Chapter 13 Pre and Post Tests

Chapter 13 Pre and Post Tests - The correct answer for each...

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. 1 CORRECT To achieve economic efficiency, managers should: A) use the highest quality inputs. B) use the least costly input combination. C) hire the most highly skilled employees. D) use the most sophisticated technology. Feedback: Economic efficiency is attained when production costs are minimized. 2 CORRECT Since labor is relatively abundant in Bangladesh while land and capital are not, the economically efficient method of producing rugs would probably: A) be labor intensive. B) not be labor intensive. C) be capital intensive. D) be land intensive. Feedback: Since labor is relatively abundant, it will also be relatively cheap, making labor intensive production methods less costly. 3 CORRECT If indivisible setup costs are sufficiently high: A) per-unit cost falls as output increases. B) per-unit cost rises as output increases. C) marginal productivity falls as output increases. D) marginal productivity rises as output increases. Feedback: If indivisible setup costs are high, the fixed costs of production can outweigh the variable costs, and the effect of falling average fixed cost will dominate the effect of rising average variable cost in the relevant output range. 4 CORRECT If a firm experiences economies of scale over all relevant levels of output, its long-run average total cost curve will: A) slope upward. B) be vertical. C) slope downward. D) be horizontal. Feedback: The presence of persistent scale economies implies that long-run average cost always falls as output rises, so the long-run average total cost curve will be downward sloping. 5 CORRECT The shape of the long-run average cost curve is primarily due to: A) technological change. B) diminishing marginal productivity. C)
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Chapter 13 Pre and Post Tests - The correct answer for each...

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