Chapter 7

1.

1 point

Marginal product equals average product

at the maximum value of marginal product.

at the maximum value of average product.

when marginal product equals zero.

when average product equals zero.

at the inflection point of the total product curve.

2.

1 point

The economically efficient input combination for producing a given level of output

is determined entirely by the production function.

occurs at the maximum value of the total product curve.

can produce that level of output at the lowest possible total cost.

minimizes the average cost of producing the given level of output.

3.

1 point

If average product is rising, then marginal product

must be rising.

can be either rising or falling, but it must lie above average product.

cannot be falling.

must lie below average product.

4.

1 point

The average product of labor when 3 units of labor are employed is

-1

5

11

3.

7

5.

1 point

The marginal product of the 6th laborer is

3

7

11

-1

5

6.

1 point

Diminishing marginal returns begin with the

5th unit of labor.

2nd unit of labor.

6th unit of labor.

4th unit of labor.

7.

1 point

Marginal product is negative when more than

5 units of labor are employed.

4 units of labor are employed.

3 units of labor are employed.

6 units of labor are employed.

8.

1 point

Fixed costs

must be considered in any decision-making process.

do not exist in the long run.

decrease as output rises.

a and b.

b and c.

9.

1 point

What is total fixed cost?

20

cannot be determined

15

10

none of the above

10.

1 point

What is total cost when Q = 1?

30

35

40

20

none of the above

11.

1 point

What is average total cost when Q = 2?

10

20

30

40

none of the above

12.

1 point

What is marginal cost when Q = 3?

10

8

9

7

13.

1 point

What is marginal cost when Q = 4?

5

20

15

10

11

14.

1 point

When the average product of the variable input is equal to the marginal product,

marginal cost reaches its minimum value.

average variable cost reaches its minimum value.

marginal cost is rising.

both a and c.

both b and c.

15.

1 point

If a firm is producing 5 units of output and the marginal cost for the fifth unit is $7 and the average variable cost for the fifth unit is $3, then the average variable cost for the fourth unit is _______.

1

2

4

8

none of the above

16.

1 point

If short-run marginal cost is ! -shaped, then

total cost increases at an increasing rate, then increases at a decreasing rate.

total variable cost increases at a decreasing rate then increases at an increasing rate.

total variable cost must be S-shaped.

all of the above.

both b and c.

17.

1 point

Average total cost

increases as output increases.

decreases as output increases.

increases if marginal cost is increasing.

increases if marginal cost is greater than average total cost.

both c and d.

18.

1 point

Average fixed cost

increases as output increases.

increases if marginal cost is increasing.

decreases as output increases.

increases if marginal cost is greater than average fixed cost.