quiz6 - QUIZ 6 VERSION 1 1) Average product is maximized...

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QUIZ 6 VERSION 1 1) Average product is maximized when A) total product is maximized. B) the maximum quantity of the variable input is employed. C) marginal product is maximized. D) average product equals marginal product and marginal product is falling. E) diminishing returns cease to operate. 2) Diminishing marginal product of labour occurs when there is A) an increase in the division and specialization of labour. B) a diminishing reduction in the level of labour input and output increases. C) a diminishing increase in output with an increase in labour input. D) technological advancement. E) an increase in the capital available for each unit of labour. 3) When cost curves are drawn for a firm, all of the following are generally assumed EXCEPT that the A) average fixed costs are constant. B) firm is too small to influence factor prices. C) average variable cost initially declines, then rises at higher output levels. D) total fixed costs are constant. E) marginal product of the variable factor eventually declines. The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. Labour per unit of time Total Output 0 0 1 25 2 75 3 175 4 250 5 305 TABLE 1 4) Refer to Table 1. Average fixed costs for 305 units of output is approximately A) 33 cents. B) 41 cents. C) 45 cents. D) 74 cents. E) 82 cents. 5) Refer to Table 1. The total cost of producing 175 units of output is A) $75. B) $100. C) $150. D) $175. E) $350.
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6) Short-run cost curves rise eventually because of the effects of A) increasing marginal productivity of the variable inputs. B) increasing fixed costs. C) diminishing marginal product. D) the increasing price of variable inputs. E) decreasing average product. 7) Assume a firm is using 10 units of capital and 10 units of labour to produce 10 widgets. Now it doubles both inputs resulting in 20 more widgets being produced. This firm is experiencing A) increasing returns. B) increasing costs. C) diseconomies of scale. D) decreasing returns. E) constant returns. 8) We can predict that resources will move into an industry whenever A) that industry becomes fashionable. B) accounting profits for firms in that industry are greater than zero. C) accounting profits for firms in that industry are zero. D) economic profits for firms in that industry are greater than zero. E) economic profits for firms in that industry are zero. 9) Average, marginal, and total product curves A) relate the price of output to the quantity supplied. B) demonstrate that in the short run, all inputs are variable. C) express relationships between physical inputs and physical outputs.
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This note was uploaded on 11/08/2011 for the course ECON 1B03 taught by Professor Hannahholmes during the Fall '08 term at McMaster University.

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quiz6 - QUIZ 6 VERSION 1 1) Average product is maximized...

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