Suppose there is a technology to produce Grendels such that there are diseconomies of

Suppose there is a technology to produce Grendels such that there are diseconomies of
                            scale after the first unit is produced. There are both fixed (a physical plant called a lair)
                            and variable (food that grows in lairs) costs of production. Which statement is true?

a.No Grendels will be produced.

b.Producing multiple units increases the average fixed cost.

c.There will be no more than one firm in this industry.

d.It is cheaper to make five Grendels by buying five lairs and producing one Grendel
in each lair than it is to produce five Grendels in one lair.

e.This is an impossible situation.

152.              Some reasons that firms may experience diseconomies of scale include

a.the firm is too small to take advantage of specialization

b.large management structures may be bureaucratic and inefficient

c.if there are too many employees, the work place becomes crowded and people
become less productive

d.having more employees doesn’t mean there will be more raw materials to use in
production

e.average fixed costs begin to rise again

153.              The difference between short-run and long-run cost is that in the short run,

a.there are shortages of labor that can restrict output

b.only labor can be changed to increase or decrease production

c.fixed factors of production have already been chosen

d.the market-day supply limits the amount by which producers can change production

e.all factors of production are variable

154.              The difference between short-run and long-run cost is that in the long run,

a.there are shortages of labor that can restrict output

b.only labor can be changed to increase or decrease production

c.fixed factors of production have already been chosen

d.there are no diseconomies of scale

e.all factors of production are variable

 

155.              In the fishing industry, the long run is described as the time in which

a.the seasons have changed and it is now too cold to fish

b.the fish is no longer fresh

c.the scale of operation can be chosen

d.the boat loses all of its value

e.only the boat size can vary

156.              Every year Mary rents a tiller from the local hardware store and turns over the soil in her
                            yard to plant her garden. She decides how big a plot to till and when she is finished, she
                            returns the tiller to the hardware store. From that point on, Mary is operating in the

a.long run because she has designated the size of her plot

b.long run because the growing season is only a few months long

c.short or long run because she can always decide not to plant any vegetables

d.short run because she has chosen her scale of operation

e.short run because once she waters the garden, she cannot get the water back

157.              Three landscapers, Allen, Betty, and Christina, are visiting the lawn and garden supply
                            store. Allen is choosing between a mower with a 40-inch blade and a mower with a 28-
                            inch blade. Betty is picking up her mower, which was in for scheduled maintenance.
                            Christina is putting up a For Sale sign advertising her equipment and list of customers.
                            Who is operating in the short run?

a.Allen and Betty

b.Betty and Christina

c.Allen only

d.Betty only

e.Christina only

158.              Three landscapers, Allen, Betty, and Christina, are visiting the lawn and garden supply
                            store. Allen is choosing between a mower with a 40-inch blade and a mower with a 28-
                            inch blade. Betty is picking up her mower, which was in for scheduled maintenance.
                            Christina is putting up a For Sale sign advertising her equipment and list of customers.
                            Who is operating in the long run?

a.Allen and Christina

b.Betty and Christina

c.Allen only

d.Betty only

e.Christina only

159.              Angela, Bonnie, and Carl are visiting the local paint store. Angela, owner of Angela’s
                            Artful Painting Co., is posting a Help Wanted sign because she is looking for more
                            painters to join her crew. Bonnie, who is a sole proprietor, is placing an order for 12
                            gallons of green paint. Carl is a painter who is looking for a job and is reading the
                            bulletin board in the paint shop. Who is operating in the short run?

a.Angela and Bonnie

b.Angela and Carl

c.Angela only

d.Bonnie only

e.Carl only

160.              Angela, Bonnie, and Carl are visiting the local paint store. Angela, owner of Angela’s
                            Artful Painting Co., is posting a Help Wanted sign because she is looking for more
                            painters to join her crew. Bonnie, who is a sole proprietor, is placing an order for 12
                            gallons of green paint. Carl is a painter who is looking for a job and is reading the
                            bulletin board in the paint shop. Who is operating in the long run?

a.Angela only

b.Bonnie only

c.Carl only

d.Carl and Angela

e.no one is operating in the long run

 

161.              Suppose you are the owner of a softball team and you are hiring laborers (players).
                            Suppose also that not all players are equally talented, but that union rules require that
                            they all receive the same salary. If you measure output by the number of runs scored in a
                            season, your total variable cost curve will take what shape, and why?

a.U-shaped because softball teams like this one are no different from other businesses

b.U-shaped because even though salaries are identical, some players are better and will
score more runs

c.increasing but at different rates because there are only so many times players can
come to bat

d.increasing but at different rates because even though salaries are identical, some
players are better and will score more runs

e.increasing at a constant rate because union rules require uniform salaries for players

162.              Suppose you know the following facts about the Smith Lamp Factory. When they
                            produce 2,500 lamps, the difference between the average total cost and average variable
                            cost is only $1. If the average variable cost for 5,000 lamps is $8, what is the total cost of
                            producing 5,000 lamps?

a.$2,500

b.$4,000

c.$20,000

d.$40,000

e.$42,500

163.              Suppose the total cost of producing 50,000 telephones is $500,000. Suppose also that at
                            an output of 30,000, the average total cost is $8 and the marginal cost is $6. What is true
                            about the minimum of the average total cost curve?

a.The minimum of the ATC is greater than $10.

b.The minimum of the ATC is less than $8.

c.The minimum of the ATC is between $8 and $10.

d.The minimum of the ATC can be no bigger than $6.

e.The minimum of the ATC corresponds to a quantity greater than 50,000.

164.              When the average total cost is rising, it must be the case that

a.production must be cut back

b.fixed cost is not very high

c.marginal cost is greater than average total cost

d.average fixed cost exceeds average variable cost

e.marginal cost is less than average fixed cost