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WorksheetsEconomics Quiz on Technology and Costs
Total questions: 51
Worksheet time: 26mins
What is a technological change in economics?
Increase in the number of workers
Change in the production process that increases output
Decrease in input costs
Increase in product price
Which of the following is an example of technological change?
Hiring more workers
Using robots instead of manual labor
Leasing new buildings
Increasing advertising spending
Technological advancement typically:
Raises the marginal cost of production
Shifts the average total cost curve upward
Increases output with the same amount of inputs
Decreases labor productivity
The introduction of automation in a factory is:
A capital increase
A technological change
A supply shift
A marginal cost
Technological change results in:
Higher fixed costs
Less efficient production
A new production function
Increased prices
In the short run:
All factors of production are variable
Firms can enter or exit the industry
At least one input is fixed
There is no cost
The long run is defined as a period in which:
Marginal cost equals price
Firms are not making profits
All inputs are variable
Output is constant
Fixed costs are relevant in:
Both short run and long run
Only in the short run
Only in the long run
Neither
In the long run, a firm can:
Only increase labor
Not change plant size
Vary all inputs
Have constant marginal cost
Which of the following is true about the economic short run?
Firms face no fixed costs
Technology changes
At least one factor of production is fixed
All costs are variable
Marginal Product of Labor (MPL) is:
Total product divided by the number of workers
Output added by hiring one more worker
Cost of labor
Average total cost
Average Product of Labor (APL) is calculated by:
Dividing total output by number of workers
Dividing fixed cost by total workers
Subtracting fixed cost from total cost
Output minus input
When MPL > APL, the APL is:
Constant
Decreasing
Increasing
Unchanged
If MPL is falling but still positive, total product is:
Increasing at an increasing rate
Decreasing
Increasing at a decreasing rate
Constant
When MPL = APL:
APL is at its minimum
APL is increasing
APL is at its maximum
MPL is zero
Marginal cost is:
Total cost divided by output
Change in total cost from producing one more unit
Fixed cost per unit
Output per worker
When MC < ATC, the ATC is:
Falling
Rising
Constant
Unchanged
When MC = ATC:
ATC is at its minimum
MC is decreasing
ATC is increasing
Total cost is zero
If MC > ATC:
ATC is decreasing
ATC is increasing
MC is falling
Output is falling
The MC curve intersects the ATC curve:
At its maximum
At its minimum
At its average
Where marginal cost is zero
The AVC curve is always:
Below the AFC curve
Above the ATC curve
Below the ATC curve
Equal to MC
Average fixed cost:
Stays constant as output increases
Increases with output
Decreases with output
Equals average variable cost
Which cost curve is U-shaped due to diminishing returns?
AFC
AVC
MC
Both B and C
The vertical distance between ATC and AVC is:
AFC
MC
AVC
Total cost
The marginal cost curve typically intersects the AVC and ATC:
At their highest point
At their lowest point
At zero output
After diminishing returns begin
The long-run average cost curve shows:
The minimum ATC for every output level
Total cost at different outputs
Fixed costs in the long run
Cost of hiring labor only
The long-run average cost curve shows:
The minimum ATC for every output level
Total cost at different outputs
Fixed costs in the long run
Cost of hiring labor only
Economies of scale occur when:
LRAC is rising
LRAC is constant
LRAC is falling
Output falls
Diseconomies of scale occur when:
Output increases
LRAC is falling
LRAC is rising
Total cost is constant
The minimum efficient scale is:
Where SRAC = LRAC
The smallest output where LRAC is minimized
Where average product is maximized
Where marginal cost is zero
A firm uses the LRAC curve to:
Maximize profit in the short run
Determine pricing strategy
Plan plant size and scale of production
Forecast demand
Diminishing marginal returns cause:
AFC to rise
MPL to increase
MC to rise
Total product to fall
If fixed costs double, marginal cost will:
Double
Not change
Decrease
Equal ATC
An increase in wages affects:
Only fixed costs
Average fixed cost
Variable and marginal costs
Long-run cost only
Which of the following is not a variable cost?
Wages
Raw materials
Rent (in the short run)
Packaging
In the short run, expanding output typically:
Lowers marginal cost immediately
Increases average fixed cost
Eventually leads to diminishing returns
Eliminates fixed costs
In the long run, all of the following can change except:
Number of workers
Size of the factory
Technology
Law of diminishing returns
Which of the following cost curves is not U-shaped?
AFC
AVC
ATC
MC
When total product is increasing at an increasing rate:
Marginal product is falling
Marginal product is rising
Average product is falling
Marginal cost is rising
If a firm's MC is below ATC, producing one more unit will:
Increase ATC
Not affect ATC
Decrease ATC
Increase AFC
Which cost concept is most relevant for decision-making?
Sunk cost
Marginal cost
Fixed cost
Average cost
In which stage of production does diminishing marginal product occur?
Initial stage
After total product reaches its peak
After marginal product begins to decline
When average product is highest
If a firm experiences constant returns to scale:
LRAC increases
LRAC stays the same
LRAC decreases
MPL increases
The law of diminishing marginal returns applies:
In the long run only
In both the short and long run
Only when capital is fixed
Only when all inputs are variable
An increase in fixed costs will:
Shift the MC curve
Raise the AVC
Increase ATC but not MC
Affect marginal product
A firm's short-run cost curves are based on:
The market demand
A fixed plant size
The long-run cost structure
Government regulation
If MC is rising and greater than ATC, then ATC must be:
Falling
Constant
Rising
At its minimum
The U-shape of the ATC curve is due to:
Increasing AFC
Increasing marginal returns
Initially falling and then rising AVC and AFC
Rising fixed costs
The total cost of production is:
Fixed cost plus marginal cost
Variable cost only
Fixed cost plus variable cost
Cost per unit of output
When total product is at its maximum:
Marginal product is positive
Marginal product is zero
Average product is also maximum
Total cost is zero
Firms use the long-run average cost curve in planning to:
Maximize short-run profits
Determine optimal scale of production
Minimize average fixed costs
Evaluate marginal productivity
