ECON 528 Final | Questions with 100% Verified Answers | Latest
Update 2026/2027
Question: d. As the size of the firm increases it becomes more difficult to
coordinate the operations of its manufacturing plants.
Answer:
Which of the following is a reason why a firm would experience diseconomies of scale?
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.
Question: d. level of operation where long-run average costs are lowest.
Answer:
The minimum efficient scale is
a. the smallest output level where the firm finally reaches productive efficiency.
b. the plant size that yields the most profit.
c. the level of output where diminishing returns have not set in yet.
d. level of operation where long-run average costs are lowest.
Question: b. As output increases, the managers can begin to have
difficulty coordinating the operations of their firms.
Answer:
Which of the following is not a reason why firms experience economies of scale?
a. Larger firms may be able to purchase inputs at lower costs than smaller competitors.
b. As output increases, the managers can begin to have difficulty coordinating the
operations of their firms.
c. Technology can make it possible to increase production with a smaller increase in at
least one input.
d. Workers and managers can become more specialized, enabling them to be more
productive.
,Question: c. the cost of publishing a magazine is lower for book
publishers than for other firms.
Answer:
Economies of scope exist between book publishing and magazine publishing if
a. the cost of publishing a book falls over time as the publisher acquires more
experience.
b. the cost of publishing a magazine is lower for firms that publish many magazines than
for firms that publish only one magazine.
c. the cost of publishing a magazine is lower for book publishers than for other firms.
d. the cost of a publishing a book is not subject to diminishing marginal returns.
Question: c. average variable cost and the cumulative number of units
produced
Answer:
Learning curves represent the relationship between
a. average variable cost and the number of units produced per time period
b. total cost and technology
c. average variable cost and the cumulative number of units produced
d. average variable cost and the rate of increase in technology
Question: d. None of the above is correct
Answer:
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
a. Increase output by hiring more labor, more capital, or both
b. Hold output constant, but hire more labor and less capital
c. Decrease output by reducing the quantity of capital, reducing the number of units of
labor, or both
d. None of the above is correct
Question: b) False
Answer:
Answer whether the following statement is true or false: If the marginal 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.
a) True
b) False
, Question: b) False
Answer:
Answer whether the following statement is true or false: Economic rent for an input is
higher if the input is abundant is supply
a) True
b) False
Question: a. of the law of diminishing marginal returns.
Answer:
A firm's demand curve for labor slopes downwards because
a. of the law of diminishing marginal returns.
b. of rising marginal product.
c. workers supply less labor services as the wage rate falls.
d. firms supply less labor as the wage rate rises.
Question: a. the price of a factor of production that is fixed in supply.
Answer:
Economic rent is defined as
a. the price of a factor of production that is fixed in supply.
b. the revenue received by a factor of production with an upward sloping supply curve.
c. the surplus received by employing a factor of production in its highest valued use.
d. what you pay to rent your apartment or house.
Question: a. B) The relationship between the quantity of output
produced and the total cost of production
Answer:
What does the total cost (TC) curve represent?
a. B) The relationship between the quantity of output produced and the total cost of
production
b. C) The relationship between price and quantity demanded
c. D) The firm's profits at different output levels
d. A) The total revenue a firm earns
Question: c. C) Do not change with the level of output
Answer:
Fixed costs are costs that:
a. D) Are incurred only when production stops
b. B) Decrease as production decreases
c. C) Do not change with the level of output
d. A) Increase as production increases
Update 2026/2027
Question: d. As the size of the firm increases it becomes more difficult to
coordinate the operations of its manufacturing plants.
Answer:
Which of the following is a reason why a firm would experience diseconomies of scale?
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.
Question: d. level of operation where long-run average costs are lowest.
Answer:
The minimum efficient scale is
a. the smallest output level where the firm finally reaches productive efficiency.
b. the plant size that yields the most profit.
c. the level of output where diminishing returns have not set in yet.
d. level of operation where long-run average costs are lowest.
Question: b. As output increases, the managers can begin to have
difficulty coordinating the operations of their firms.
Answer:
Which of the following is not a reason why firms experience economies of scale?
a. Larger firms may be able to purchase inputs at lower costs than smaller competitors.
b. As output increases, the managers can begin to have difficulty coordinating the
operations of their firms.
c. Technology can make it possible to increase production with a smaller increase in at
least one input.
d. Workers and managers can become more specialized, enabling them to be more
productive.
,Question: c. the cost of publishing a magazine is lower for book
publishers than for other firms.
Answer:
Economies of scope exist between book publishing and magazine publishing if
a. the cost of publishing a book falls over time as the publisher acquires more
experience.
b. the cost of publishing a magazine is lower for firms that publish many magazines than
for firms that publish only one magazine.
c. the cost of publishing a magazine is lower for book publishers than for other firms.
d. the cost of a publishing a book is not subject to diminishing marginal returns.
Question: c. average variable cost and the cumulative number of units
produced
Answer:
Learning curves represent the relationship between
a. average variable cost and the number of units produced per time period
b. total cost and technology
c. average variable cost and the cumulative number of units produced
d. average variable cost and the rate of increase in technology
Question: d. None of the above is correct
Answer:
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
a. Increase output by hiring more labor, more capital, or both
b. Hold output constant, but hire more labor and less capital
c. Decrease output by reducing the quantity of capital, reducing the number of units of
labor, or both
d. None of the above is correct
Question: b) False
Answer:
Answer whether the following statement is true or false: If the marginal 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.
a) True
b) False
, Question: b) False
Answer:
Answer whether the following statement is true or false: Economic rent for an input is
higher if the input is abundant is supply
a) True
b) False
Question: a. of the law of diminishing marginal returns.
Answer:
A firm's demand curve for labor slopes downwards because
a. of the law of diminishing marginal returns.
b. of rising marginal product.
c. workers supply less labor services as the wage rate falls.
d. firms supply less labor as the wage rate rises.
Question: a. the price of a factor of production that is fixed in supply.
Answer:
Economic rent is defined as
a. the price of a factor of production that is fixed in supply.
b. the revenue received by a factor of production with an upward sloping supply curve.
c. the surplus received by employing a factor of production in its highest valued use.
d. what you pay to rent your apartment or house.
Question: a. B) The relationship between the quantity of output
produced and the total cost of production
Answer:
What does the total cost (TC) curve represent?
a. B) The relationship between the quantity of output produced and the total cost of
production
b. C) The relationship between price and quantity demanded
c. D) The firm's profits at different output levels
d. A) The total revenue a firm earns
Question: c. C) Do not change with the level of output
Answer:
Fixed costs are costs that:
a. D) Are incurred only when production stops
b. B) Decrease as production decreases
c. C) Do not change with the level of output
d. A) Increase as production increases
