Quiz: Review for Managerial

1

Marginal product is defined as
- The Additional ouput produced by an additional unit of input, all other factors held constant
- The additional output produced by a scale increase in all inputs
- The additional input required to produce one additional unit of output
- Total output divided y the total units of an input.
- None of the answers above is correct
2

Labors marginal product curve may rise as Q increases over a small range of output due to
- increasing specialization of labor
- Increasing returns to scale
- increasing efficiency of capital
- Increasing profits from additional output produced and sold
- declining labor costs
3

According to the law of diminsihing returns
- If all inputs are increased in equal proportions, output will eventually decrease
- if one input is increased, with all other inputs unchanged, additional output will eventually decline
- if one input is held constant and all other inputs are increased, output will eventually decrease
- if one input is increased and all other factors are held constant output will eventually decrease
- if all inputs are increased output will grow but by a smally proportion
4

Marginal Revenue product denotes
- the extra revenue resulting from a unit increase in the input
- the extra revenue that results from economizing on excess inputs
- the extra output that results from a unit increase in the input
- the extra revenue that results from an increase in technical efficiency
- the extra revenue that results from an increase in output
5

In seeking to maximize profits what rule should the firm follow regarding the amount of labor to hire?
- hire as longs as MRPL>MRPK
- Hire until MRPL>MCL
- Hire until MRPL=MCL
- Hire until MRPL-0
- None of the above
6

In an isquant map, which of the following best measures the trade off between the inputs
- the ratio of the inputs marginal products
- the slope of the isoquant
- the ratio of the inputs average products
- the slope of the budget line
- both the ratio of the inputs marginal products and the slope of the isoquant
7

If production takes place with fixed proportions, the inputs used in the production process
- are perfect substitutes
- are imperfect substitutes
- cannot be substituted for one another
- are combined in linear fashing to make output
- uncertain, depends on the nature of technolog
8

In the long run a profit maximizing firm produces such that
- the marginal products of all inputs is zero
- the ratio of the marginal products to inputs prices are equal accross all input
- marginal prodcuts are equal for all inputs
- each inputs marginal revenue product equals the inputs marginal cost
- both the ratio of the marginal products to inputs prices are equal accross all input each inputs marginal revenue product equals the inputs marginal cost
9

The total economic cost of pursing a three year masters degree after college is equal to
- the total cost of tuition books and living expenses during the program
- the cost of tuition and books
- all expenses incurred during the program
- all educational expenses during the program plus three years of wages that the individual would have earned if she had not elected the program
- none of the above
10

A firms average fixed cost
- is constant at all levels of output
- always increases as output increases
- increases at first and then decreases
- decreases at first and then increases
- always decreases as output increases
11

A firm that is maximizing profits should nonethelesess shutdown in the short run if
- total sales revenue is less than total cost
- total sales revenue is less than total variable cost
- the firm is earning less than a normal rate of return
- the firm is not able to cover its overhead
- all answers but total sales revenue is less than total cost
12

A firm maximizes profits by
- producing until marginal cost equals average cost
- producing where the average cost per unit is minimized
- raising price until revenue is maximized
- producing until marginal revenue equals marginal cost
- producing until price equals average cost
13

When the LAC curve is at a minimum
- the lmc curve is also at a minimum
- the lmc curve is decreasing
- the firm is operating at its profit maximizing level of output
- total cost is at a minimum
- LMC=LAC
14

Under constant returns to scla
- the SAC curve will tend to be horizontal
- the lac curve will tend to be u shaped
- the lmc curve will tend to be upward sloping
- an increase in scale will return output more than proportionally
- the LAC curve will tend to be horizontal
15

a firm produces 100 units of output and an average varibale cost of $5 per unit and incurs total fixed costs of 700. Then
- average total cost is 12
- Total variable cost is 1200
- marginal costs is constant and equal to $5 per unit
- average fixed cost is $5 per unit
- total cost is 500
16

The products produced by firms under perfect competition are
- vigorously advertised by the various firms
- highly differentiated
- imperfect substitutes for each other
- identical
- poor substitutes for one another
17

In order to maximize profits perfectly a competitive firm continue producing until
- it reaches full capacity
- the cost of producing the last unit equals the market price
- the average cost per unit is minimized
- total sales revenue is maximized
- none of the above
18

in the long run, perfectly competitive firms will most likely
- suffer economic losses
- fluctuate between swings of large profits and losses
- shut down because of their inability to cover overhead costs
- continue to earn economic profits because of barriers to entry
- earn zero economic profits
19

A pefectly competitive firms supply curve is simply its
- MC curve above MR
- MC curve above AC
- MC curve above AVC
- AC Curve
- AVC Curve
20

The Demand curve faced by an individual firm under perfect competition is
- downward sloping
- the sames as the market demand curve
- horizontal
- vertical
- Both downward sloping and the sames as the market demand curve

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Review for Managerial

Marginal product is defined as

Labors marginal product curve may rise as Q increases over a small range of output due to

According to the law of diminsihing returns

Marginal Revenue product denotes

In seeking to maximize profits what rule should the firm follow regarding the amount of labor to hire?

In an isquant map, which of the following best measures the trade off between the inputs

If production takes place with fixed proportions, the inputs used in the production process

In the long run a profit maximizing firm produces such that

The total economic cost of pursing a three year masters degree after college is equal to

A firms average fixed cost

A firm that is maximizing profits should nonethelesess shutdown in the short run if

A firm maximizes profits by

When the LAC curve is at a minimum

Under constant returns to scla

a firm produces 100 units of output and an average varibale cost of $5 per unit and incurs total fixed costs of 700. Then

The products produced by firms under perfect competition are

In order to maximize profits perfectly a competitive firm continue producing until

in the long run, perfectly competitive firms will most likely

A pefectly competitive firms supply curve is simply its

The Demand curve faced by an individual firm under perfect competition is

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