Econ 101 - Microeconomics » Summer 2021 » iVAT Chapter 12

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Question #1
A firm can use 50 workers and 10 machines, 70 workers and 9 machines, or 75 workers and 9 machines to produce 40 chairs. If each worker costs $20 and each machine is rented for $500, the economically efficient input combination is:
A.   75 workers and 9 machines.
B.   50 workers and 10 machines.
C.   120 workers and 19 machines.
D.   70 workers and 9 machines.
Question #2
In order to achieve economic efficiency, managers of a firm should:
A.   Use the highest quality inputs.
B.   Produce the most output with the least amount of inputs.
C.   Use the most sophisticated technology.
D.   Hire the most highly skilled employees.
E.   Use the least costly input combination.
Question #3
Which of the following statements is true?
A.   Many different production processes can be economically efficient, but only the method that involves the lowest possible cost is technically efficient.
B.   There are many production processes that are both technically and economically efficient, but only one of these involves the lowest possible cost.
C.   There is only one production process that is technically efficient, and this process is also economically efficient.
D.   Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient.
Question #4
LCD screens replaced plasma screens because a LCD manufacturing facility can produce various sized screens for various products (smartphones, TVs, tablets, etc.). This is an example of a technology:
A.   Providing constant returns to scale.
B.   None of the available answers.
C.   Reducing indivisible setup costs.
D.   Increasing diseconomies of scale.
E.   Providing inconstant returns to scale.
Question #5
Economies of scale are associated with:
A.   Declining per-unit costs.
B.   Increased monitoring costs.
C.   Increased levels of bureaucracy within a firm.
D.   Increasing per-unit costs.
Question #6
A firm finds that producing 30,000 books costs $180,000 and producing 40,000 books costs $200,000. This pattern might be explained by:
A.   Economies of scope.
B.   Diminishing marginal productivity.
C.   Diseconomies of scale.
D.   Economies of scale.
Question #7
Which of the following is most likely an example of diseconomies of scale?
A.   The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government.
B.   Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs.
C.   Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant.
D.   The Dynasty Co. increased production capacity by 25 percent and experienced a 50 percent increase in its total cost.
Question #8
Suppose that per-unit costs for Alpha-Zeta Co. are $25 when they are producing 50,000 units. Now suppose that the firm increases production to 50,100 units and total costs are $2,000,000 at that level of production. Question: What is occurring as the firm increases production from 50,000 to 50,100 units?
A.   Diseconomies of scale due to the fact that per-unit costs increased from $25 to $41.92.
B.   Economies of scale due to the fact that per-unit costs decreased from $25 to $22.
C.   Diseconomies of scale due to the fact that per-unit costs increased from $25 to $39.92.
D.   Economies of scale due to the fact that per-unit costs decreased from $25 to $23.56.
Question #9
Suppose a firm has economies of scale over all levels of its output and production levels, its long-run average total cost curve will:
A.   Be horizontal.
B.   Be extremely upwardly sloping and steep.
C.   Be vertical.
D.   Slope downward.
E.   Slope upward.
Question #10
Suppose a firm has diseconomies of scale over all levels of its output, its long-run average total cost curve will:
A.   Be relatively flat.
B.   Be vertical.
C.   Be horizontal.
D.   Slope downward.
E.   Be upward sloping.
Question #11
The long-run average cost curve’s shape is primarily determined by:
A.   The macroeconomic conditions.
B.   Economies and diseconomies of scale.
C.   Indivisible set up costs.
D.   Technological change.
E.   Economies of scope.
Question #12
The long-run average cost of producing 19 units of output is $56, and the long-run average cost of producing 20 units is also $56. These numbers illustrate:
A.   Constant returns to scale.
B.   Diseconomies of scale.
C.   Economies of scale.
D.   Decreasing marginal productivity.
Question #13
Proctor and Gamble’s expansion from soap production to shampoo production is an example of:
A.   Economies of scale.
B.   None of the available answers.
C.   Diseconomies of scale.
D.   Economies of scope.
E.   Constant returns to scale.
Question #14
An example of economies of scope is:
A.   Increasing per unit costs given increased unit production.
B.   None of the available answers.
C.   Google utilizing its information processing capabilities to provide data analysis services to other firms.
D.   The 200,000 unit production threshold for GM to make a profit on a car model.
E.   Decreasing per unit costs given increased unit production.

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