Chapter 11

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  MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short run is a time frame in which 1) _______A) the firm is not able to hire more workers. B) the amount of output produced is fixed. C) at least one factor of production is fixed. D) there is not enough time to make all of the decisions necessary to maximize profit. E) there is a shortage of most factors of production. 2) The long run refers to a time period 2) _______A) in which labour is variable, but plant is fixed. B) when there is at least one variable factor of production. C) in which all factors of production are variable. D) of one year or less. E) of at least 5 years. 3) The total product curve is a graph that shows the 3) _______A) maximum output that can be produced as technology advances. B) minimum cost of producing a given amount of output using a given technology. C) change in total product for a given change in marginal product. D) maximum profit from each unit of output sold. E) maximum output that a given quantity of labour can produce.  Figure 11.2.1 4) Refer to Figure 11.2.1 which illustrates Tania's total product curve. Which one of the following statements is  false ? 4) _______A) All the points below the curve are attainable. B) All the points on the curve are attainable. C) The cost of producing at point B  equals the cost of producing at point C . D) All the points below the curve are inefficient. E) All the points above the curve are unattainable. 5) Refer to Figure 11.2.1 which illustrates Tania's total product curve. Which one of the following statements is true? 5) _______A) The points below the curve are attainable and inefficient. B) The points below the curve are inefficient and unattainable. C) The points above the curve are attainable and inefficient. D) The points on the curve are efficient and unattainable. E) Marginal product is equal at every point on the total product curve. 6) Refer to Figure 11.2.1 which illustrates Tania's total product curve. Marginal product of labour reaches its maximum when the number of workers increases from 6) _______A) zero to 1.B) 1 to 2.C) 2 to 3. D) 3 to 4. E) 4 to 5.  Refer to the table below to answer the following questions. Table 11.2.1 Labour(workers per day)Output(teapots per day)01234503121923257) Refer to Table 11.2.1 which gives Tania's total product schedule. The average product when the firm hires two workers is7) _______A) 9 teapots per worker. B) 3 teapots per worker. C) 6 teapots per worker. D) 7 teapots per worker. E) 12 teapots per worker. 8) Which of the following are correct? According to the law of diminishing returns,(1) marginal product eventually rises.(2) marginal product eventually falls.(3) marginal cost eventually rises.(4) marginal cost eventually falls. 8) _______A) (1) and (3)B) (1) and (4)C) (2) and (3)D) (2) and (4)E) (4)  Use the figure below to answer the following questions. Figure 11.3.2 9) Refer to Figure 11.3.2, which illustrates short - run average and marginal cost curves. Which one of the following statements is  false ? 9) _______A) The vertical gap between curves B  and C  is equal to average fixed cost. B) The vertical gap between curves B  and C  is equal to average variable cost. C) Line B  comes closer to line C  as output increases because of a decrease in average fixed cost. D) Curve D  is the marginal cost curve. E) Average fixed cost decreases with output. 10) Marginal cost equals10) ______A) ( TC -   TVC )/ Q .B) ∆ TC /∆ Q .C) ∆ Q /∆ TVC .D) ∆ TFC /∆ TC .E) Q / TVC .11) A firm's total fixed cost is $100. If total cost is $200 for one unit of output and $310 for two units, what is the marginal cost of the second unit? 11) ______A) $200B) $310C) $110D) $100E) $210
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