Question 1 According to the Law of Diminishing Returns, as more variable input is used with the fixed inputs to increase output, the marginal productivity of the variable input
a. turns negative
b. increases
c. decreases
d. inverts
e. cycles
Question 2 Chapter Seven introduces the study of market structures. Although we have not covered this in class yet, you should be able to identify the different types of market structures form the description of their features in the text. Which market structure has many small firms that sell a commodity product?
a. Pure or Perfect Competition
b. Oligopoly
c. Monopoly
d. Monopolistic Competition
Question 3 Your firm has some fixed inputs and some variable inputs. What economic time period is your firm operating in? ___________________________
Question 4 As output increases, total fixed cost
a. increases
b. decreases
c. stays the same
d. falls in real terms, but rises in nominal terms
e. changes, but there is too little information here to say how it will change
Question 5 As output increases, average fixed cost
a. increases
b. decreases
c. stays the same
d. falls in real terms, but rises in nominal terms
e. changes, but there is too little information here to say how it will change
Question 6 Chapter Seven introduces the study of market structures. Although we have not covered this in class yet, you should be able to identify the different types of market structures form the description of their features in the text. Which market structure has one single seller?
a. Pure or Perfect Competition
b. Oligopoly
c. Monopoly
d. Monopolistic Competition
Question 7 The moving assembly line can be found in any different types of industries. This technology basically comes in one size only (that is, the firm either automates or mechanizes assembly, or it dos not). This capital “indivisibility†often results in
a. diminishing returns
b. economies of scale
c. diseconomies of scale
d. technological innovation
e. a bad hair day
Question 8 When marginal cost is equal it average cost
a. average costs are too high
b. average costs are at a maximum
c. marginal costs are at a minimum
d. average costs are at a minimum
e. marginal profit is at a minimum
Question 9 When the firm’s long run unit cost curve is flat (that is, constant), the firm
a. is experiencing economies of scale, but not diseconomies of scale
b. is experiencing diseconomies of scale, but not economies of scale
c. is experiencing both economies of scale and diseconomies of scale
d. is not experiencing economies of scale or diseconomies of scale
e. is too inefficient to be competitive
Question 10 At the beginning of this course, we noted different types of competition. One type of competition was the “competition of capitals.†We argued that when accounting profits were “above normal,†the competition of capitals would
a. stop working
b. bring about a government antitrust suit
c. cause firms in a free open market to enter the industry
d. cause firms in a free open market to exit the industry
e. reduce interest rates
Question 11 Thomas Malthus’ analysis of the future was
a. very complete and very accurate
b. essentially a long run analysis
c. essentially a short run analysis
d. wromg in every respect, including being wrong about the Law of Diminishing Returns
e. basically a very positive and upbeat assessment of future prospects for mankind
Question 12 At your current output level, your firm’s marginal costs are less than its per unit costs. If you increase output, you should expect your unit costs to
a. fall
b. increase
c. stay the same
d. turn negative
e. change, but there is too little information here to say how they will change
Question 13 If a firm’s long run average costs are falling, _____________________ must be present.
Question 14 Which of the following is an “implicit†cost?
a. wages
b. rent
c. utility expenses
d. normal profit
e. merchandise costs
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