Question 1

The marginal rate of technical substitution is

Accepted Answer

A)  the rate at which a firm is able to substitute one input for another, while keeping total cost constant.
B)  the rate at which a firm is able to substitute one input for another, while keeping the level of output constant.
C)  the rate at which a firm is able to institute positive technological changes to its production process.
D)  the rate at whch a firm is able to increase its output by replacing labour with technology.E) All of the above
F) A) and B)

Question 2

Which of the following are examples of a firm experiencing a positive technological change?
a.A firm is able to reduce its inputs by 15 per cent and still produce the same level of output.
b.A seminar attended by the firm's workers makes them more productive.
c.A firm adds 5 per cent to its workforce and is able to maintain its initial level of output.
d.A firm restructures its distribution system and is able to save on its shipping times.
e.A firm rearranges its warehouse and finds that it can use fewer workers to maintain its productivity level.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Examples a, b, d, and e are examples of ...

Question 3

Long-run cost curves are U-shaped because

Accepted Answer

A)  of the law of demand.
B)  of the law of diminishing returns.
C)  of economies and diseconomies of scale.
D)  of the law of supply.E) A) and B)
F) A) and C)

Question 4

The level of output at which all economies of scale have been exhausted is known as

Accepted Answer

A)  constant returns to scale.
B)  minimum efficient scale.
C)  the economically efficient output level.
D)  optimal economic size.E) A) and D)
F) B) and C)

Question 5

Which of the following statements is true?

Accepted Answer

A)  An explicit cost is an actual cost; an implicit cost is a theoretical cost.
B)  Economic costs include both explicit costs and implicit costs.
C)  An explicit cost is more important, dollar for dollar, than an implicit cost.
D)  Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs.E) A) and B)
F) C) and D)

Question 6

Figure 7.1 
-Refer to Figure 7.1.Diminishing marginal productivity sets in after

Accepted Answer

A)  the 2nd worker is hired.
B)  the 3rd worker is hired.
C)  the 4th worker is hired.
D)  the 5th worker is hired.E) A) and B)
F) None of the above

Question 7

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

Accepted Answer

A) True 
 B)False

Question 8

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Accepted Answer

A) True 
 B)False

Question 9

Damian owns a tattoo parlour and has hired three tattoo artists to work for him.The marginal product of labour is 8 for the first artist, 12 for the second artist, and 7 for the third artist.What is Damian's average product of labour for these three tattoo artists?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The average product of labour ...

Question 10

What is the difference between technology and technological change?

Accepted Answer

A)  Technology refers to the processes used by a firm to transform inputs into output, while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs.
B)  Technology is carried out by firms producing physical goods, but technological change is an intellectual exercise in seeking ways to improve production.
C)  Technology is product-centred, that is, developing new products with our limited resources, while technological change is process-centered in that it focuses on developing new production techniques.
D)  Technology involves the use of capital equipment, while technological change requires the use of brain power.E) C) and D)
F) All of the above

Question 11

You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

Accepted Answer

A)  price of capital increases.
B)  price of labour decreases.
C)  price of labour increases.
D)  marginal product of labour increases.E) A) and B)
F) A) and C)

Question 12

The law of diminishing marginal returns

Accepted Answer

A)  explains why the average total cost and marginal cost curves are U-shaped in the short run.
B)  explains why the average total cost, average fixed cost and the marginal cost curves are U-shaped in the short run.
C)  causes average total costs to rise at a decreasing rate as output increases.
D)  causes the difference between average total cost and average variable cost to get smaller as output increases.E) B) and C)
F) A) and D)

Question 13

Which of the following can a firm do in the long run but not in the short run?

Accepted Answer

A)  Decrease the size of its physical plant
B)  Reduce its rate of output by laying off workers
C)  Increase its variable costs
D)  Increase its use of raw materialsE) A) and B)
F) C) and D)

Question 14

When a firm experiences negative technological change, it can produce the same output with fewer inputs.

Accepted Answer

A) True 
 B)False

Question 15

A firm has successfully adopted a positive technological change when

Accepted Answer

A)  it can produce more output using the same inputs.
B)  it produces less pollution in its production process.
C)  it can pay its workers less yet increase its output.
D)  it sees an increase in worker productivity.E) B) and D)
F) All of the above

Question 16

Which of the following statements is true?

Accepted Answer

A)  As output increases, average fixed cost becomes smaller and smaller.
B)  Average fixed cost does not change as output increases.
C)  The marginal cost curve intersects the average fixed cost curve at its minimum point.
D)  When marginal cost is greater than average fixed cost, average fixed cost increases.E) All of the above
F) B) and D)

Question 17

If the marginal product of labour is decreasing, then marginal cost of production must be rising.

Accepted Answer

A) True 
 B)False

Question 18

What is the difference between total costs, variable costs, and fixed costs?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Total costs are the costs of all inputs ...

Question 19

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

Accepted Answer

A)  60 units.
B)  54 units.
C)  48 units.
D)  5 units.E) All of the above
F) B) and D)

Question 20

If average product is decreasing, then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Exam 7: Technology Production and Costs

Figure 7.1 -Refer to Figure 7.1.Diminishing marginal productivity sets in after

Correct Answer
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Correct Answer
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Examples a, b, d, and e are examples of ...
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Which of the following statements is true?

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You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

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The marginal rate of technical substitution is

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What is the difference between technology and technological change?

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If the marginal product of labour is decreasing, then marginal cost of production must be rising.

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The level of output at which all economies of scale have been exhausted is known as

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The law of diminishing marginal returns

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What is the difference between total costs, variable costs, and fixed costs? __________________________________________________________________________________________________________________________________________________________________________________________

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Total costs are the costs of all inputs ...
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The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

Correct Answer
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A firm has successfully adopted a positive technological change when

Correct Answer
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Long-run cost curves are U-shaped because

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If average product is decreasing, then marginal product must be negative.

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Correct Answer
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The average product of labour ...
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Which of the following can a firm do in the long run but not in the short run?

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Which of the following statements is true?

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If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

Correct Answer
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When a firm experiences negative technological change, it can produce the same output with fewer inputs.

Correct Answer
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If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Correct Answer
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Exam 7: Technology Production and Costs

Figure 7.1 -Refer to Figure 7.1.Diminishing marginal productivity sets in after

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Correct AnswerverifiedExamples a, b, d, and e are examples of ...View AnswerShow Answer

Which of the following statements is true?

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You own a business that answers telephone calls for physicians after their offices close.You have an incentive to substitute capital for labour if the

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The marginal rate of technical substitution is

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What is the difference between technology and technological change?

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If the marginal product of labour is decreasing, then marginal cost of production must be rising.

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The level of output at which all economies of scale have been exhausted is known as

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The law of diminishing marginal returns

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What is the difference between total costs, variable costs, and fixed costs? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedTotal costs are the costs of all inputs ...View AnswerShow Answer

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

Correct AnswerverifiedShow Answer

A firm has successfully adopted a positive technological change when

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Long-run cost curves are U-shaped because

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If average product is decreasing, then marginal product must be negative.

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Correct AnswerverifiedThe average product of labour ...View AnswerShow Answer

Which of the following can a firm do in the long run but not in the short run?

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Which of the following statements is true?

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If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

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When a firm experiences negative technological change, it can produce the same output with fewer inputs.

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If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

Correct AnswerverifiedShow Answer

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Correct Answer
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Examples a, b, d, and e are examples of ...
View Answer

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Correct Answer
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Total costs are the costs of all inputs ...
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Correct Answer
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Correct Answer
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Correct Answer
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The average product of labour ...
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Correct Answer
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