ECON 528 - ULL - Final Exam
Questions and Answers 100%
Correct
Which of the following is a reason why a firm would experience diseconomies of scale?
Select one:
a. As the size of the firm increases, it becomes more difficult to find markets where it
doesn't already have operations.
b. To finance an increase in the size of its plant a firm must borrow more money or sell
more shares of stock.
c. As the size of the firm increases, it must operate in other countries where differences
in language, customs and laws increase its average costs.
d. As the size of the firm increases it becomes more difficult to coordinate the
operations of its manufacturing plants. - ANSWER-d. As the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants.
The minimum efficient scale is
Select one:
a. the plant size that yields the most profit.
b. level of operation where long-run average costs are lowest.
c. the level of output where diminishing returns have not set in yet.
d. the smallest output level where the firm finally reaches productive efficiency. -
ANSWER-b. level of operation where long-run average costs are lowest.
If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is
$3, the rental price of capital is $6, and the price of output is $1.50, then the firm should
Select one:
a. Increase output by hiring more labor, more capital, or both
b. None of the above is correct
c. Decrease output by reducing the quantity of capital, reducing the number of units of
labor, or both
d. Hold output constant, but hire more labor and less capital - ANSWER-b. None of the
above is correct
revenue product of an input is less than the price of that input, the input is too expensive
and the firm should stop using that input and try to find some alternate inputs.
Select one:
True
False - ANSWER-False
Answer whether the following statement is true or false: Economic rent for an input is
higher if the input is abundant is supply
Questions and Answers 100%
Correct
Which of the following is a reason why a firm would experience diseconomies of scale?
Select one:
a. As the size of the firm increases, it becomes more difficult to find markets where it
doesn't already have operations.
b. To finance an increase in the size of its plant a firm must borrow more money or sell
more shares of stock.
c. As the size of the firm increases, it must operate in other countries where differences
in language, customs and laws increase its average costs.
d. As the size of the firm increases it becomes more difficult to coordinate the
operations of its manufacturing plants. - ANSWER-d. As the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants.
The minimum efficient scale is
Select one:
a. the plant size that yields the most profit.
b. level of operation where long-run average costs are lowest.
c. the level of output where diminishing returns have not set in yet.
d. the smallest output level where the firm finally reaches productive efficiency. -
ANSWER-b. level of operation where long-run average costs are lowest.
If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is
$3, the rental price of capital is $6, and the price of output is $1.50, then the firm should
Select one:
a. Increase output by hiring more labor, more capital, or both
b. None of the above is correct
c. Decrease output by reducing the quantity of capital, reducing the number of units of
labor, or both
d. Hold output constant, but hire more labor and less capital - ANSWER-b. None of the
above is correct
revenue product of an input is less than the price of that input, the input is too expensive
and the firm should stop using that input and try to find some alternate inputs.
Select one:
True
False - ANSWER-False
Answer whether the following statement is true or false: Economic rent for an input is
higher if the input is abundant is supply
