1
ECON 205 Exam 3 Questions with Correct
Answers | Updated (100% Correct Answers)
An adjustment that affects the period of time in which a firm can
vary all its inputs, adopt new technology, and increase or decrease
the size of its plant EX: Wal-Mart builds another super center
Answer: Long Run Adjustment
A cost that does not change EX: payment to hire a security worker
to guard the gate to the factory around the clock Answer: Fixed
Cost:
the non-monetary opportunity cost of using the firm's own
resources Answer: Implicit Costs:
EX: not being able to spend your $10,000 savings if you sink the
money in your business Answer: opportunity cost
$120 Answer: EX: Vipsana's Gyros House sells gyros. The cost of
ingredients (pita, meat, spices, etc.) to make a
gyro is $2.00. Vipsana pays her employees $60 per day. She also
incurs a fixed cost of $120 per
day. What is Vipsana's total cost per day when she does not
produce any gyros and does not hire
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, 2
any workers?
2 chairs Answer: If four workers can produce 18 chairs a day and
five can produce 20 chairs a day, the marginal
product of the fifth worker is
that at some point, adding more of a variable input to a given
amount of a fixed input will cause the marginal product of the
variable input to decline. Answer: The law of diminishing marginal
returns states
extra output of another worker may rise at first, but eventually must
fall. Answer: As a firm hires more labor in the short run, the
less than 8 chairs. Answer: If diminishing marginal returns have
already set in for Golden Lark Woodworks, and the marginal
product of the 6th carpenter is 8 chairs, then the marginal product
of the 7th carpenter is
summing the marginal values to find the total and dividing it by the
number of workers to get the average. Answer: If we have
information about workers' marginal products, then total and
average product can be found by
Marginal product: ---, 200, 300, 400, 250, 150
© 2025 All rights reserved
ECON 205 Exam 3 Questions with Correct
Answers | Updated (100% Correct Answers)
An adjustment that affects the period of time in which a firm can
vary all its inputs, adopt new technology, and increase or decrease
the size of its plant EX: Wal-Mart builds another super center
Answer: Long Run Adjustment
A cost that does not change EX: payment to hire a security worker
to guard the gate to the factory around the clock Answer: Fixed
Cost:
the non-monetary opportunity cost of using the firm's own
resources Answer: Implicit Costs:
EX: not being able to spend your $10,000 savings if you sink the
money in your business Answer: opportunity cost
$120 Answer: EX: Vipsana's Gyros House sells gyros. The cost of
ingredients (pita, meat, spices, etc.) to make a
gyro is $2.00. Vipsana pays her employees $60 per day. She also
incurs a fixed cost of $120 per
day. What is Vipsana's total cost per day when she does not
produce any gyros and does not hire
© 2025 All rights reserved
, 2
any workers?
2 chairs Answer: If four workers can produce 18 chairs a day and
five can produce 20 chairs a day, the marginal
product of the fifth worker is
that at some point, adding more of a variable input to a given
amount of a fixed input will cause the marginal product of the
variable input to decline. Answer: The law of diminishing marginal
returns states
extra output of another worker may rise at first, but eventually must
fall. Answer: As a firm hires more labor in the short run, the
less than 8 chairs. Answer: If diminishing marginal returns have
already set in for Golden Lark Woodworks, and the marginal
product of the 6th carpenter is 8 chairs, then the marginal product
of the 7th carpenter is
summing the marginal values to find the total and dividing it by the
number of workers to get the average. Answer: If we have
information about workers' marginal products, then total and
average product can be found by
Marginal product: ---, 200, 300, 400, 250, 150
© 2025 All rights reserved
