Question 1

Which of the following best describes a positive technological change in the context of a firm's production process?

Accepted Answer

A firm adopts a new process that allows it to produce more output with the same amount of inputs.

Question 2

Suppose a pizza restaurant has fixed costs of $$800 per week and variable costs of 650 $$per worker per week. If the restaurant hires 3 workers, what is the total cost per week?

Accepted Answer

$2,750

Question 3

Which of the following is an example of an implicit cost for a business owner?

Accepted Answer

The salary the owner could have earned working elsewhere

Question 4

If a firm’s marginal cost of producing the 10th unit is $$15, and the total cost of producing 9 units is 120$$, what is the total cost of producing 10 units?

Accepted Answer

$135

Question 5

Which of the following best illustrates the law of diminishing returns?

Accepted Answer

Adding more workers to a fixed number of machines eventually leads to smaller increases in output.

Question 6

A firm’s production function shows:

Accepted Answer

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs.

Question 7

If the marginal product of the third worker is less than the average product of the first two workers, what happens to the average product when the third worker is hired?

Accepted Answer

The average product decreases.

Question 8

Which equation correctly represents the relationship between total cost, fixed cost, and variable cost?

Accepted Answer

$$TC = FC + VC$$

Question 9

In the short run, which of the following is true about a firm’s costs?

Accepted Answer

Some costs are fixed and some are variable.

Question 10

If average total cost (ATC) is $$20 and average variable cost (AVC) is 15 at a $$certain output level, what is average fixed cost (AFC) at that output?

Accepted Answer

$$AFC = 5$

Question 11

Which of the following best explains why the average total cost curve is U-shaped?

Accepted Answer

Average total cost falls at low levels of production due to spreading fixed costs, but rises at high levels due to diminishing returns.

Question 12

A firm is experiencing economies of scale if:

Accepted Answer

Long-run average cost decreases as output increases.

Question 13

Which of the following is most likely to be a fixed cost for a publishing company?

Accepted Answer

Lease payments for the printing facility

Question 14

If a firm’s marginal cost is below its average total cost, what will happen to average total cost as output increases?

Accepted Answer

Average total cost will fall.

Question 15

Which of the following best describes diseconomies of scale?

Accepted Answer

A firm’s long-run average cost increases as output increases.

Question 16

Suppose a car manufacturer is able to lower its average cost per car by increasing production and buying inputs in bulk. This is an example of:

Accepted Answer

Economies of scale

Question 17

Which of the following formulas correctly calculates average variable cost (AVC)?

Accepted Answer

$$AVC = VC / Q$$

Question 18

A firm’s long-run average cost curve shows:

Accepted Answer

The lowest cost at which a firm can produce each level of output when all inputs are variable.

Question 19

If a firm’s total cost increases from $$1,000 to 1$$,150 when output increases from 50 to 55 units, what is the marginal cost per unit for this range?

Accepted Answer

$$MC = 30$

Question 20

Which of the following statements about the short run and long run is correct?

Accepted Answer

In the long run, all inputs can be varied.

Technology, Production, and Costs in Microeconomics

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