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CHAPTER 7—PRODUCTION AND COST
MULTIPLE CHOICE
1. A firm's profit is
a. greater if it is a corporation rather than if it is a sole proprietorship
b. higher if it raises its price than if it does not
c. lower if it lowers its price than if it does not
d. never taxed by the government
e. its revenue minus its costs
ANS: E PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Costs of production
TOP: Production KEY: Bloom's: Knowledge
2. If the physical plant for a corporation is considered to be a fixed input, then

a. it is held constant in the long run
b. it can be changed in the long run
c. labor must be a variable input
d. technology must be changing
e. the firm will lose money in the short run, except under perfect competition
ANS: B PTS: 1 DIF: Difficulty: Moderate
TOP: Production KEY: Bloom's: Comprehension
3. The "short run" may vary in length from industry to industry.

a. True
b. False
ANS: A PTS: 1 DIF: Difficulty: Moderate
4. In the short run,

a. utilization of any input can be varied
b. production takes less than one year
c. all resources are limited in supply
d. utilization of some inputs is assumed constant
e. equilibrium cannot occur
ANS: D PTS: 1 DIF: Difficulty: Moderate
5. The short run for Barbara's Bakery is defined as

a. one year
b. one month
c. the period of time during which all inputs are variable
d. the period of time during which at least one input is fixed
e. the time needed for a transaction to occur
ANS: D PTS: 1 DIF: Difficulty: Easy
6. Which of the following is most likely to be a fixed input in the short run for Joe's Garage?
a. the grease used to lubricate cars
b. the part-time labor employed to repair cars
c. the inventory of replacement parts
d. the electricity used to heat and light the garage
e. the garage used to repair cars
ANS: E PTS: 1 DIF: Difficulty: Moderate
TOP: Production KEY: Bloom's: Application
7. In a firm's planning horizon, the long run refers to

a. a period of one year or more
b. the term to which the current board of directors has been elected
c. the period during which all of the firm's inputs can be varied
d. the period during which at least one of the firm's inputs is fixed
e. the period during which the level of available technology is fixed
ANS: C PTS: 1 DIF: Difficulty: Easy
8. Consider a firm that needs one day to hire more labor, one week to increase its purchases of raw
materials, and three months to change the amount of its capital. This firm's long run is
a. three months
b. one week
c. one day
d. three months plus eight days
e. three months plus one week
9. As a firm increases its output in the short run,

a. it also varies its technology
b. it increases all of its inputs
c. it increases its plant size
d. it increases only one of its inputs
e. at least one of its inputs is fixed
10. In the long run,

a. at least one of the firm's inputs is fixed
b. customer tastes and preferences are fixed
c. the firm may vary all inputs
d. sunk costs become variable costs
e. government intervention is inevitable
ANS: C PTS: 1 DIF: Difficulty: Moderate
11. In the short run,

a. at least one of the firm's inputs is fixed
b. customer tastes and preferences are fixed
c. the firm may vary all inputs
d. sunk costs are variable
e. government intervention is inevitable
12. Fixed inputs are those whose

a. quantity changes as the level of output changes
b. costs are irreversible
c. quantity remains constant regardless of the level of output
d. quantity determines the level of profit
e. appearance was damaged while being transported, but has been fixed
13. Variable inputs are those whose

a. quantity changes as the level of output changes
b. costs are irreversible
c. quantity remains constant regardless of the level of output
d. costs are considered sunk costs
e. price is continuously changing
14. Marginal product is the change in output divided by the change in the amount of an input used.
a. True
b. False
TOP: Production in the Short Run KEY: Bloom's: Knowledge
15. The law of diminishing marginal returns says that as more of a variable input is combined with a fixed
input, total output will increase; however, the increases in the firm's output will become ever smaller.
a. True
b. False
16. Total product begins to decline when diminishing marginal returns are first experienced.
a. True
b. False
TOP: Production in the Short Run KEY: Bloom's: Comprehension
Figure 7-1
Quantity Tons of Coal
of Labor Mined
1 80
2 180
3 300
4 480
5 555
17. Figure 7-1 shows the amounts of coal that a mining company could produce per week by changing the
number of workers while capital and technology remain constant. The marginal product of employing
the fourth worker is
a. 120 tons of coal
b. 480 tons of coal
c. 319 tons of coal
d. 180 tons of coal
e. 106.33 tons of coal
number of workers while capital and technology remain constant. Which worker has a marginal
product of 120 tons of coal?
a. first
b. second
c. third
d. fourth
e. fifth
number of workers while capital and technology remain constant.How many workers could the mine
hire before the marginal product of labor begins to decline?
a. 1 worker
b. 2 workers
c. 3 workers
d. 4 workers
e. 5 workers
Figure 7-2
Quantity Total
of Labor Product
0 0
10 100
20 230
30 340
40 410
50 460
20. Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and
technology constant. What is the marginal product of labor between 20 and 30 units of labor?
a. 340 units
b. 220 units
c. 11 units
d. 110 units
e. 34 units
TOP: Production in the Short Run KEY: Bloom's: Analysis
21. Figure 7-2 shows how much a firm could produce with various amounts of labor holding capital and
technology constant. What is the average product of labor when 20 units of labor are employed?
a. 230 units
b. 11.5 units
c. 130 units
d. 6.5 units
e. 110 units
22. The marginal product of labor is the

a. total output produced when one more worker is hired
b. change in average output produced when one more worker is hired
c. total output per worker when one more worker is hired
d. change in total output when one more worker is hired
e. maximum quantity of output when one more worker is hired
23. When the marginal product of labor increases as the amount of labor employed increases,
a. the additional worker has made other workers more productive
b. the firm also must have increased the amount of capital
c. the firm is experiencing economies of scale
d. there has been an improvement in the available technology
e. the law of diminishing returns has been violated
ANS: A PTS: 1 DIF: Difficulty: Challenging
24. The marginal product of labor is the
a. additional output produced when one more worker is hired
b. amount of output associated with labor inputs
c. maximum amount of output produced by a given set of inputs
d. maximum profit "produced" by selling a firm's output
e. additional cost associated with an additional unit of labor
25. If a firm is experiencing diminishing marginal returns to labor, then

a. total output must be decreasing
b. total output rises more slowly as additional workers are added
c. the firm must decrease the amount of labor it hires
d. total output per worker must be rising
e. the firm must be operating in the long run
26. The law of diminishing marginal returns says that

a. total product will eventually remain constant as more of an input is added to production
b. total revenue decreases as output increases, holding technology fixed
c. marginal product eventually falls as more of an input is employed
d. the quantity demanded of a good decreases as its price rises
e. utility falls as more of a good is consumed
27. For the total product curve shown in Figure 7-3, the marginal product of hiring the fifth unit of labor
is
a. 200
b. 50
c. 20
d. 1,000
e. 1
28. For the total product curve shown in Figure 7-3, diminishing marginal returns to labor
a. do not occur over this range
b. begin with the third unit of labor
c. exist for every unit of labor
d. begin with the fourth unit of labor
e. begin with the first unit of labor
29. For the total product curve shown in Figure 7-3, for which unit of labor is the marginal product 20
units of output?
a. first
b. second
c. third
d. fourth
e. fifth
30. The law of diminishing marginal returns says that as additional units of a variable input are added to
a. fixed amounts of other inputs, total output will eventually remain constant
b. varying amounts of other inputs, total output will eventually decline
c. fixed amounts of other inputs, the resulting increases in total output will eventually
become smaller
d. varying amount of other inputs, the resulting increases in total output will eventually
become smaller
e. a declining amount of output, technology will eventually deteriorate
31. If there are diminishing marginal returns to labor,

a. output diminishes as additional workers are added
b. the management team grows as more workers are hired
c. the rise in output becomes smaller and smaller with each successive worker hired
d. the management team shrinks as successive workers are added
e. macroeconomic business cycles are generated by microeconomic production functions
ANS: C PTS: 1 DIF: Difficulty: Challenging
32. If the marginal product of labor is positive and increasing, then the total product of labor curve is
a. constant
b. upward sloping and becoming steeper
c. downward sloping and becoming flatter
d. lies above the total cost curve
e. lies below the total cost curve
ANS: B PTS: 1 DIF: Difficulty: Challenging
33. In Figure 7-4, marginal product of labor is increasing for levels of employment
a. between 0 and 35 workers
b. equal to 35 workers
c. between 35 and 80 workers
d. greater than 80 workers
e. none of the above
ANS: A PTS: 1 DIF: Difficulty: Easy
34. In Figure 7-4, marginal product of labor is diminishing for levels of employment
35. In Figure 7-4, marginal product of labor is positive for levels of employment
36. In Figure 7-4, marginal product of labor is negative for levels of employment
37. Consider the total product curve depicted in Figure 7-5. The firm experiences the greatest marginal
returns to labor
a. when employing more than 200 workers
b. when employing between 80 and 200 workers
c. when employing 80 workers
d. when employing between zero and 80 workers
e. at all levels of employment
38. The change in total output when one additional unit of labor is hired is known as the
a. capacity utilization rate
b. average product of labor
c. marginal product of labor
d. total product of labor
e. marginal output of labor
39. Sunk costs should be ignored in decision making because they

a. increase the cost of the transaction
b. lead to an increase in the opportunity cost of any decision
c. have already been paid
d. often exceed marginal and average costs
e. are usually negligible when compared with the explicit costs of decisions
TOP: Thinking about Costs KEY: Bloom's: Comprehension
40. Last month, Sally spent $3,000 in repairing her old car. Now her car requires an additional $2,000 in
repairs. She could get a comparable car for $2,500. She should
a. repair her car because the money she has already spent repairing the car ($3,000) exceeds
the price of the new car ($2,500)
b. buy a new car because sunk costs should be ignored in decision making
c. buy a new car because the price of the new car ($2,500) is less than the total amount she
would spend on her current car ($5,000)
d. repair her car since the cost of repairing it is lower than the cost of buying another car
e. repair the car or buy a comparable one because the opportunity costs are the same
ANS: D PTS: 1 DIF: Difficulty: Challenging
TOP: Thinking about Costs KEY: Bloom's: Analysis
41. A firm's total cost of production is the

a. employees' opportunity cost
b. owners' opportunity cost
c. owners' opportunity cost minus the employees' opportunity cost
d. owners' opportunity cost plus the employees' opportunity cost
e. employees' opportunity cost minus the owners' opportunity cost
TOP: Thinking about Costs KEY: Bloom's: Knowledge
42. Which of the following is irrelevant when deciding whether to undertake an action?
a. opportunity costs
b. implicit costs
c. sunk costs
d. implicit costs and explicit costs
e. fixed costs and implicit costs
43. A corporation has been steadily losing money on one of its product lines. The factory used to produce
that brand cost $20 million to build. The firm now is considering an offer to buy that factory for $15
million. Which of the following statements about the decision to sell or not is correct?
a. The firm should turn down the purchase offer because the factory cost more than $15
million to build.
b. The $20 million spent on the factory is a sunk cost that should not affect the decision.
c. The $20 million spent on the factory is an implicit cost that should be included in the
decision.
d. The firm should sell the factory only if it can reduce its costs elsewhere by $5 million.
e. The firm's opportunity cost would be $35 million if it decides to sell the factory.
44. A firm's total cost of production is

a. the owners' opportunity cost
b. labor costs plus the cost of materials
c. the payments for its inputs
d. depreciation plus payments for inputs
e. taxes plus depreciation plus payments for inputs
45. A sunk cost is one that

a. changes as the level of output changes in the short run
b. was paid in the past and will not change regardless of later decisions
c. should determine the rational course of action in the future
d. has the most impact on profit-maximizing decisions
e. influences rational decision makers
46. Bob gives up his factory job in order to open a bait-and-tackle shop. The earnings from his factory job
represent
a. the hourly wage paid by the shop
b. the marginal cost of running the shop
c. the average cost of running the shop
d. a fixed cost that can vary in the long run
e. an implicit cost of opening the shop
47. Samantha has been working for a law firm and earning an annual salary of $90,000. She decides to
open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment
rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper.
Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she
was earning annual interest of $1,000. Assuming that there are no additional expenses, Samantha's
total annual cost of production will equal
a. $55,200
b. $221,400
c. $91,000
d. $146,200
e. $145,200
annual explicit costs will equal
a. $55,200
b. $221,400
c. $91,000
d. $146,200
e. $145,200
annual implicit costs will equal
a. $55,200
b. $221,400
c. $91,000
d. $146,200
e. $145,200
50. Which of the following is an implicit cost?

a. salaries paid to owners who work for their own firm
b. interest on money borrowed to finance equipment purchases
c. cash payments for raw materials
d. wages paid to hourly employees
e. foregone rent on office space owned and used by the firm
51. Which of the following is an implicit cost?

a. salaries paid to owners who work for their own firm
b. interest on money borrowed to finance equipment purchases
c. cash payments for raw materials
d. wages paid to hourly employees
e. foregone interest on money taken from bank accounts to buy equipment
52. A firm's explicit costs are

a. the opportunity costs of the owners
b. its depreciation costs
c. the money paid for use of inputs
d. the foregone rents on owner occupied office space
e. irrelevant to the determination of economic profit
53. A firm's implicit costs are

a. its maintenance costs
b. its paid-out costs of production
c. its main source of executive costs
d. irrelevant to the determination of economic profit
e. opportunity costs of production that do not involve money outlays
54. Total fixed costs decrease as output expands.

a. True
b. False
TOP: Costs in the Short Run KEY: Bloom's: Comprehension
55. The spreading of fixed costs over more output explains why the long-run average cost falls as output
rises.
a. True
b. False
56. Which of the following, necessarily, equals zero when the firm's short-run output level is zero?
a. sunk costs
b. fixed costs
c. implicit costs
d. variable costs
e. opportunity costs
57. Variable costs are

a. the same as sunk costs
b. irrelevant to decision making, because they are sunk
c. the costs of inputs that vary with the level of production
d. the costs of inputs that do not vary with the level of production
e. the additional total cost associated with producing an additional unit of output
TOP: Costs in the Short Run KEY: Bloom's: Knowledge
58. Total cost is

a. fixed cost plus variable cost
b. irrelevant to decision making
c. marginal cost plus fixed cost
d. total product minus total input
e. the additional cost associated with producing an additional unit
59. Average fixed cost is

a. the sum of variable and fixed costs
b. total cost minus variable cost
c. variable cost plus marginal cost
d. total fixed cost per unit of output
e. constant as output changes
60. Average variable cost is

a. total cost minus fixed cost
b. total variable cost divided by the quantity of output
c. total cost plus marginal cost
d. total cost per unit of output
e. output divided by the quantity of inputs used
ANS: B PTS: 1 DIF: Difficulty: Easy
61. Average total cost is

a. the change in cost as output decreases
b. the change in cost as output increases
c. TC / quantity of output
d. MC - TC
e. AVC - AFC
62. Average variable cost is

a. the change in cost as output decreases
b. the change in cost as output increases
c. TC / quantity of output
d. TVC / quantity of output
e. AFC + AVC
63. Marginal cost is

a. the increase in total cost from producing one more unit of output
b. total variable cost per unit of output
c. fixed cost per marginal unit
d. average total cost divided by the quantity of inputs used
e. total cost per unit of output
64. In the short run, costs that arise from resources that cannot vary in quantity are known as
____________, whereas costs from inputs that can vary in quantity are known as ____________.
a. fixed costs; variable costs
b. explicit costs; implicit costs
c. opportunity costs; variable costs
d. fixed costs; opportunity costs
e. variable costs; fixed costs
65. Which of the following formulas is not correct?

a. ATC = AVC + (TFC/Q)
b. TVC = TC/Q
c. TC = TFC + TVC
d. AFC = TFC/Q
e. TVC = AVC  Q
66. The vertical distance between a firm's total cost curve and its total variable cost curve
a. is zero
b. is negative when the firm incurs fixed costs in the short run
c. represents total fixed costs
d. represents marginal costs
e. represents average fixed costs
67. A firm's cost of variable inputs per unit of output is known as

a. average total cost
b. average fixed cost
c. marginal cost
d. total variable cost
e. average variable cost
68. The change in cost resulting from producing one additional unit of output is
b. total variable cost
c. average variable cost
d. marginal cost
e. total cost
Figure 7-6
Tons
Output (Q) Cost (TC)
0 $1,000
1 $1,400
2 $2,000
3 $2,400
4 $2,600
5 $2,700
69. Figure 7-6 shows the total cost for six different levels of output for a particular firm. What is the
average total cost (ATC) of producing four units of output?
a. $2,600
b. $200
c. $650
d. $50
e. $10,400
TOP: Costs in the Short Run KEY: Bloom's: Analysis
70. Figure 7-6 shows the total cost for six different levels of output for a particular firm. What is the
marginal cost (MC) of the last unit of output listed in the table (i.e., the fifth unit of output)?
a. $2,700
b. $540
c. $100
d. $90
e. $500
71. Figure 7-6 shows the total cost for six different levels of output for a particular firm. Total fixed cost
(TFC) if five units of output are produced is
a. $1,700
b. $540
c. $1,000
d. $100
e. $2,700
72. If Babette's Bicycle shop can rebuild three bicycles for $200 and four bicycles for $240, then the
average variable cost of four bicycles
a. equals $40
b. cannot be determined without more information
c. equals $60
d. equals $240
e. equals $10
73. Which of the following always decreases as output increases?

a. ATC
b. MC
c. AFC
d. TC
e. TVC
74. If a firm increases its output level in the short run, then
a. variable cost rises but fixed cost remains unchanged
b. both variable cost and fixed cost rise
c. variable cost rises, but fixed cost fall
d. both variable cost and fixed cost fall
e. variable cost remains unchanged, but fixed cost rises
75. Which of the following is the best example of a variable cost?

a. property taxes
b. lease payments for equipment rental
c. rent on office space
d. wages for hourly workers
e. interest on outstanding loans
76. To produce a firm's current output level, total cost is $600, and the total variable cost is $450.
Therefore, the firm has
a. a marginal cost of $150
b. sunk costs of $150
c. a marginal cost of $1,450
d. total fixed cost of $1,450
e. total fixed cost of $150
77. At a firm's current output level of 200 units per week, it has 10 employees at a weekly wage of $500
each. Raw materials, which are ordered and delivered daily, cost $1,000 per week. The weekly cost of
the firm's capital is $1,250. Which of the following statements is correct?
a. Total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250.
b. Total variable cost is $6,000; total fixed cost is $1,250; total cost is $7,250.
c. Total variable cost is $1,250; total fixed cost is $6,000; total cost is $7,250.
d. Total variable cost is $2,250; total fixed cost is $500; total cost is $2,750.
e. Total variable cost is $1,500; total fixed cost is $1,250; total cost is $2,750.
78. As a firm increases its output in the short run, average fixed cost
a. rises steadily
b. falls and then rises
c. falls steadily
d. rises and then falls
e. remains unchanged
Figure 7-7
Short-run Costs
Output TVC
0 $0
10 $200
20 $350
30 $575
40 $900
79. Figure 7-7 shows a firm's total variable cost for different daily output levels. In addition, the firm has
total fixed cost of $50 per day. If output increases from 20 to 30 units, average total cost rises from
a. $17.50 to $19.17, and marginal cost is $225.00
b. $400 to $625, and marginal cost is $225.00
c. $15.00 to $22.50, and marginal cost is $22.50
d. $20.00 to $20.83, and marginal cost is $22.50
e. $20.00 to $20.83, and marginal cost is $225.00
80. Figure 7-7 shows a firm's total variable cost for different daily output levels. In addition, the firm has
total fixed cost of $50 per day. At an output level of 20 units, average variable cost is
a. $75.00, and average fixed cost is $2.50
b. $17.50, and average fixed cost is $50.00
c. $150.00, and average fixed cost is $2.50
d. $7.50, and average fixed cost is $50.00
e. $17.50, and average fixed cost is $2.50
81. If the marginal product of labor rises, the marginal cost of output
a. rises
b. falls
c. remains constant
d. rises and then falls
e. dampens
82. If the marginal product of labor falls, the marginal cost of output
a. declines, then increases
b. becomes negative
c. rises
d. remains constant
e. falls
83. Figure 7-8 shows three different cost curves, labeled A, B, and C. Which of these curves is most likely
to represent marginal cost?
a. curve A
b. curve B
c. curve C
d. neither A, B, nor C
e. cannot be determined without more information
84. Figure 7-8 shows three different cost curves, labeled A, B, and C, for a firm. Which of these curves
could most likely represent average total cost?
a. curve A
b. curve B
c. curve C
d. curves A or B
e. none of the curves can represent total cost
85. Figure 7-8 shows three different cost curves, labeled A, B, and C for a firm. What does curve C most
likely represent?
b. marginal cost
c. total cost
d. average fixed cost
e. total fixed cost
86. Whenever marginal cost is below average cost, average cost must fall as output increases.
a. True
b. False
87. The minimum points of the average variable cost and average total cost curves occur where
a. the marginal cost curve lies below the average variable cost and average total cost curves
b. the marginal cost curve intersects those curves
c. wages are the lowest
d. the slope of total cost is the smallest
e. the elasticity of demand is unitary
88. If marginal cost is greater than average total cost then

a. profits are increasing
b. economies of scale are becoming greater
c. average total cost remains constant
d. average total cost is increasing
e. average total cost is decreasing
89. Figure 7-9 shows three different cost curves, labeled A, B, and C, for a firm. Which of these curves is
most likely to represent average fixed cost?
a. curve A
b. curve B
c. curve C
d. neither A, B, nor C
e. cannot be determined without more information
90. Which of the following is true about the relationships among various cost curves?
a. When MC exceeds ATC, ATC must be rising.
b. When MC exceeds ATC, ATC could be rising or falling.
c. When ATC is falling, MC must exceed ATC.
d. When TC is rising, MC must exceed TC.
e. TC falls when AFC falls.
91. If Papagna's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.00 and that the average
total cost of making 499 pizzas is $3.30, then
a. average costs are rising at Q = 500
b. average costs are falling at Q = 500
c. total costs are falling at Q = 500
d. average variable costs must be falling
e. average variable costs must be rising
92. The vertical distance between a firm's average total cost curve and its average variable cost curve is its
a. marginal cost
b. sunk cost
c. total variable cost
d. total fixed cost
e. average fixed cost
93. The Marginal Cost curve will

a. cut ATC at the minimum of ATC but cut AVC at a point to the left of the minimum of
AVC.
b. cut ATC at the minimum of ATC but cut AVC at a point to the right of the minimum of
AVC.
c. cut AVC at the minimum of AVC but cut ATC at a point to the left of the minimum of
ATC.
d. cut AVC at the minimum of AVC but cut ATC at a point to the right of the minimum of
ATC.
e. cut both ATC and AVC at their respective minimums
94. Average Fixed Cost is the

a. horizontal distance (at any particular cost level) between ATC and AVC
b. vertical distance (at any particular quantity) between ATC and AVC
c. vertical distance (at any particular quantity) between ATC and the horizontal axis
d. vertical distance (at any particular quantity) between AVC and the horizontal axis
e. horizontal distance (at any particular cost level) between ATC and the vertical axis
95. The marginal cost curve crosses

a. both the average total cost and average variable cost curves at their respective minimum
points
b. the average total cost curve at its minimum point, and the average variable cost curve at its
maximum point
c. the average total cost curve and the average variable cost curves at the same output level
d. both the average total cost and average variable cost curves at their respective maximum
points
e. the average total cost curve at its maximum point, and the average variable cost curve at
its minimum point
96. The total cost to a firm of producing zero units of output is

a. zero in both the short run and the long run
b. its fixed cost in the short run, zero in the long run
c. its fixed cost in the long run, zero in the short run
d. its fixed cost in both the short run and the long run
e. its variable cost in both the short run and the long run
TOP: Production and Cost in the Long Run KEY: Bloom's: Comprehension
97. Along its long-run total cost curve, a firm is producing

a. at the output level for each plant size that has the lowest cost
b. at the minimum points of its various total cost curves
c. each level of output using the input mix that has the lowest cost
d. each level of output using the fewest possible inputs
e. at the output level for each plant size that uses the fewest possible inputs
98. The least-cost rule for firms states that in the long run, firms will
a. produce output at the point where ATC is minimized
b. produce output at the point where MC is minimized
c. minimize variable costs
d. choose the output level with the lowest TC
e. choose the lowest-cost input combination for any output level
TOP: Production and Cost in the Long Run KEY: Bloom's: Knowledge
99. Along its long-run average total cost curve, a firm employs
a. a different amount of fixed inputs at each point
b. the same amount of fixed inputs at each point
c. a declining amount of fixed inputs at each point as it moves to higher output levels
d. an increasing amount of fixed inputs at each point as it moves to higher output levels
e. no fixed inputs
100. For a given level of output, the short-run total cost of production
a. always falls below the long-run total cost of production
b. always exceeds the long-run total cost of production
c. always equals the long-run total cost of production
d. may exceed or equal the long-run total cost of production
e. may exceed or fall below the long-run total cost of production
ANS: D PTS: 1 DIF: Difficulty: Challenging
101. Long-run average total cost must always be

a. rising
b. declining
c. greater than or equal to the marginal unit of variable cost
d. greater than or equal to the short run average total cost
e. less than or equal to short-run average total cost
102. In comparing long-run and short-run costs, which of the following statements is true at each level of
output?
a. long-run total cost is always less than short-run total costs
b. long-run total cost cannot exceed short-run total cost
c. long-run and short-run total costs are equal when fixed costs are large
d. firms usually make decisions about production levels based on long-run costs rather than
short-run costs
e. short-run total cost cannot exceed long-run total cost
103. The firm depicted in Figure 7-10 currently is producing 200 units of output per day. If it decides to
increase its output level to 375 units, then it will
a. adjust from point F to point G in the short run
b. be unable to adjust to point G in the short run because some inputs are fixed
c. be unable to adjust to point G in the long run because some are fixed
d. be unable to adjust to point H in the short run because some inputs are fixed
e. adjust from point F to point H in the long run
TOP: Production and Cost in the Long Run KEY: Bloom's: Analysis
104. The firm's long-run average total cost curve

a. intersects each short-run average total cost curve at its minimum point
b. lies below its short-run average total cost curves at every output level
c. lies above its short-run average total cost curves at every output level
d. coincides with a small segment of its short-run average total cost
e. touches each of the firm's short-run average total cost curves at the lowest points
105. The firm depicted in Figure 7-11 has a larger plant size at point
a. H than at point F
b. F than at point H
c. F than at point G
d. G than at point H
e. H than at point G
TOP: Production and Cost in the Long Run KEY: Bloom's: Analysis
106. A lumpy input is one that

a. is infinitely divisible
b. is not smooth
c. can only be adjusted in large amounts
d. can not be legally employed
e. can be easily adjusted in small amounts
TOP: Production and Cost in the Long Run KEY: Bloom's: Knowledge
107. Which of the following would be an excellent example of a lumpy input

a. pancake griddles
b. water
c. labor
d. corn
e. pancake batter
TOP: Production and Cost in the Long Run KEY: Bloom's: Application
108. Which of the following explains why long-run average total cost at first decreases as output increases?
a. diseconomies of scale
b. less efficient use of lumpy inputs
c. fixed costs become spread out over more units of output
d. gains from specialization of inputs
e. marginal costs rise at a slower rate than average costs in the short run
109. If a firm increases its output level by 50 percent and, as a result, long-run total cost rises by 40 percent,
the firm is experiencing
b. constant returns to scale
c. economies of scale
d. increasing marginal returns
e. diminishing marginal returns
110. Assume that an industry requires a very specialized technology that involves high start-up costs for
new firms no matter what level of output they produce. In the long run, at low levels of output, these
firms will tend to exhibit
a. diminishing marginal returns
b. increasing marginal returns
c. diseconomies of scale
d. constant returns to scale
e. economies of scale
111. When long-run average total cost decreases as output increases, a firm experiences
a. increasing average fixed cost
b. decreasing total cost
c. economies of scale
d. diseconomies of scale
e. constant returns to scale
112. If a firm experiences economies of scale, then, as output increases,

a. short-run total costs decline
b. long-run total costs rises proportionately more than output
c. short-run marginal cost must decline
d. long-run total cost rises proportionately less than output
e. demand increases
113. When firms become so large that they have to add additional layers of management and decision
making becomes more cumbersome,
a. economies of scale are said to occur
b. marginal cost begins to fall in the short run
c. marginal cost begins to rise in the short run
d. the long-run average total cost curve is flat
e. the long-run average total cost curve slopes upward
114. Diseconomies of scale tend to occur in large firms because

a. the many layers of management are cumbersome and because it is difficult to monitor
employees
b. such firms are operating at inappropriate plant sizes for their output levels
c. such firms are operating at a point above their long-run average total cost curves
d. their ability to adjust their plant sizes is constrained by the existence of fixed inputs
e. they fail to garner all the possible gains from specialization
115. When long-run average total cost increases as output increases, a firm experiences
b. economies of scale
c. constant returns to scale
d. decreasing marginal cost
e. greater total cost in the long run than in the short run
116. If a firm experiences constant returns to scale at all output levels, then its long-run average total cost
curve would
a. slope downward
b. be horizontal
c. slope upward
d. slope downward for low output levels and upward for high output levels
e. slope upward for low output levels and downward for high output levels
117. If a firm is experiencing constant returns to scale

a. long-run average total cost neither rises nor falls as production increases
b. average fixed cost is zero
c. the increase in average variable cost is exactly offset by a decrease in average fixed cost
d. the decrease in average variable cost is exactly offset by an increase in average fixed cost
e. long-run average total cost is zero.
118. A firm's minimum efficient scale is defined as

a. the output level at which LRATC first reaches its minimum level
b. any output level at which LRATC is minimized
c. the highest output level at which LRATC takes on its minimum value
d. the output level at which the firm charges its highest price
e. the lowest output level at which the firm can charge a positive price
TOP: Using the Theory: The Urge to Merge KEY: Bloom's: Knowledge
119. If all firms in a market have the same LRATC curve,

a. only one of them can survive in the long run
b. the lowest possible long-run price is determined by LRATC at minimum efficient scale
c. the highest possible long-run price is determined by LRATC at minimum efficient scale
d. minimum efficient scale must be zero
e. there is no minimum efficient scale
TOP: Using the Theory: The Urge to Merge KEY: Bloom's: Comprehension
120. If minimum efficient scale is small relative to the maximum potential market,
a. relatively large firms will have a cost advantage over relatively small firms
b. the market price will be low
c. relatively small firms will have a cost advantage over relatively large firms
d. the market price will be high
e. only one firm will survive in the long run.
121. In many markets for personal services (such as shoe repair or lawn care) with low start-up costs,
a. production exhibits constant returns to scale
b. economies of scale are exhausted rapidly
c. economies of scale are exhausted slowly
d. economies of scale are never exhausted
e. there are only short-run costs, no long-run costs
122. If significant economies of scale continue as output increases,

a. then small firms enjoy a cost advantage over large firms
b. minimum efficient scale is small relative to market demand
c. we have the case of a natural monopoly
d. the market will disappear in the long run.
e. all firms will become large.
TOP: Using the Theory: The Urge to Merge KEY: Bloom's: Knowledge
123. Suppose that minimum efficient scale is approximately 20 percent of maximum potential market
demand. In that case,
a. there will be approximately 20 firms in the market
b. we should expect to see a few large competitors
c. we should expect to see many small competitors
d. we should expect a natural monopoly to emerge
e. minimum efficient scale is too small for perfect competition to exist
TOP: Using the Theory: The Urge to Merge KEY: Bloom's: Analysis
124. If minimum average cost is the same over a large range of output,
a. the market will evolve into a natural monopoly
b. minimum efficient scale is large as well
c. only a few large firms will survive in the long run
d. smaller firms have a cost advantage over larger firms
e. firms of varying sizes can coexist
ANS: E PTS: 1 DIF: Difficulty: Challenging
125. Suppose that (1) LRATC is minimized at $60 when 30,000 units are being produced, (2) the quantity
demanded at a price of $60 is 150,000 units, and (3) there are currently 10 firms producing in the
market. Then,
a. we should expect competition to result in a decrease in the number of firms
b. we should expect a natural monopoly to emerge
c. we should expect some existing firms to divide up into smaller firms.
d. the LRATC curve will shift upward in the long run
e. the LRATC curve will shift downward in the long run.
TOP: Using the Theory: The Urge to Merge KEY: Bloom's: Analysis
126. If firms in a market have been prohibited from reaching the minimum efficient scale,
a. the market is probably perfectly competitive.
b. the market is probably a monopoly.
c. mergers will result if the restrictions are eliminated.
d. the LRATC curve has been shifting upward.
e. the LRATC curve has been shifting downward.
127. A merger wave can be set off

a. by government restrictions that prevent firms from reaching their minimum efficient scale
b. if the federal government raises corporate income taxes.
c. if the federal government lowers corporate income taxes
d. if minimum efficient scale falls
e. by some change in a market, such as a shift in market demand.
ANS: E PTS: 1 DIF: Difficulty: Challenging
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(Made pure of mortal spots which did it stain,
And endless, which even death cannot impair),
I place on Him who will it not disdain.”
(Poems, Second Pt. S. x
This is a note heard in other poets where heavenly love is described as
naturally growing out of earthly love when the right idea of the nature of
the object of that lower passion has been learned. Thus in Milton it is
taught that the love of woman must not be passion, but must be a scale
by which the mind may mount to the heavenly world. The passion which
Adam feels for the loveliness that hedges the presence of Eve—
“when I approach
Her loveliness, so absolute she seems
And in herself complete, so well to know
Her own, that what she wills to do or say
Seems wisest, virtuousest, discreetest, best:
· · · · ·
and, to consummate all,

Greatness of mind and nobleness their seat
Build in her loveliest, and create an awe
About her, as a guard angelic placed—”
(VIII. 546–55
is described by Raphael “with contracted brow” as merely transported
touch, in reality the same feeling shared by the beasts of the field. (VIII.
582.) Raphael, accordingly, directs Adam to love only the rational in
Eve’s nature, for true love has his seat in the reason.
“What higher in her society thou find’st
Attractive, human, rational, love still:
In loving thou dost well, in passion not,
Wherein true Love consists not. Love refines
The thoughts, and heart enlarges—hath his seat
In Reason, and is judicious, is the scale
By which to Heavenly Love thou may’st ascend,
Not sunk in carnal pleasure.”
(VIII. 586–59
In Phineas Fletcher’s sixth “Piscatorie Eclogue,” where there is a long
discussion on the nature of love, human love is shown to be a love
merely of the passing charms of woman: of her form, which will decay;
of her voice, which is but empty wind; and of her color, which can move
only the sense. (Stz. 20–22.) No attempt is made to describe the nature
of the higher love, but a simple exhortation to raise this love of woman
to a love of the “God of fishers” closes the account.
“Then let thy love mount from these baser things,
And to the Highest Love and worth aspire:
Love’s born of fire, fitted with mounting wings;
That at his highest he might winde him higher;
Base love, that to base earth so basely clings!
· · · · ·
“Raise then thy prostrate love with tow’ring thought;

And clog it not in chains and prison here:
The God of fishers, deare thy love hath bought:
Most deare He loves; for shame, love thou as deare.”
(Stz. 24, 2
Heavenly love, then, whether springing from the desire within the
soul to see wisdom in her beauty, or from a desire to raise the mind
from a love of earth to the intelligible world, or from the desire to find a
worthy object in the love of the rational in woman, when freed from all
the grossness of physical passion, is a contemplative love of a less
perishing beauty than can be found on earth. And just as the transition
was easy from the love which God himself knows to the soul’s love of
God, so was the change from the love of soul for a higher reality than
earthly beauty to the immortal love of God for the soul. Thus in Sidney’s
sonnet the subtle change is effected.
“Leave me, O Love, which reachest but to dust,
And thou my mind aspire to higher things:
Grow rich in that which never taketh rust:
Whatever fades, but fading pleasure brings.
Draw in thy beames, and humble all thy might,
To that sweet yoke, where lasting freedomes be:
Which breakes the clowdes and opens forth the light,
That doth both shine and give us sight to see.
O take fast hold, let that light be thy guide,
In this small course which birth drawes out to death,
And thinke how evill becommeth him to slide,
Who seeketh heav’n, and comes of heav’nly breath.
Then farewell world, thy uttermost I see,
Eternall Love maintaine thy life in me.”
(S.
The appeal which Platonism made to the English poets in its doctrine
of a heavenly love was through its power to stir the minds with a deep
sense of that beauty which God was understood to possess. The
application of the principle of beauty to God resulted in a note of joy
and in an exaltation of soul in the religious mind, which, after forsaking
the beauty of this world of sense, could enjoy the great principle of
beauty in the beatific vision of God. Such a strain of joy may be heard in
Drummond, in John Norris, and even in the quiet lyrics of George
Herbert.
The sight of God in His absolute beauty is considered by these poets
as the end of the soul’s endeavor. According to John Norris God is the
divine excellence,
“Which pleases either mind or sense,
Tho’ thee by different names we call!
Search Nature through, there still wilt be
The Sum of all that’s good in her Variety.”
He thus exhorts the soul to rise to a sight of Him.

“But do not thou, my Soul, fixt here remain,
All streams of Beauty here below
Do from that immense Ocean flow,
And thither they should lead again.
Trace then these Streams, till thou shalt be
At length o’erwhelm’d in Beauty’s boundless Sea.”
(“Beauty,” stz. 4, 1
According to Drummond, the one “choicest bliss” of life is the
possession of God’s beauty as a burning passion within the soul. In “An
Hymn of True Happiness” he teaches that supreme felicity does not
consist in the enjoyment of earth’s treasures, of sensuous beauty, or of
other sensual delights, and not even in knowledge and fame.
“No, but blest life is this,
With chaste and pure desire,
To turn unto the loadstar of all bliss,
On God the mind to rest,
Burnt up with sacred fire,
Possessing him, to be by him possesst.”
(ll. 61–66.)
“A love which, while it burns

The soul with fairest beams,
In that uncreated sun the soul it turns,
And makes such beauty prove,
That, if sense saw her gleams,
All lookers-on would pine and die for love.”
(ll. 97–10
The essential nature of this beatific vision is described either as a
sense of eternal rest or of eternal joy. In Norris’s “Prospect,” the soul is
preparing for the great change that will come when it is free from the
body; and its greatest change is described as a sight of “the only Fair.”
“Now for the greatest Change prepare,
To see the only Great, the only Fair,
Vail now thy feeble eyes, gaze and be blest;
Here all thy Turns and Revolutions cease,
Here’s all Serenity and Peace:
Thou’rt to the Center come, the native seat of rest.
Here’s now no further change nor need there be;
When One shall be Variety.”
(Stz.
In Drummond’s “Teares on the Death of Mœliades” the joy of the
departed soul is repeatedly emphasized as a rest in the enjoyment of
God’s beauty. Thus, in closing, the dead is addressed:
“Rest, blessed spright, rest satiate with the sight
Of him whose beams doth dazzle and delight,
Life of all lives, cause of each other cause,
The sphere and centre where the mind doth pause;
Narcissus of himself, himself the well,
Lover, and beauty, that doth all excel.
Rest, happy ghost, and wonder in that glass
Where seen is all that shall be, is, or was,
While shall be, is, or was do pass away,
And nought remain but an eternal day:
For ever rest.”
(ll. 179–18
The note of joy in the beatific vision is heard in Drummond and
Norris. In Drummond earthly love is a care, a war within our nature;
but love
“Among those sprights above
Which see their Maker’s face,
It a contentment is, a quiet peace,
A pleasure void of grief, a constant rest,
Eternal joy which nothing can molest.”
(“Urania,” Madrigal
And again:
“O blest abode! O happy dwelling-place
Where visibly th’ Invisible doth reign!
Blest people, who do see true beauty’s face,
With whose dark shadows he but earth doth deign,
All joy is but annoy, all concord strife,
Match’d with your endlesse bliss and happy life.”
(“Urania,” S
In Norris’s “Seraphick Love” a more violent strain is detected. He has
forsaken the beauty of earth because he has seen a fairer beauty in
contemplation, and to this source of all good and beauty he thus
addresses the close of his poem.
“To thee, thou only Fair, my Soul aspires
With Holy Breathings, languishing Desires
To thee m’ inamour’d, panting Heart does move,
By Efforts of Ecstatic Love.
How do thy glorious streams of Light
Refresh my intellectual sight!
Tho broken, and strain’d through a Skreen
Of envious Flesh that stands between!
When shall m’ imprison’d Soul be free,
That she thy Native Uncorrected Light may see,
And gaze upon thy Beatifick Face to all Eternity?”
(Stz.
The violence of passion in these poets is absent in George Herbert,
and even the presence of the beatific vision, as a conscious experience of
the soul known after the long travail of its search for beauty, is not in
the least discernible. Still, the conviction that there is a higher beauty
than that seen on earth, and that in truth lies this beauty, is felt beneath
the mildness of Herbert’s devotion. In two sonnets, which he sent to his
mother in 1608, he laments the decay of any true love for God among
the poets, and contrasts the beauty of God with the beauties of the
amorists. To him the beauty of God lies in the discovery.
“Such poor invention burns in their [the amorists’] low minde,
Whose fire is wild, and doth not upward go
To praise, and on Thee, Lord, some ink bestow.
Open the bones, and you shall nothing finde
In the best face but filth; when, Lord, in Thee
The beauty lies in the discoverie.”
(S
He is, accordingly, content to sing the praises of God.
“Let foolish lovers, if they will love dung,
With canvas, not with arras, clothe their shame;
Let Follie speak in her own native tongue:
True Beautie dwells on high; ours in a flame
But borrow’d thence to light us thither;
Beautie and beauteous words should go together.”
(“The Forerunners,” ll. 25–3
So intimately has this notion of the spiritual nature of true beauty
blended with the simple experience of his devotional life that he can ask
“Is there in truth no beautie?
Is all good structure in a winding-stair?
May no lines passe, except they do their dutie
Not to a true, but painted chair?
· · · · ·
Must purling streams refresh a lover’s loves?

Must all be vail’d while he that reades divines,
Catching the sense at two removes?”[7]
As for himself, he says:

“I envie no man’s nightingale or spring;
Nor let them punish me with loss of rhyme,
Who plainly say, My God, my King.”
(“Jordan
In that truth he found his beauty.
Platonism, then, came as a direct appeal to the religious mind of the
sixteenth and seventeenth centuries which was so constituted that the
element of philosophic revery was blended most naturally with a strain
of pure devotional love. Although the ultimate postulates of that
philosophy were intellectual principles, they were such as could be
grasped by the soul only in its deep passion of love for spiritual beauty.
The condemnation which Baxter passes upon other philosophies could
not be brought with truth against Platonism. “In short,” he says, “I am
an enemy of their philosophy that vilify sense.... The Scripture that saith
of God that He is life and light, saith also that He is love, and love is
complacence, and complacence is joy; and to say God is infinite,
essential love and joy is a better notion than with Cartesians and
Cocceians to say that God and angels and spirits are but a thought or an
idea. What is Heaven to us if there be no love and joy?”[8] This desire of
life and love, along its upper levels of thought, was satisfied by
Platonism; it enabled the poets to forecast the life of the soul in heaven,
and of its anticipation on earth as a love of beauty.
There was a strong tendency, however, throughout this period of
religious poetry, toward a phase of devotional love which may be called
erotic mysticism, or that love for Christ which is characterized less by
admiration and more by tenderness and mere delight in the pure
sensuous experience of love. Contemplation of Christ’s divine nature as
essential beauty is totally absent from this passion. Christ as the object
of this love is conceived only as the perfection of physical beauty; and
the response within the soul of the lover is that of mere sensuous delight
either in the sight of his personal beauties or in the realization of the
union with him. This strain of religious devotion is heard in Herbert, in
Vaughan, and Crashaw. In Herbert, who confessed that he entered the
service of the church in order to be like Christ, “by making humility
lovely,”—a confession which breathes pure emotion,—there was joined
so sensuous a strain that “he seems to rejoice in the thoughts of that
word Jesus, and say, that the adding these words, my Master, to it, and
often repetition of them, seemed to perfume his mind, and leave an
oriental fragrancy in his very breath.”[9] The spectacle of the crucified
Saviour of man was especially influential in keeping this strain of
mystical devotion alive; and the minds of these poets are continually
dwelling upon the beauty of his mangled hands and feet. In a nature so
eminently intellectual as John Donne’s, this strain of feeling is still
present, and in his explanation of the grounds for such a love is found
an excellent account of its varying phases. In one of his sermons he
says:
“I love my Saviour, as he is the Lord, he that studies my salvation: and
as Christ, made a person able to work my salvation; but when I see him
in the third notion, Jesus, accomplishing my salvation, by an actual
death, I see those hands stretched out, that stretched out the heavens,
and those feet racked, to which they that racked them are footstools: I
hear him, from whom his nearest friends fled, pray for his enemies, and
him, whom his Father forsook, not forsake his brethren: I see him that
clothes this body with his creatures, or else it would wither, and clothes
this soul with his righteousness, or else it would perish, hang naked
upon the cross; ... when I conceit, when I contemplate my Saviour thus,
I love the Lord, and there is reverent adoration in that love, I love
Christ, and there is a mysterious adoration in that love, but I love Jesus,
and there is a tender compassion in that love....” (Works, II. 181.)
Whenever Platonism enters into this tender passion it always elevates
the emotion into a higher region, where the more intellectual or
spiritual nature of Christ or God is the object of contemplation; and it
does this by affording the poets a conception of the object of the soul’s
highest love, as a philosophical principle, whether of beauty, of good, or
of true being.
The first way by which this elevation of a purely sensuous passion into
a higher region was effected was through the Platonic conception of the
“idea.” Plato had taught that in love the mind should pass from a sight
of the objects of beauty through ever widening circles of abstraction to
the contemplation of absolute beauty in its idea. This can be known only
by the soul, and is the only real beauty. Spenser’s “Hymne of Heavenly
Love” is the best example of the application of this idea to the love of
Christ. In this poem he sings the praise of Christ as the God of Love. He
finds the chief manifestation of Christ’s love in his sacrifice. At first he
treats this as a spectacle to move the eye. He dwells upon the mangling
of Christ’s body (ll. 241–247), and exhorts the beholder to
“bleede in every vaine,
At sight of his most sacred heavenly corse.”
(ll. 251–25
But later, instead of calling upon the beholder to lift up his “heavie
clouded eye” to behold such a manifestation of mercy (ll. 226–227), he
directs him to lift up his mind and meditate upon the author of his
salvation (l. 258). Christ’s love then will burn all earthly desire away by
the power of
“that celestiall beauties blaze,”
(l. 28
whose glory dazes the eye but illumines the spirit. And then, when this
final stage of refinement is past, the ravished soul of the beholder shall
have a sight not of
“his most sacred heavenly corse”
(l. 25
but of the very idea of his pure glory.
“Then shall thy ravisht soule inspired bee
With heavenly thoughts, farre above humane skill,
And thy bright radiant eyes shall plainely see
Th’ Idee of his pure glorie present still,
Before thy face, that all thy spirits shall fill
With sweet enragement of celestiall love,
Kindled through sight of those faire things above.”
(ll. 284–29
The “Hymne,” which celebrates the life of Christ on earth as a man
among men, closes, as it had begun, with the mind in the presence of
heavenly beauty.
In Phineas Fletcher the term “idea” is not used, but the habit of
thought is identical with that of Spenser’s. Christ is to be seen by the
soul, not in his bodily form, but in his “first beautie” and “true
majestie.” In the passage where these expressions occur Fletcher is
showing the manner of the love we should bestow upon Christ for that
which he has shown to us. He says that the only adequate return is to
give back to Christ the love he has given to us. He then prays that Christ
will inflame man with his glorious ray in order that he may rise above a
love of earthly things into heaven.
“So we beholding with immortall eye
The glorious picture of Thy heav’nly face,
In His first beautie and true Majestie,
May shake from our dull souls these fetters base;
And mounting up to that bright crystal sphere,
Whence Thou strik’st all the world with shudd’ring fear,
May not be held by earth, nor hold vile earth so deare.”
(“The Purple Island,” VI. 7
In Crashaw’s “In the Glorious Epiphanie of Our Lord God,” the
elevation of the subject from a sensuous image into an object of pure
contemplation is effected by conceiving Christ’s nature as that of true
being according to the Platonic notion. The first image brought before
the mind is that of the Christ child’s face.
“Bright Babe! Whose awfull beautyes make
The morn incurr a sweet mistake;
For Whom the officious Heavns devise
To disinheritt the sun’s rise:
Delicately to displace
The day, and plant it fairer in Thy face.”
(ll. 1–
Soon, however, under this image of the face appears the hidden
conception of Christ as true being unchanging and everywhere present.
For Christ is addressed as
“All-circling point! all-centring sphear!
The World’s one, round, aeternall year:
Whose full and all-unwrinkled face
Nor sinks nor swells with time or place;
But every where and every while
Is one consistent, solid smile.”
(ll. 26–
The poem, then, which had begun with a recognition of the beauty of the
Babe’s eyes in whose beauty the East had come to seek itself, ends in a
desire not to know what may be seen with the eyes, but to press on,
upward to a purely intellectual object,—Christ in heaven.
“Thus we, who when with all the noble powres
That (at Thy cost) are call’d not vainly, ours:
We vow to make brave way
Upwards, and presse on for the pure intelligentiall prey.”
(ll. 220–22
In those passages in Henry More, where the mystic union of the soul
with Christ or God is symbolized as a sensuous experience, the elevating
power of Platonism is noticeable in the progression of the poet’s mind
out of this lower plane into a higher region of pure thought. Thus in
“Psychathanasia” the advance is made from a treatment of the
communion, which the blest have with Christ in their partaking His
body and blood, to a contemplation of the beauty of God. In this union,
which is shared by those
“whose souls deiform summitie
Is waken’d in this life, and so to God
Are nearly joynd in a firm Unitie,”
(III. i. 3
the true believers grow incorporate with Christ.
“Christ is the sunne that by his chearing might
Awakes our higher rayes to joyn with his pure light.
“And when he hath that life elicited,

He gives his own dear body and his bloud
To drink and eat. Thus dayly we are fed
Unto eternall life. Thus do we bud,
True heavenly plants, suck in our lasting food
From the first spring of life, incorporate
Into the higher world (as erst I show’d
Our lower rayes the soul to subjugate
To this low world) we fearlesse sit above all fate,
“Safely that kingdomes glory contemplate,

O’erflow with joy by a full sympathie
With that worlds spright, and blesse our own estate,
Praising the fount of all felicitie,
The lovely light of the blest Deitie.
Vain mortals think on this, and raise your mind
Above the bodies life; strike through the skie
With piercing throbs and sighs, that you may find
His face. Base fleshly fumes your drowsie eyes thus blind.”
(III. i. 31–3
In Giles Fletcher’s “Christ’s Triumph after Death” the most elaborate
attempt is made to convey the idea of the blessedness of the union of the
soul with God through the pleasure of mere sense and at the same time
to show how the object with which the soul is joined is in every respect a
super-sensible entity. At first the blessedness of the soul’s life in heaven
is presented both as a pleasurable enjoyment of the sense of sight, of
hearing, and even that of smell, and as a more spiritual pleasure in the
exercise of the faculties of understanding and will. Speaking of the joy of
those souls that ever hold
“Their eyes on Him, whose graces manifold
The more they doe behold, the more they would behold,”
Fletcher says:
“Their sight drinkes lovely fires in at their eyes,
Their braine sweet incense with fine breath accloyes,
That on God’s sweating altar burning lies;
Their hungrie eares feede on the heav’nly noyse,
That angels sing, to tell their untould joyes;
Their understanding, naked truth; their wills
The all, and selfe-sufficient Goodnesse, fills:
That nothing here is wanting, but the want of ills.”
(Stz. 3
Here the progression in the scale of pleasures is from those of the senses
to those of the mind.
But Fletcher presents this union as even a more intimate experience
of the soul. His is the most elaborate attempt in English poetry to
describe the nature of the participation of the soul in the beauty of the
ultimate reality, according to the Platonic notion of the participation of
an object in its idea. After three stanzas descriptive of the state of
absolute freedom from cares of life which reigns in heaven (stz. 35–37),
Fletcher passes on to a description of God—the “Idea Beatificall,” as he
names Him—in accordance with the Platonic notion of the highest
principle, The One:
“In midst of this citie cælestiall,
Whear the Eternall Temple should have rose,
Light’ned the Idea Beatificall:
End, and beginning of each thing that growes;
Whose selfe no end, nor yet beginning knowes;
That hath no eyes to see, nor ears to heare;
Yet sees, and heares, and is all-eye, all-eare;
That nowhear is contain’d, and yet is every whear:
“Changer of all things, yet immutable;

Before and after all, the first and last;
That, mooving all, is yet immoveable;
Great without quantitie: in Whose forecast
Things past are present, things to come are past;
Swift without motion; to Whose open eye
The hearts of wicked men unbrested lie;
At once absent and present to them, farre, and nigh.”
(Stz. 39–4
He then goes on to explain what the Idea is not. It is nothing that can be
known by sense. It is no flaming lustre, no harmony of sounds, no
ambrosial feast for the appetite, no odor, no soft embrace, nor any
sensual pleasure. And yet within the soul of the beholder it is known as
an inward feast, a harmony, a light, a sound, a sweet perfume, and
entire embrace. Thus he writes:
“It is no flaming lustre, made of light;
No sweet concent, as well-tim’d harmonie;
Ambrosia, for to feast the appetite,
Or flowrie odour, mixt with spicerie;
No soft embrace, or pleasure bodily;
And yet it is a kinde of inward feast,
A harmony, that sounds within the brest,
An odour, light, embrace, in which the soule doth rest.
“A heav’nly feast, no hunger can consume;

A light unseene, yet shines in every place;
A sound, no time can steale; a sweet perfume
No winds can scatter; an intire embrace
That no satietie can ere unlace.”
(Stz. 41–4
Such was the powerful hold of the doctrines of Platonism upon the
minds of these religious poets. Strong as were the forces leading them
into a degenerate form of Christian love, these were overcome by the
one fundamental conception of Platonism that the highest love the soul
can know is the love of a purely intellectual principle of beauty and
goodness; and that this love is one in which passion and reason are
wedded into the one supreme desire of the seeker after wisdom and
beauty. Such a conception saved a large body of English poetry from
degenerating into that form of erotic mysticism which Crashaw’s later
poems reveal; and in which there is no elevation of the mind away from
the lower range of sense enjoyment, but only an introversion of the
physical life into the intimacies of spiritual experience.
II. EARTHLY LOVE
The influence of Platonism upon the love poetry of the sixteenth and
seventeenth centuries in England is felt in two distinct forms. In the
first place, the teachings of that philosophy were used to explain and
dignify the conception of love as a passion having its source in a desire
for the enjoyment of beauty; and in the second place, the emphasis laid
by Platonism upon the function of the soul as opposed to the senses
resulted in a tendency to treat love as a purely spiritual passion devoid
of all sensuous pleasure. In the first phase the teachings of Platonic
theory were made to render service according to the conventional love
theory known as Petrarchism; and in its second phase Platonism
contributed its share in keeping alive the so-called metaphysical mood
of the seventeenth-century lyric.
According to the conventional method of Petrarchism, the object of
the poet’s love was always a lady of great beauty and spotless virtue, and
of a correspondingly great cruelty. Hence the subjects of the Petrarchian
love poem were either the praise of the mistress’s beauty or an account
of the torment of soul caused by her heartless indifference. By applying
the doctrines of Platonism to this conventional manner, a way was
found to explain upon a seemingly philosophic basis the power of the
lover’s passion and of beauty as its exciting cause. The best example in
English of this application of Platonic theory is Spenser’s two hymns,
—“An Hymne in Honour of Love” and “An Hymne in Honour of
Beautie.”
The professed aim of Spenser in these hymns differs in no wise from
the purpose of the Petrarchian lover. Both are written to ease the
torments of an unrequited passion. In the “Hymne in Honour of Love”
he addresses love in his invocation:
“Love, that long since hast to thy mighty powre,
Perforce subdude my poore captived hart,
And raging now therein with restlesse stowre,
Doest tyrannize in everie weaker part;
Faine would I seeke to ease my bitter smart,
By any service I might do to thee,
Or ought that else might to thee pleasing bee.”
(ll. 4–1
In his closing stanzas he expresses the wish of coming at last to the
object of his desire. (ll. 298–300.) In the “Hymne in Honour of
Beautie,” he openly confesses a desire that through his hymn
“It may so please that she at length will streame
Some deaw of grace, into my withered hart,
After long sorrow and consuming smart.”
(ll. 29–
The only respect in which these hymns differ from the mass of love
poetry of their time is in the method by which Spenser treated the
common subject of the poetical amorists of the Renaissance. In singing
the praises of love and beauty he drew upon the doctrines of Italian
Platonism, and by the power of his own genius blended the purely
expository and lyrical strains so that at times it is difficult to separate
them. The presence of Platonic doctrine, however, is felt in the dignified
treatment of the passion of love and of beauty.
In the “Hymne in Honour of Love” love is described as no merely
cruel passion inflicted by the tyrannical Cupid of the amorist, but as the
manifestation in man of the great informing power which brought the
universe out of chaos and which now maintains it in order and concord.
According to Ficino, the greatest representative of Italian Platonism
during the Renaissance, one truth established by the speech of
Eryximachus in the “Symposium” is that love is the creator and
preserver of all things. “Through this,” Ficino says in his
“Commentarium in Convivium,” “fire moves air by sharing its heat; the
air moves the water, the water moves the earth; and vice versa the earth
draws the water to itself; water, the air; and the air, the fire. Plants and
trees also beget their like because of a desire of propagating their seed.
Animals, brutes, and men are allured by the same desire to beget
offspring.” (III. 2.) And in summing up his discussion he says,
“Therefore all parts of the universe, since they are the work of one
artificer and are members of the same mechanism like to one another
both in being and in life, are linked together by a certain mutual love, so
that love may be rightly declared the perpetual bond of the universe and
the unmoving support of its parts and the firm basis of the whole
mechanism.” (III. 3.) Holding to this conception of love Spenser comes
to a praise of the
“Great god of might, that reignest in the mynd,
And all the bodie to thy hest doest frame,”
(ll. 46–4
with an explanation of His power as the creating and sustaining spirit of
the universe. Before the world was created love moved over the warring
elements of chaos and arranged them in the order they now obey.
“Then through the world his way he gan to take,
The world that was not till he did it make;
Whose sundrie parts he from them selves did sever,
The which before had lyen confused ever,
“The earth, the ayre, the water, and the fyre,

Then gan to raunge them selves in huge array,
And with contrary forces to conspyre
Each against other, by all meanes they may,
Threatning their owne confusion and decay:
Ayre hated earth, and water hated fyre,
Till Love relented their rebellious yre.
“He then them tooke, and tempering goodly well

Their contrary dislikes with loved meanes,
Did place them all in order, and compell
To keepe them selves within their sundrie raines,
Together linkt with Adamantine chaines.”
(ll. 77–9
The second subject which was treated in the light of Platonism was
that of beauty. In the “Hymne in Honour of Beautie” the topic is treated
from three points of view. First, the “Hymne” outlines a general theory
of æsthetics to account for the presence of beauty in the universe lying
without us (ll. 32–87); second, it explains the ground of reason for the
beauty to be found in the human body (ll. 88–164); and third, it
accounts for the exaggerated notion which the lover has of his beloved’s
physical perfections. (ll. 214–270.)
Spenser’s general theory of æsthetics is a blending of two suggestions
he found in his study of Platonism. According to Ficino, beauty is a
spiritual thing, the splendor of God’s light shining in all things. (II. 5; V.
4.) This conception is based upon the idea that the universe is an
emanation of God’s spirit, and that beauty is the lively grace of the
divine light of God shining in matter. (V. 6.) But according to another
view, the universe is conceived as the objective work of an artificer,
working according to a pattern. “The work of the creator,” says Plato in
the “Timæus” (28, 29), “whenever he looks to the unchangeable and
fashions the form and the nature of his work after an unchangeable
pattern, must necessarily be made fair and perfect.... If the world be
indeed fair and the artificer good, it is manifest that he must have
looked to that which is eternal ... for the world is the fairest of creations
and he is the best of causes.” By blending these ideas Spenser was able
to conceive of God as creating the world after a pattern of ideal beauty,
which, by virtue of its infusion into matter, is the source of that lively
grace which the objects called beautiful possess. At first he presents the
view of creation which is more in accordance with the Mosaic account,
“What time this worlds great workmaister did cast
To make al things, such as we now behold:
It seemes that he before his eyes had plast
A goodly Paterne to whose perfect mould,
He fashioned them as comely as he could,
That now so faire and seemely they appeare,
As nought may be amended any wheare.
“That wondrous Paterne
· · · · ·
Is perfect Beautie, which all men adore,

Whose face and feature doth so much excell
All mortall sence, that none the same may tell.”
(ll. 32–4
Spenser now passes on to the theory of the infusion of beauty in matter,
by which its grossness is refined and quickened, as it were, into life.
“Thereof as every earthly thing partakes,
Or more or lesse by influence divine,
So it more faire accordingly it makes,
And the grosse matter of this earthly myne,
Which clotheth it, thereafter doth refyne,
Doing away the drosse which dims the light
Of that faire beame, which therein is empight.
“For through infusion of celestiall powre,

The duller earth it quickneth with delight
And life-full spirits privily doth powre
Through all the parts, that to the looker’s sight
They seeme to please. That is thy soveraine might,
O Cyprian Queene, which flowing from the beame
Of thy bright starre, then into them doest streame.”
(ll. 46–5
At this point of his “Hymne” Spenser pauses to refute the idea that
beauty is
“An outward shew of things, that onely seeme”
(l. 9
His pausing to overthrow such an idea of beauty is quite in the manner
of the scientific expositor in the Italian treatises and dialogues written
throughout the Renaissance. Ficino, for instance, combats the idea,
which he says some hold, that beauty is nothing but the proportion of
the various parts of an object with a certain sweetness of color. (V. 3.) In
like manner Spenser says it is the idle wit that identifies beauty with
proportion and color, both of which pass away.
“How vainely then doe ydle wits invent,
That beautie is nought else, but mixture made
Of colours faire, and goodly temp’rament,
Of pure complexions, that shall quickly fade
And passe away, like to a sommers shade,
Or that it is but comely composition
Of parts well measurd, with meet disposition.”
(ll. 67–7
Spenser overthrows this contention by doubting the power of mere color
and superficial proportion to stir the soul of man. (ll. 74–87.) He has
proved the power of beauty only too well to maintain such a theory. He
thus seeks for the source of its power in the soul.
The Platonic theory of beauty teaches that the beauty of the body is a
result of the formative energy of the soul. According to Ficino, the soul
has descended from heaven and has framed a body in which to dwell.
Before its descent it conceives a certain plan for the forming of a body;
and if on earth it finds material favorable for its work and sufficiently
plastic, its earthly body is very similar to its celestial one, hence it is
beautiful. (VI. 6.) In Spenser this conception underlies his account of
the descent of the soul from God to earth.
“For when the soule, the which derived was
At first, out of that great immortall Spright,
By whom all live to love, whilome did pas
Downe from the top of purest heavens hight,
To be embodied here, it then tooke light
And lively spirits from that fayrest starre,
Which lights the world forth from his firie carre.
“Which powre retayning still or more or lesse,

When she in fleshly seede is eft enraced,
Through every part she doth the same impresse,
According as the heavens have her graced,
And frames her house, in which she will be placed,
Fit for her selfe, adorning it with spoyle
Of th’ heavenly riches, which she robd erewhyle.
· · · · ·
“So every spirit, as it is most pure,

And hath in it the more of heavenly light,
So it the fairer bodie doth procure
To habit in, and it more fairely dight
With chearefull grace and amiable sight.
For of the soule the bodie forme doth take:
For soul is forme, and doth the bodie make.”
(ll. 109–13
The obvious objection which one might make to this theory, that it does
not cover the whole ground inasmuch as it could never account for the
fact of the existence of a good soul in any but a beautiful form, was
answered by the further explanation that when the matter of which the
soul makes its body is unyielding, the soul must content itself with a less
beautiful form. (Ficino, VI. 6.) Thus Spenser adds:
“Yet oft it falles, that many a gentle mynd
Dwels in deformed tabernacle drownd,
Either by chaunce, against the course of kynd,
Or through unaptnesse in the substance sownd,
Which it assumed of some stubborne grownd,
That will not yield unto her formes direction,
But is perform’d with some foule imperfection.”
(ll. 144–15
After an exhortation to the “faire Dames” to keep their souls
unspotted (ll. 165–200), Spenser outlines the true manner of love and
in the course of his poem he accounts for that manifestation of power
which the beloved’s beauty has over the mind of the lover. According to
Ficino, true lovers are those whose souls have departed from heaven
under the same astral influences and who, accordingly, are informed
with the same idea in imitation of which they frame their earthly bodies.
(VI. 6.) Thus Spenser writes that love is not a matter of chance, but a
union of souls ordained by heaven.
“For Love is a celestiall harmonie,
Of likely harts composd of starres concent,
Which joyne together in sweet sympathie,
To work ech others joy and true content,
Which they have harbourd since their first descent
Out of their heavenly bowres, where they did see
And know ech other here belov’d to bee.
“Then wrong it were that any other twaine

Should in loves gentle band combyned bee,
But those whom heaven did at first ordaine,
And made out of one mould the more t’ agree:
For all that like the beautie which they see,
Streight do not love: for love is not so light,
As straight to burne at first beholders sight.”
(ll. 200–2
He then explains the Platonist’s views of love as a passion. Ficino had
stated that the lover is not satisfied with the mere visual image of the
beloved, but refashions it in accordance with the idea of the beloved
which he has; for the two souls departing from heaven at the same time
were informed with the same idea. The lover, then, when he beholds the
person of the beloved, sees a form which has been made more in
conformity with the idea than his own body has; consequently he loves
it, and by refining the visual image of the beloved from all the grossness
of sense, he beholds in it the idea of his own soul and that of the
beloved; and in the light of this idea he praises the beloved’s beauty. (VI.
6.) So Spenser:
“But they which love indeede, looke otherwise,
With pure regard and spotlesse true intent,
Drawing out of the object of their eyes,
A more refyned forme, which they present
Unto their mind, voide of all blemishment;
Which it reducing to her first perfection,
Beholdeth free from fleshes frayle infection.”
(ll. 214–22
Here there is no distinction of lover and beloved; but soon Spenser
passes on to consider the subject from the lover’s standpoint:
“And then conforming it unto the light,
Which in it selfe it hath remaining still
Of that first Sunne, yet sparckling in his sight,
Thereof he fashions in his higher skill,
An heavenly beautie to his fancies will,
And it embracing in his mind entyre,
The mirrour of his owne thought doth admyre.
“Which seeing now so inly faire to be,

As outward it appeareth to the eye,

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2. If the physical plant for a corporation is considered to be a fixed input, then

3. The "short run" may vary in length from industry to industry.

4. In the short run,

5. The short run for Barbara's Bakery is defined as

7. In a firm's planning horizon, the long run refers to

9. As a firm increases its output in the short run,

10. In the long run,

11. In the short run,

12. Fixed inputs are those whose

13. Variable inputs are those whose

22. The marginal product of labor is the

25. If a firm is experiencing diminishing marginal returns to labor, then

26. The law of diminishing marginal returns says that

31. If there are diminishing marginal returns to labor,

39. Sunk costs should be ignored in decision making because they

41. A firm's total cost of production is the

44. A firm's total cost of production is

45. A sunk cost is one that

50. Which of the following is an implicit cost?

51. Which of the following is an implicit cost?

52. A firm's explicit costs are

53. A firm's implicit costs are

54. Total fixed costs decrease as output expands.

57. Variable costs are

58. Total cost is

59. Average fixed cost is

60. Average variable cost is

61. Average total cost is

62. Average variable cost is

63. Marginal cost is

65. Which of the following formulas is not correct?

67. A firm's cost of variable inputs per unit of output is known as

73. Which of the following always decreases as output increases?

75. Which of the following is the best example of a variable cost?

88. If marginal cost is greater than average total cost then

93. The Marginal Cost curve will

94. Average Fixed Cost is the

95. The marginal cost curve crosses

96. The total cost to a firm of producing zero units of output is

97. Along its long-run total cost curve, a firm is producing

101. Long-run average total cost must always be

104. The firm's long-run average total cost curve

106. A lumpy input is one that

107. Which of the following would be an excellent example of a lumpy input

112. If a firm experiences economies of scale, then, as output increases,

114. Diseconomies of scale tend to occur in large firms because

117. If a firm is experiencing constant returns to scale

118. A firm's minimum efficient scale is defined as

119. If all firms in a market have the same LRATC curve,

122. If significant economies of scale continue as output increases,

127. A merger wave can be set off

and, to consummate all,

“Raise then thy prostrate love with tow’ring thought;