WorksheetsECO162- CHAPTER 6
Total questions: 20
Worksheet time: 11mins
To increase marginal return, a company might consider
stopping production
purchasing more machinery
increasing output
reducing output
In general, it is a bad move for a company to produce more of a good or service if, by doing so
marginal cost exceeds marginal revenue
variable costs exceed fixed costs
demand exceeds supply
fixed costs exceed marginal revenue
Which of the following would be an example of a fixed cost on a farm?
Mortgage on the land
Cost of seed
Fuel to operate machinery
Fertilizer
In determining the optimal level of output, a firm should aim for the
point where decreasing returns become negative returns
output level where fixed costs exceed variable costs
point of maximum profitability for the company
output level where marginal returns are still increasing
In which of the following situations would a business be wise to shut its factory?
When revenue exceeds variable costs
When marginal costs exceed fixed costs
When fixed costs exceed revenue
When total costs exceed marginal costs
If a firm does not produce any output, its total cost is equal to
Zero
Its fixed costs
Its variable costs
Its marginal cost
Which of the following describes an eventual decline in the productivity of factor inputs as additional units of variable factors are added to fixed resources?
Law of diminishing marginal utility
Law of diminishing marginal returns
Laffer curve
Law of diminishing total product
In the long run...
All inputs are fixed
All input are variable
at least one input is variable and one input is fixes
at most one input is variable and one input is fixed
Which of the following is NOT considered as variable input?
A. Worker
A. Building
A. Raw materials
A. Operation manager
A firm experiences decreasing marginal return only when
Stage 1
Stage 2
Stage 3
Stage 4
At the level of 5 labors, average production is __________.
4 units
6 units
7 units
8 units
The marginal production from 3 to 4 labors is _________.
2
7
4
8
At Stage 1 of production, a rational producer _________.
will stop the production
will reduce the usage of labors
will continue to increase the number of labors
will stay the current combination of machine and labors.
Average variable cost (AVC) is
Explicit costs
Variable cost divided by output
The increase in output that arises from an additional unit of input
Costs that do not vary with the quantity of output produced
What does marginal cost (MC) tell us?
Is cost from fixed input
Is variable cost
The increase in output that arises from an additional unit of input
The increase in total cost that arises from producing an additional unit of output
Variable cost is
Long run ATC stays the same as the quantity of output changes
Fixed + variable cost
Costs that vary with the output (Q) produced
An explicit cost
Fixed cost
long run ATC rises as output increases
long run ATC falls as output rises
costs that do not vary with the quantity of output produced
long run ATC stays the same as the quantity of output changes
Average product is defined as:
total product divided by the total cost.
total product divided by marginal product
total product divided by the variable input.
marginal product divided by the variable input.
Suppose the first four units of a variable input generates corresponding total outputs of 200, 350, 450, 500. The marginal product of the third unit of input is:
50
100
150
200
In the third of the three stages of production:
the total product curve has an increasing slope
the marginal product curve lies completely below the average product curve.
the marginal product curve has a positive slope
marginal product is negative
