Question 1

Which of the following best describes a positive technological change in the context of microeconomics?

Accepted Answer

A firm improves its ability to turn inputs into outputs, resulting in more output from the same amount of inputs.

Question 2

In the short run, which of the following statements is true regarding a firm's inputs?

Accepted Answer

At least one input is fixed.

Question 3

Given the cost equation $$TC = FC + VC$$, if a firm has fixed costs of $$800 and variable costs of 1$$,950$, what is the total cost?

Accepted Answer

$$2,750$$

Question 4

Which of the following is an example of an implicit cost?

Accepted Answer

Forgone salary from a previous job.

Question 5

At Jill Johnson's restaurant, pizza ovens are considered which type of cost in the short run?

Accepted Answer

Fixed cost

Question 6

If Jill Johnson hires a second worker and output increases from 200 to 450 pizzas, what is the marginal product of labor for the second worker?

Accepted Answer

$$250$$

Question 7

Which law states that adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline?

Accepted Answer

Law of diminishing returns

Question 8

Calculate the average product of labor if Jill Johnson's restaurant produces 550 pizzas with 3 workers.

Accepted Answer

$$183.3$$

Question 9

If the marginal product of the next worker hired is less than the current average product of labor, what happens to the average product?

Accepted Answer

It decreases

Question 10

What is the formula for marginal cost ($$MC) in $$terms of change in total cost ($$\Delta TC) $$and change in quantity ($$\Delta Q$$)?

Accepted Answer

$$MC = \Delta TC / \Delta Q$$

Question 11

Why does the average total cost curve typically have a U-shape?

Accepted Answer

Because average total cost falls at low levels of production and rises at higher levels due to diminishing returns.

Question 12

Which cost curve cuts through the minimum points of both the average total cost and average variable cost curves?

Accepted Answer

Marginal cost curve

Question 13

In the long run, all costs are:

Accepted Answer

Variable

Question 14

What does the long-run average cost curve show?

Accepted Answer

The lowest cost at which a firm can produce a given quantity of output in the long run when no inputs are fixed.

Question 15

A firm experiences economies of scale when:

Accepted Answer

Long-run average costs fall as output increases.

Question 16

What is the minimum efficient scale?

Accepted Answer

The output level at which all economies of scale are exhausted.

Question 17

If a firm gets so large that its long-run average costs begin to rise, it is experiencing:

Accepted Answer

Diseconomies of scale

Question 18

An isoquant represents:

Accepted Answer

All combinations of inputs that produce the same level of output.

Question 19

At the cost-minimizing combination of inputs, the slope of the isoquant equals the slope of the isocost line. What does this condition represent?

Accepted Answer

The marginal rate of technical substitution equals the ratio of input prices.

Question 20

Suppose the price of ovens increases relative to the price of labor. What happens to the cost-minimizing input choice for a pizza restaurant?

Accepted Answer

The restaurant will use fewer ovens and more workers.

Technology, Production, and Costs – Microeconomics Chapter 11 Study Notes

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