ULL ECON 528 – FINAL EXAM WITH ANSWERS

ULL ECON 528 – FINAL EXA M WITH
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ANSWERS

If, when a firm doubles all its inputs, its average cost of
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production decreases, then production displays |\ |\ |\ |\




A) diminishing returns.
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B) economies of scale.
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C) diseconomies of scale.
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D) declining fixed costs. - CORRECT ANSWERS ✔✔B)
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economies of scale. |\ |\




The long-run average cost curve shows
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A) the lowest average cost of producing every level of
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output in the long run. |\ |\ |\ |\




B) where the most profitable level of output occurs.
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C) the average cost of producing where diminishing
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returns are not present. |\ |\ |\




D) the plant size or scale that the firm should build. -
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CORRECT ANSWERS ✔✔A) the lowest average cost of |\ |\ |\ |\ |\ |\ |\ |\



producing every level of output in the long run. |\ |\ |\ |\ |\ |\ |\ |\




All of the following statements are true of the minimum
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efficient scale except one. Which one?|\ |\ |\ |\ |\

,A) All possible economies of scale have been exhausted.
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B) The short-run average total cost curve's minimum
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point is equal to the long run average cost curve's
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minimum point. |\




C) Any increase in the scale of operation will encounter
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diseconomies of scale. |\ |\




D) An increase in the output level will increase profit. -
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CORRECT ANSWERS ✔✔D) An increase in the output level |\ |\ |\ |\ |\ |\ |\ |\ |\



will increase profit.
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At the minimum efficient scale
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A) all possible economies of scale have not been
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exhausted.
B) the firm has achieved the lowest possible average cost
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of production.
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C) any increases in the scale of operation will encounter
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further economies of scale. |\ |\ |\




D) marginal cost is at its minimum. - CORRECT ANSWERS
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✔✔B) the firm has achieved the lowest possible average
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cost of production. |\ |\




The president of Toyota's Georgetown plant was quoted
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as saying, "Demand for high volumes saps your energy.
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Over a period of time, it eroded our focus [and] thinned
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out the expertise and knowledge we painstakingly built
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,up over the years." Based on this quote, what must be
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true of the plant's average cost of production curve?
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A) It is upward-sloping.
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B) It is downward-sloping.
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C) It is a ray from the origin.
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D) It is U-shaped. - CORRECT ANSWERS ✔✔A) It is
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upward-sloping.


Economies of scope refers to the decrease in average
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total cost that can occur when a firm
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A) produces more than one product.
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B) has monopoly power in world markets.
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C) controls the raw materials used as inputs.
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D) narrows the scope of its regional markets. - CORRECT
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ANSWERS ✔✔A) produces more than one product. |\ |\ |\ |\ |\ |\




Producing 200 units of good Y and 100 units of good X in
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the same factory costs the firm $50,000. In contrast,
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producing 200 units of good Y in one factory and 100
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units of good X in another factory costs the firm $75,000.
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So if the firm produces the two goods together, it
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achieves:
A) quadratic returns to scale.
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B) diseconomies of scope.
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, C) economies of scope.
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D) diseconomies of scale and diseconomies of scope. -
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CORRECT ANSWERS ✔✔C) economies of scope. |\ |\ |\ |\ |\




The marginal revenue product of labor for a firm
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A) will increase if the price of the firm's output increases.
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B) is the firm's demand curve for labor.
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C) will decrease if the firm hires more labor.
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D) All of the above are correct. - CORRECT ANSWERS
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✔✔D) All of the above are correct.
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Answer whether the following statements are true or
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false:
A) Over time, more experienced workers will demand
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higher wages and therefore, will lead to an increased in
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the cost of production for the producers.
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B) When you produce more, the average cost of
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production increases. - CORRECT ANSWERS ✔✔A) False & |\ |\ |\ |\ |\ |\ |\ |\



B) False
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A reason why a perfectly competitive firm's demand for
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labor curve slopes downward is that
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A) each additional unit of labor hired is less efficient than
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previously hired units. |\ |\