Micro II Quiz week 13 - set A

All the decisions made by people who operate firms have one overriding objective, which is to

• make maximum attainable profit.

• maximize the firm's total revenue.

• maximize the firm's market share.

• maximize the quantity that the firm sells.

Economists define the short run as a period of time so short that

• the amount of output cannot be changed except under diminishing marginal returns.

• the amount of output cannot be changed at all.

• only one factor of production can be varied.

• at least one factor of production cannot be varied.

A cost that has already been made and cannot be recovered is called a

• variable cost.

• fixed cost.

• sunk cost.

• marginal cost.

In the long run, a firm has

• no factors of production that are fixed.

• no factors of production that are variable.

• no factors of production that are either fixed or variable.

• fixed factors of production but no variable resources.

The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

• 25 baseball hats.

• 21 baseball hats.

• 7 baseball hats.

• 6.25 baseball hats.

In the figure above, the marginal product of the second worker is

• 10 units

• 5 units

• 2 units

• 1 units

Increasing marginal returns to labour might occur at low levels of labour input because of

• increasing average costs.

• differing factor proportions.

• increasing specialization of tasks.

• decreasing use of machinery and increasing use of technology.

Which of the following statements regarding the marginal product curve is FALSE?

• Increasing marginal returns occur only when the total product increases as the number of workers increases.

• Increasing marginal returns is due to greater efficiency from specialization in the production process.

• The law of diminishing returns applies in the short run.

• Along the marginal product curve, increasing marginal returns occur first and then diminishing marginal returns.

The law of diminishing returns occurs because

• the marginal product of an additional worker is greater than the marginal product of the previous worker.

• the marginal product of a variable input, such as labor, depends in part on the amount of fixed inputs, such as capital.

• total production decreases as more of the variable inputs are used.

• adding more and more workers leads to a decrease in the quantity of capital.

The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is

• $180

• $190

• $120

• $10