Econ 528 Final Study Guide Fall 2019 ULL Dr. Rahmad Questions & Answers
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Course
Econ 528
Institution
Econ 528
Economies of scale exist as a firm increases its size in the long run because of all the following except: - ANSWERSAs a firm expands its production, its
profit margin per-unit of output increases
Over the past twenty years, the number of small family farms has fallen significantly and in their...
Econ 528 Final Study Guide Fall 2019
ULL Dr. Rahmad Questions & Answers
Economies of scale exist as a firm increases its size in the long run because of all the
following except: - ANSWERSAs a firm expands its production, its
profit margin per-unit of output increases
Over the past twenty years, the number of small family farms has fallen significantly and
in their place there are fewer, but larger, farms owned by corporations. Which of the
following best explains this trend? - ANSWERSEconomies of scale in farming
The president of Toyota's Georgetown plant was quoted as saying, "Demand for high
volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out
the expertise and knowledge we painstakingly built up over the years." This quote
suggests that: - ANSWERSAs Toyota expanded its capacity, it experienced
diseconomies of scale.
The marginal revenue product of labor for a firm:
A. will decrease if the firm hires more labor
b. Will increase if the price of the firms's output increases
c. is the firms demand curve for labor
d. all of the above are correct - ANSWERSd. all of the above are correct
Evaluate the Statement; Cost approach is the easier approach to achieve optimal
production when the firm is at the start of their production - ANSWERSFALSE
Evaluate the Statement; Resource approach is the easier approach to achieve optimal
production after the firm has already established a production plan and requires only
incremental changes in their plan to achieve the maximum possible profit. -
ANSWERSFALSE
The demand for labor is described as a derived demand because: - ANSWERSIt is
derived from the demand of
products that use labor in the production process.
Figure 17-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a
producer of linen doilies.
If the wage rate is $40, how many workers should Dale hire? - ANSWERS3 Units
(Workers)
Which type of workers is most likely to enjoy substantial economic rent? -
ANSWERSThose with high wages which result
from them possessing the innate ability to develop some skill to a very high level
, Which of the following is a reason why a firm would experience diseconomies of scale?
- ANSWERSAs the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants
The minimum efficient scale is: - ANSWERSLevel of operation where long-run
average costs are lowest.
Which of the following is not a reason why firms experience economies of scale? -
ANSWERSAs output increases, the managers can
begin to have difficultly coordinating the operations of their firms.
Economies of scope exist between book publishing and magazine publishing if: -
ANSWERSThe cost of publishing a magazines
lower for book publishers than for other firms
Learning curves represent the relationship between - ANSWERSAverage variable cost
and the cumulative number of units produced.
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. - ANSWERSFALSE
Answer whether the following statement is true or false: Economic rent for an input is
higher if the input is abundant is supply? - ANSWERSFALSE
A firm's demand curve for labor slopes downwards because: - ANSWERSOf the law of
diminishing marginal returns
An increase in input costs in the production of electric automobiles caused the price of
electric automobiles to rise. Holding everything else constant, how would this affect the
market for gasoline-powered automobiles (a substitute for electric automobiles)? -
ANSWERSThe demand for gasoline-powered automobiles would increase and the
equilibrium price of gasoline-powered automobiles would increase.
A perfectly competitive firm produces 3,000 units of a food at a total cost of $36,000.
The fixed cost of production is $20,000. The price of each good is $10. Should the firm
continue to produce in the short run? - ANSWERSYes, it should continue to produce
because it is minimizing its loss.
Max Shreck, an accountant, quit his $80,000- a-year job and bought an existing tattoo
parlor from its previous owner, Sylvia Sidney. The lease has five years remaining and
requires a monthly payment of $4,000. Max's explicit cost amounts to $3,000 per month
more than his revenue. Should Max continue operating his business? - ANSWERSMax
should continue running the tattoo parlor until his lease runs out.
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