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.   120 workers and 19 machines.
C.   50 workers and 10 machines.
D.   70 workers and 9 machines.
Question #2
In order to achieve economic efficiency, managers of a firm should:
A.   Use the least costly input combination.
B.   Hire the most highly skilled employees.
C.   Produce the most output with the least amount of inputs.
D.   Use the most sophisticated technology.
E.   Use the highest quality inputs.
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.   Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient.
D.   There is only one production process that is technically efficient, and this process is also 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.   Reducing indivisible setup costs.
B.   Providing inconstant returns to scale.
C.   Providing constant returns to scale.
D.   None of the available answers.
E.   Increasing diseconomies of scale.
Question #5
Economies of scale are associated with:
A.   Declining per-unit costs.
B.   Increased levels of bureaucracy within a firm.
C.   Increasing per-unit costs.
D.   Increased monitoring 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 scale.
B.   Diseconomies of scale.
C.   Economies of scope.
D.   Diminishing marginal productivity.
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.   Economies of scale due to the fact that per-unit costs decreased from $25 to $22.
B.   Diseconomies of scale due to the fact that per-unit costs increased from $25 to $39.92.
C.   Economies of scale due to the fact that per-unit costs decreased from $25 to $23.56.
D.   Diseconomies of scale due to the fact that per-unit costs increased from $25 to $41.92.
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.   Slope downward.
B.   Be extremely upwardly sloping and steep.
C.   Be vertical.
D.   Be horizontal.
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 horizontal.
C.   Be upward sloping.
D.   Be vertical.
E.   Slope downward.
Question #11
The long-run average cost curve’s shape is primarily determined by:
A.   Indivisible set up costs.
B.   The macroeconomic conditions.
C.   Economies of scope.
D.   Economies and diseconomies of scale.
E.   Technological change.
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.   Economies of scale.
B.   Constant returns to scale.
C.   Decreasing marginal productivity.
D.   Diseconomies of scale.
Question #13
Proctor and Gamble’s expansion from soap production to shampoo production is an example of:
A.   Constant returns to scale.
B.   Economies of scope.
C.   None of the available answers.
D.   Economies of scale.
E.   Diseconomies of scale.
Question #14
An example of economies of scope is:
A.   None of the available answers.
B.   The 200,000 unit production threshold for GM to make a profit on a car model.
C.   Google utilizing its information processing capabilities to provide data analysis services to other firms.
D.   Decreasing per unit costs given increased unit production.
E.   Increasing per unit costs given increased unit production.

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