Description
Test Bank For Fundamentals of Economics International Edition 6th Edition by Melvin Boyes
Chapter 5—Costs and Profit Maximization
MULTIPLE CHOICE
1. Labor, land, and capital used in production are
|
a. |
resources. |
|
b. |
outputs. |
|
c. |
productivity. |
|
d. |
technological progress. |
|
e. |
innovations. |
ANS:APTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
2. The transformation of resources into economic goods and services is called
|
a. |
technical efficiency. |
|
b. |
resource. |
|
c. |
production. |
|
d. |
increasing returns. |
|
e. |
output. |
ANS:CPTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
3. Economic goods and services produced by business firms are
|
a. |
resources. |
|
b. |
outputs. |
|
c. |
innovations. |
|
d. |
productivity. |
|
e. |
technological progress. |
ANS:BPTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
4. Average total cost is calculated by dividing
|
a. |
the change in total cost by the change in the quantity of output. |
|
b. |
total output by the number of people employed. |
|
c. |
the change in total output by the change in the number of people employed. |
|
d. |
total cost by total output. |
|
e. |
total output by total cost. |
ANS:DPTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
5.The average total cost curve indicates that
|
a. |
as output rises in the short run, costs decline rapidly. |
|
b. |
as output rises in the short run, per unit costs initially fall but eventually rise. |
|
c. |
firms generally operate at a highly inefficient point of production. |
|
d. |
costs cannot be contained even if businesses employ the proper combination of resources. |
|
e. |
as more output is produced in the short run, average total costs must increase. |
ANS:BPTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
6.Average total cost is
|
a. |
the per-unit cost and is derived by dividing total cost by marginal cost. |
|
b. |
the total unit cost of production. |
|
c. |
the per-unit cost and is derived by dividing total cost by the quantity of output. |
|
d. |
just the marginal cost adjusted for the workers’ productivity level. |
|
e. |
derived by dividing marginal cost by the quantity of output. |
ANS:CPTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
7.Marginal cost is calculated by dividing
|
a. |
the change in total cost by the change in the quantity of output produced. |
|
b. |
total output by the number of people employed. |
|
c. |
the change in total output by the change in the number of people employed. |
|
d. |
the change in total cost by the change in change in variable cost. |
|
e. |
total cost by total output. |
ANS:APTS:1DIF:Easy
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
8.As output rises unit by unit, costs ____ relatively ____ at first, but then ____ more ____.
|
a. |
decrease; slowly; increase; rapidly |
|
b. |
decrease; quickly; increase; slowly |
|
c. |
rise; slowly; increase; rapidly |
|
d. |
rise; quickly; increase; slowly |
|
e. |
rise; quickly; increase; quickly |
ANS:CPTS:1DIF:Moderate
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Knowledge
9.After hiring three new employees, a manager sees that total output increases. If the manager hires two additional employees and discovers total output has fallen, the result is due to
|
a. |
diseconomies of scale. |
|
b. |
a poor hiring procedure. |
|
c. |
diminishing marginal returns. |
|
d. |
the lack of skills of newest employees⎯the best workers are hired first. |
|
e. |
economies of scale. |
ANS: C PTS: 1 DIF: Moderate NAT: BPROG: Analytic
TOP: Costs KEY: BLOOM’S: Comprehension
10.Which of the following does not refer to diminishing marginal returns?
|
a. |
The application of increasing amounts of fertilizer to a field of corn |
|
b. |
Increasing numbers of seat belts in an automobile |
|
c. |
Closing part of a restaurant because of a lack of servers |
|
d. |
Increasing the number of assistant vice presidents as the size of the firm increases |
|
e. |
Increasing the number of students in one classroom |
ANS:DPTS:1DIF:Moderate
NAT: BPROG: Reflective Thinking TOP: Costs KEY: BLOOM’S: Application
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