in productivity.
B.   Because economies of scale are being utilized.
C.   Due to increases in the size of a factory.
D.   Because per-unit labor costs fall due to decreases in productivity.
Question #14
The distance between the Total cost (TC) curve and the variable cost (VC) curve is:
A.   Variable costs.
B.   Average fixed costs.
C.   Average total costs.
D.   Fixed costs.
Question #15
Average fixed costs (AFC) decline as production is increased:
A.   Due to the fact that fixed costs are being spread over an increasing number of units produced.
B.   Because total costs are declining.
C.   Due to the fact that production is becoming increasingly efficient.
D.   Due to the fact that variable costs are being spread over an increasing number of units produced.
Question #16
You run a small business producing candles. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 candles. Given this information, your:
A.   Average variable cost is $2.
B.   Average total cost is $3.
C.   Average total cost is $1.
D.   Average fixed cost is $1.
Question #17
The marginal cost curve intersects:
A.   The average variable cost and average total cost curves at their minimum points.
B.   The average fixed cost curve at its minimum point.
C.   The average fixed cost curve at its maximum point.
D.   The total cost curve and the total variable cost curve at their minimum point.
Question #18
If Billy’s GPA is currently a C and the grade he receives in his next class is a B, then his:
A.   Overall GPA will remain the same.
B.   Overall GPA will increase.
C.   Not enough information provided.
D.   Marginal grade is less than his average grademarginal grade is less than his average grade.
E.   Overall GPA will fall.
Question #19
Once marginal product goes below average product:
A.   Average total costs will begin to rise.
B.   Average fixed costs will rise.
C.   Average variable costs will begin to decline.
D.   Average variable costs will begin to rise.
Question #20
If marginal product is above average product:
A.   Total costs will be declining.
B.   Average product is decreasing and average variable costs are declining.
C.   Average product is increasing and average variable costs are declining.
D.   Average variable costs will be rising.
Question #21
The marginal cost curve intersects the:
A.   Average fixed cost curve at its minimum point.
B.   Variable cost curve at its minimum point.
C.   Total cost curve at its minimum point.
D.   Average variable cost curve at its minimum point.
Question #22
If marginal cost is greater than average variable cost, average variable cost will:
A.   Equal average total cost.
B.   Increase as output increases.
C.   Decrease as output increases.
D.   Not change as output increases.
Question #23
If marginal cost is less than average variable cost, average variable cost will:
A.   Remain constant as output rises.
B.   Equal average total cost.
C.   Decrease as output rises.
D.   Increase as output rises.

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