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Economics - Canadian Edition, 15e (Ragan)
Chapter 7 Producers in the Short Run
7.1 What Are Firms?
1) A single proprietorship is a form of business organization which

A) has one owner-manager who is personally responsible for the firm's actions and debts.
B) has a single owner but has directors who are responsible for the firm's debts.
C) has limited liability.
D) has unlimited access to money capital.
E) allows easy transferability of ownership by the trading of shares.
Answer: A
Diff: 1
Topic: 7.1. organization, financing, and goals of firms
Skill: Recall
Learning Obj.: 7-1 Identify the various forms of business organization and discuss the different ways that firms can
be financed.
User2: Qualitative
2) Which of the following statements describes an advantage to the owner of a single proprietorship?
A) The owner's liability is limited to the amount he or she actually invests in the firm.
B) He or she has limited liability.
C) The owner can readily maintain full and complete control over every aspect of the firm's operation.
D) The firm has a legal existence separate from its owner.
E) Shares of the firm can be traded on any stock exchange.
Answer: C
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
3) A firm that has two or more owners who share decision-making power as well as the firm's profits is
called
A) a single proprietorship.
B) a partnership.
C) a corporation.
D) a non-profit organization.
E) a joint-stock company.
Answer: B
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
1
Copyright © 2017 Pearson Education, Inc.
4) A limited partnership differs from an ordinary partnership by
A) having a limited number of partners.
B) having a limited number of partners, each with limited liability.
C) including some partners whose liability is restricted to the amount that they invested in the firm.
D) having limited liability of all partners.
E) having unlimited liability for all partners.
Answer: C
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
5) Which of the following items is part of a firm's financial capital as distinct from its real capital?
A) a new bulldozer
B) a $500 000 balance in a bank account
C) a network of personal computers
D) a fleet of delivery trucks
E) inventory of goods valued at $1 000 000
Answer: B
Diff: 1
Skill: Applied
be financed.
User2: Qualitative
6) Which of the following statements is NOT true of a corporation?

A) It can enter into contracts.
B) It is an entity separate from the individuals who own it.
C) It can incur debt that is an obligation of the corporation but not of its individual owners.
D) It has the right to sue and be sued.
E) It is legally obliged to distribute all profits to shareholders.
Answer: E
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
2
7) A firm can raise financial capital without incurring debt by
A) issuing bonds.
B) making extra dividend payments.
C) issuing new shares.
D) increasing its bank loans.
E) investing in new capital equipment.
Answer: C
Diff: 2
Skill: Recall
be financed.
User2: Qualitative
8) Which of the following statements about the organization of firms is true?

A) Partnerships are the most common form of business organization in Canada.
B) Owners of a corporation have unlimited liability.
C) Corporations have limited access to money markets.
D) Owners of a corporation are not personally liable for the firm's actions, though its directors may be.
E) Crown corporations are never interested in increasing profits because they have other goals.
Answer: D
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
9) Churches, the YMCA, the Salvation Army, and the Nature Conservancy are examples of
A) single proprietorship.
B) partnership.
C) non-profit organizations.
D) limited partnership.
E) corporations.
Answer: C
Diff: 1
Skill: Applied
be financed.
User2: Qualitative
3
10) An example of "real" capital is
A) shares in a corporation.
B) corporate bonds.
C) a firm's balance in a bank account.
D) a firm's computer systems.
E) a firm's retained earnings.
Answer: D
Diff: 1
Skill: Applied
be financed.
User2: Qualitative
11) Real capital includes

A) a firm's physical assets.
B) corporate bonds.
C) corporate stock.
D) a firm's balance in its bank account.
E) owner's equity.
Answer: A
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
12) Undistributed profits of a firm are

A) earnings that are used to pay dividends to shareholders.
B) earnings that are used to cover the costs of production.
C) earnings that are used to cover interest expenses of the firm.
D) profits that are paid out to owners of the firm.
E) profits that are available to be reinvested in the firm's operations.
Answer: E
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
4
13) When a corporation issues a bond
A) the purchaser of the bond assumes ownership rights in the corporation.
B) it is making a promise to pay interest each year and to repay the principal at a stated time in the future.
C) it is called equity capital.
D) it is called financing through the stock market.
E) it is making a promise to pay interest each year but not repay the principal.
Answer: B
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
14) An example of debt financing for any form of business organization is

A) issuing new stock.
B) buying back bonds.
C) borrowing from a bank.
D) using undistributed profits.
E) buying back previously issued stock.
Answer: C
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
15) It is assumed in standard economic theory that a firm makes decisions in an effort to
A) become as large as possible.
B) have a highly diversified product.
C) be favoured politically.
D) maximize its revenue.
E) maximize its profits.
Answer: E
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
5
16) "An objective of firms is to maximize profits." This statement
A) has been proven by empirical testing to be always true.
B) is an assumption used by economists to predict the behaviour of firms.
C) is a normative statement and thus cannot be tested.
D) applies only to corporations.
E) is an unrealistic assumption, and therefore of little use to economists.
Answer: B
Diff: 1
Skill: Recall
be financed.
User2: Qualitative
17) The theory of the firm is based on the following two key assumptions:
A) Firms seek to become as large as possible, and they seek to maximize total revenue.
B) Each firm has a highly diversified product, and this leads to profit maximization.
C) Firms seek to maximize profit, and to distribute the maximum value in dividends.
D) Firms seek to maximize profits, and the firm is a single, consistent decision-making unit.
E) Firms seek to maximize revenues, and to maximize undistributed profits.
Answer: D
Diff: 2
Skill: Recall
be financed.
User2: Qualitative
18) Which of the following is the best example of an input to production that is an intermediate product?
A) 40 acres of farmland
B) the skills and training of a web designer
C) computer circuit boards
D) a textile factory
E) a sewing machine
Answer: C
Diff: 1
Skill: Applied
be financed.
User2: Qualitative
6
7.2 Production, Costs, and Profits
1) The relationship between factors of production used in the production process and the resulting output
is called a(n)
A) consumption possibilities boundary.
B) economic function.
C) production boundary.
D) cost function.
E) production function.
Answer: E
Diff: 1
Topic: 7.2a. production functions
Skill: Recall
Learning Obj.: 7-2 Distinguish between accounting profits and economic profits.
User2: Qualitative
2) Economists use the notation Q = f(L,K) to describe

A) the flow of labour (L) and capital (K) services that are available when output is (Q).
B) the financial relationship between the inputs that a firm uses and the outputs that it produces.
C) the arithmetic relationship between the outputs that a firm uses and the inputs that it produces.
D) the technological relationship between the inputs that a firm uses and the outputs that it produces.
E) the level of output (Q) required to fully employ labour (L) and capital (K).
Answer: D
Diff: 2
Skill: Recall
User2: Qualitative
3) The equation Q = 0.5KL - (0.4)L + 2L2 is an example of

A) a factor of production equation.
B) an economic input function.
C) a technological change equation.
D) an arithmetic expression of output quantities.
E) a production function.
Answer: E
Diff: 1
Skill: Applied
User2: Qualitative
7
4) Suppose a production function for a firm takes the following algebraic form: Q = 2KL - (0.2)L2, where
Q is the output of sweaters per day. Now suppose the firm is operating with 8 units of capital (K=8) and
10 units of labour (L=10). What is the output of sweaters?
A) 30 sweaters per day
B) 60 sweaters per day
C) 80 sweaters per day
D) 140 sweaters per day
E) 155 sweaters per day
Answer: D
Diff: 2
Skill: Applied
User2: Quantitative
5) Suppose a production function for a firm takes the following algebraic form: Q = (0.5)KL - 40L, where
Q is the output of paintbrushes per week. Now suppose the firm is operating with 100 units of capital (K
= 100) and 30 000 units of labour (L = 30 000). What is the output of paintbrushes per week?
A) 30 000
B) 300 000
C) 1 200 000
D) 1 500 000
E) 3 000 000
Answer: B
Diff: 2
Skill: Applied
User2: Quantitative
6) Suppose a production function for a firm takes the following algebraic form: Q = (0.25)K × (1.5)L2,
where Q is the output of garage doors produced per month. Now suppose the firm is operating with 10
units of capital (K = 10) and 8 units of labour (L = 8). What is the output of garage doors per month?
A) 24
B) 240
C) 300
D) 2400
E) 3000
Answer: B
Diff: 2
Skill: Applied
User2: Quantitative
8
7) The opportunity cost of any factor of production is
A) its accounting cost.
B) the money actually paid to the factors of production.
C) the benefit forgone by not using it in its worst alternative.
D) the benefit forgone by not using it in its best alternative.
E) its explicit cost.
Answer: D
Diff: 1
Topic: 7.2b. economic vs. accounting profits
Skill: Recall
User2: Qualitative
8) The choices listed below involve costs to the firm. For which is the implicit cost potentially different
than its explicit cost?
A) The use of firm-owned assets.
B) The services of hired workers.
C) The use of rented land.
D) The interest paid on borrowed money.
E) The purchase of raw materials used in production.
Answer: A
Diff: 2
Skill: Recall
User2: Qualitative
9) The opportunity cost to a firm of using an asset is zero if

A) the asset is already owned by the firm.
B) no money was spent to acquire the asset.
C) the asset has no alternative uses.
D) the asset has zero sunk costs associated with it.
E) the asset was given to the firm for free.
Answer: C
Diff: 2
Skill: Applied
User2: Qualitative
9
10) The opportunity cost of money that a firm's owner has invested in the firm is an example of
A) direct production costs.
B) accounting costs.
C) sunk costs.
D) implicit costs.
E) explicit costs.
Answer: D
Diff: 2
Skill: Applied
User2: Qualitative
11) If a firm uses factor inputs that are personally owned by the firm's owner, then economists refer to the
opportunity cost of these inputs as
A) direct production costs.
B) accounting costs.
C) sunk costs.
D) implicit costs.
E) inverted costs.
Answer: D
Diff: 2
Skill: Recall
User2: Qualitative
12) Economic profits are less than accounting profits because the calculation of economic profit
A) includes an amount for depreciation.
B) includes an explicit charge for risk taking.
C) includes the implicit charges for the use of capital owned by the firm and for risk taking.
D) includes the implicit charges for the use of capital owned by the firm and for income taxes.
E) is stipulated in regulations set forth by the Canada Revenue Agency.
Answer: C
Diff: 2
Skill: Recall
User2: Qualitative
10
13) We can predict that resources will move into an industry whenever
A) accounting profits for firms in that industry are greater than zero.
B) accounting profits for firms in that industry are zero.
C) economic profits for firms in that industry are zero.
D) economic profits for firms in that industry are greater than zero.
E) economic losses for firms in that industry are minimized.
Answer: D
Diff: 1
Skill: Recall
User2: Qualitative
14) If Michelle used $1000 from her savings account, which was paying 6% interest annually, to invest in
her brother's new sporting-goods store, the opportunity cost of her investment on an annual basis would
be
A) $60.
B) $1000.
C) $1060.
D) her share of the store's profits.
E) the dividend paid to her by her brother.
Answer: A
Diff: 2
Skill: Applied
User2: Quantitative
15) Consider the production costs for a firm, one of which is the cost of depreciation. Depreciation costs
are
A) payments to outside suppliers.
B) the cost of money borrowed to buy a durable asset.
C) an estimate of the loss of value of the firm's physical capital.
D) a measure of the depreciation of financial assets of the firm.
E) irrelevant to an accounting of the firm's total costs.
Answer: C
Diff: 2
Skill: Applied
User2: Qualitative
11
The table below provides the annual revenues and costs for a family-owned firm producing catered meals.
Total Revenues ($) 500 000
Total Costs ($)

- wages and salaries 200 000
- risk-free return of 6% on owners' capital of 250 000 15 000
- rent 105 000
- depreciation of capital equipment 25 000
- risk premium of 8% on owners' capital of 250 000 20 000
- intermediate inputs 150 000
- forgone wages of owners in alternative employment 80 000
- interest on bank loan 10 000
TABLE 7-1
16) Refer to Table 7-1. The explicit costs for this family-owned firm are
A) $115 000.
B) $490 000.
C) $500 000.
D) $505 000.
E) $605 000.
Answer: B
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
17) Refer to Table 7-1. The implicit costs for this family-owned firm are
A) $35 000.
B) $80 000.
C) $100 000.
D) $115 000.
E) $490 000.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
12
18) Refer to Table 7-1. The accounting profits for this family-owned firm are
A) -$15 000.
B) $0.
C) $10 000.
D) $30 000.
E) $500 000.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
19) Refer to Table 7-1. The economic profits for this family-owned firm are
A) $115 000.
B) $10 000.
C) $0.
D) -$10 000.
E) -$105 000.
Answer: E
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
20) Refer to Table 7-1. To an accountant, this family-owned catering company is earning ________. To an
economist, the same firm is earning ________.
A) zero profit; economic losses
B) zero profit; normal profits
C) positive profits; economic losses
D) economic profits; economic profits
E) economic profits; economic losses
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
13
The table below provides the total revenues and costs for a small landscaping company in a recent year.
Total Revenues ($) 250 000
Total Costs ($)

- wages and salaries 150 000
- risk-free return of 2% on owner's capital of $20 000 400
- interest on bank loan 1500
- cost of supplies 27 000
- depreciation of capital equipment 8000
- additional wages the owner could have earned in next
best alternative 30 000
- risk premium of 4% on owner's capital of $20 000 800
TABLE 7-2
21) Refer to Table 7-2. The explicit costs for this firm are
A) $178 500.
B) $186 500.
C) $186 900.
D) $217 300.
E) $217 700.
Answer: B
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
22) Refer to Table 7-2. The implicit costs for this firm are
A) $31 200.
B) $30 800.
C) $30 400.
D) $400.
E) $800.
Answer: A
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
14
23) Refer to Table 7-2. The accounting profits for this firm are
A) $32 300.
B) $32 700.
C) $63 100.
D) $63 500.
E) $71 500.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
24) Refer to Table 7-2. The economic profits for this firm are
A) $63 500.
B) $32 700.
C) $33 500.
D) $31 200.
E) $32 300.
Answer: E
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
25) With regard to economic decision making for firms, the short run is
A) a definite number of months.
B) a period over which the quantities of all factors of production and technology are variable.
C) a period over which the quantity of at least one significant factor of production is fixed.
D) a period over which the quantities of all factors of production are variable but technology is fixed.
E) less than one year.
Answer: C
Diff: 1
Topic: 7.2c. time horizons for firms
Skill: Recall
User2: Qualitative
15
26) With regard to economic decision making for firms, the long run is a period in which
A) all factors of production are variable but technology is fixed.
B) technology is variable.
C) only some of the factors of production are variable.
D) technology may be variable, but some factors of production are fixed.
E) only capital is variable.
Answer: A
Diff: 1
Skill: Recall
User2: Qualitative
27) Which of the following is most likely a long-run decision for a firm?
A) The hours a store should stay open.
B) How many warehouses to build.
C) The number of workers to hire.
D) The amount of inventory to stock.
E) The price at which to sell the product.
Answer: B
Diff: 1
Skill: Applied
User2: Qualitative
28) The period of time over which at least one factor of production is fixed is called the
A) very-short run.
B) short run.
C) long run.
D) very-long run.
E) immediate run.
Answer: B
Diff: 1
Skill: Recall
User2: Qualitative
16
29) The period of time over which the firm can vary any of its inputs for a given production technology is
called the
A) very-short run.
B) short run.
C) long run.
D) very-long run.
E) immediate run.
Answer: C
Diff: 2
Skill: Recall
User2: Qualitative
30) Which of the following factors of production is most likely to be variable in the short run?
A) capital equipment
B) land
C) labour
D) entrepreneurship
E) technology
Answer: C
Diff: 1
Skill: Recall
User2: Qualitative
31) The period of time over which all factors of production and technology are variable is known as the
A) very-short run.
B) short run.
C) long run.
D) very-long run.
Answer: D
Diff: 1
Skill: Recall
User2: Qualitative
32) The period of time over which the firm can vary its technology of production is the
A) very-short run.
B) short run.
C) long run.
D) very-long run.
E) none of the above; technology cannot be varied.
Answer: D
Diff: 1
Skill: Recall
User2: Qualitative
17
7.3 Production in the Short Run
1) What information is provided by average, marginal, and total product curves?

A) They demonstrate that each of these measures of output increase as more inputs are applied.
B) They demonstrate that, in the short run, all inputs are variable.
C) They relate the prices of inputs (factors of production) to the prices of products.
D) They relate the price of output to the quantity supplied.
E) They express relationships between physical inputs and physical outputs.
Answer: E
Diff: 2
Topic: 7.3a. total product, average product, and marginal product
Skill: Recall
Learning Obj.: 7-3 Understand the relationships among total product, average product, and marginal product; and
the law of diminishing marginal returns.
User2: Qualitative
2) Consider a firm in the short run. Average product is at its maximum when
A) total product is maximized.
B) marginal product is maximized.
C) the maximum quantity of the variable input is employed.
D) diminishing returns cease to operate.
E) average product equals marginal product and marginal product is falling.
Answer: E
Diff: 2
Skill: Recall
User2: Qualitative
3) Consider a firm in the short run. If total product is at its maximum, then
A) average product must equal marginal product.
B) average product must be rising and must lie above marginal product.
C) marginal product must be greater than zero and must be falling.
D) marginal product must be falling and be equal to zero.
E) average product must be falling and be equal to zero.
Answer: D
Diff: 2
Skill: Applied
User2: Qualitative
18
4) Consider a firm in the short run. If the AP curve is rising, then the MP curve
A) must lie above the average-product curve over this range and must also be rising.
B) must lie above the average-product curve over this range.
C) can be either above or below the average-product curve, although it must be rising over the entire
range.
D) must lie below the average-product curve over this range.
E) must be falling.
Answer: B
Diff: 2
Skill: Applied
User2: Qualitative
5) Consider a firm in the short run. If AP = MP and both are positive, then total product
A) is at a maximum.
B) is decreasing as extra units of the variable factor are employed.
C) is increasing as extra units of the variable factor are employed.
D) may be either increasing or decreasing as extra units of the variable factor are employed.
E) is at its minimum.
Answer: C
Diff: 2
Skill: Applied
User2: Qualitative
6) Consider a firm in the short run. When the total-product curve is increasing at an increasing rate
A) average product is zero.
B) marginal product is positive but declining.
C) the marginal-product curve lies below the average-product curve.
D) marginal product is positive and increasing.
E) average product is falling.
Answer: D
Diff: 2
Skill: Applied
User2: Qualitative
19
7) Which of the following statements about the relationship between marginal product and average
product is correct?
A) When average product exceeds marginal product, marginal product must be rising.
B) When marginal product is falling, average product is falling.
C) When marginal product exceeds average product, average product must be rising.
D) Average product equals marginal product at marginal product's lowest point.
E) Average product equals marginal product when marginal product is at its maximum.
Answer: C
Diff: 2
Skill: Applied
User2: Qualitative
20
FIGURE 7-1
8) Refer to Figure 7-1. The marginal product of labour curve intersects the average product of labour
curve when
A) the firm is at its capacity.
B) the firm achieves increasing returns.
C) average product is at its maximum.
D) diminishing returns sets in.
E) total product is at its maximum.
Answer: C
Diff: 2
Skill: Applied
User1: Graph
User2: Qualitative
21
9) Refer to Figure 7-1. Total product is increasing at an increasing rate
A) from 0 to 32 units of output.
B) from 0 to 140 units of output.
C) between 140 to 200 units of output.
D) between 200 to 250 units of output.
E) over the whole production range.
Answer: B
Diff: 3
Skill: Applied
User1: Graph
User2: Qualitative
10) Refer to Figure 7-1. Total product is increasing at a decreasing rate

A) from 0 to 20 units of output.
B) from 0 to 32 units of output.
C) between 140 to 200 units of output.
D) between 140 to 250 units of output.
E) over the whole production range.
Answer: D
Diff: 3
Skill: Applied
User1: Graph
User2: Qualitative
11) Refer to Figure 7-1. If the firm hires the 15th unit of labour,
A) the extra output will be zero.
B) average product will rise.
C) marginal product will be unchanged.
D) the firm will reach its capacity.
E) output will increase by 2 units of output.
Answer: A
Diff: 2
Skill: Applied
User1: Graph
User2: Qualitative
22
12) Refer to Figure 7-1. Suppose each unit of labour represents one worker for one month. What is the
maximum number of workers the firm could hire so that the final worker hired still raises the average
product of the other workers?
A) 7
B) 8
C) 9
D) 11
E) 15
Answer: C
Diff: 3
Skill: Applied
User1: Graph
User2: Quantitative
13) In the short run, the firm's product curves show

A) AP is at its minimum when MP = AP.
B) TP is at its maximum when MP = O.
C) TP begins to decrease when AP begins to decrease.
D) when MP > AP, AP is decreasing.
E) when the MP curve cuts the AP curve from below, the AP curve begins to fall.
Answer: B
Diff: 2
Skill: Applied
User2: Qualitative
14) In the short run, the firm's product curves show

A) AP is at its minimum when MP = AP.
B) TP is at its maximum when MP is at its maximum.
C) TP begins to decrease when AP begins to decrease.
D) when MP < AP, AP is increasing.
E) when the MP curve cuts the AP curve from above, the AP curve begins to fall.
Answer: E
Diff: 2
Skill: Applied
User2: Qualitative
23
15) Suppose that when a firm hires one additional unit of labour, total product increases from 100 to 110
units of output per month. Marginal product must therefore be
A) increasing.
B) positive.
C) decreasing.
D) constant.
E) zero.
Answer: B
Diff: 2
Skill: Applied
User2: Qualitative
The following data show the total output for a firm when different amounts of labour are combined with a fixed
amount of capital. Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
Labour per period Total output per period

0 0
1 10
2 30
3 90
4 132
5 150
TABLE 7-3
16) Refer to Table 7-3. The marginal product of labour is at its maximum when the firm changes the
amount of labour hired from
A) 0 to 1 unit.
B) 1 to 2 units.
C) 2 to 3 units.
D) 3 to 4 units.
E) 4 to 5 units.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
24
17) Refer to Table 7-3. The average product of labour is highest when the firm hires
A) 1 unit of labour.
B) 2 units of labour.
C) 3 units of labour.
D) 4 units of labour.
E) 5 units of labour.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
18) Refer to Table 7-3. What is the marginal product of the 4th unit of labour hired by the firm?
A) 42
B) 60
C) 132
D) 900
E) 1320
Answer: A
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
19) Refer to Table 7-3. What is the total output per period when this firm is employing labour such that
the marginal product of labour is at its maximum?
A) 30
B) 60
C) 90
D) 132
E) 150
Answer: D
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
25
20) Refer to Table 7-3. Diminishing marginal product of labour is first observed when the firm changes
the amount of labour hired from
A) 0 to 1 units.
B) 1 to 2 units.
C) 2 to 3 units.
D) 3 to 4 units.
E) 4 to 5 units.
Answer: E
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
21) Refer to Table 7-3. The average product of labour when the firm hires 3 units of labour is ________.
The average product of labour when the firm hires 4 units of labour is ________.
A) 30; 33
B) 90; 132
C) 60; 42
D) 90; 222
E) 30; 90
Answer: A
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
26
The following data show the total output for a firm when specified amounts of labour are combined with a fixed
amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25 and the
cost of the capital is $100.
Labour per unit of time Total output

0 0
1 25
2 75
3 175
4 250
5 305
TABLE 7-4
22) Refer to Table 7-4. The marginal product of labour is at its maximum when the firm changes the
amount of labour hired from
A) 0 to 1 unit.
B) 1 to 2 units.
C) 2 to 3 units.
D) 3 to 4 units.
E) 4 to 5 units.
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
23) Refer to Table 7-4. Diminishing marginal productivity of labour is first observed when the firm
changes the amount of labour hired from
A) 0 to 1 unit.
B) 1 to 2 units.
C) 2 to 3 units.
D) 3 to 4 units.
E) 4 to 5 units.
Answer: D
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
27
24) Refer to Table 7-4. The average product of labour is highest when the firm hires ________ units of
labour.
A) 1
B) 2
C) 3
D) 4
E) 5
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
25) Refer to Table 7-4. The marginal product of labour curve intersects the average product of labour
curve from above when the firm changes the amount of labour per unit of time from
A) 0 to 1 units.
B) 1 to 2 units.
C) 2 to 3 units.
D) 3 to 4 units.
E) 4 to 5 units.
Answer: E
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
26) Refer to Table 7-4. Marginal product of labour begins decreasing with the ________ unit of labour
hired. Average product of labour begins decreasing with the ________ unit of labour hired.
A) 4th; 3rd
B) 3rd; 2nd
C) 2nd; 3rd
D) 3rd; 4th
E) 4th; 5th
Answer: E
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
28
27) Suppose NHL hockey player Jarome Iginla is averaging three points per game going into the last
game of the season in which he collects four points, thereby changing his average for the season. To use
an analogy in economics, it could be said that average product increases
A) when total product increases.
B) when marginal product exceeds average product.
C) when average product exceeds marginal product.
D) when marginal product increases.
E) whenever marginal product is positive.
Answer: B
Diff: 2
Skill: Applied
User2: Qualitative
28) Consider a basket-producing firm with fixed capital. If the firm can produce 36 baskets per day with 3
workers and then increases productivity to 44 baskets per day with 4 workers, then which of the
following statements is true?
A) The marginal product of the fourth worker is 11.
B) The firm has passed the point of diminishing average productivity.
C) The marginal product is above the average product.
D) The firm has not yet reached the point of diminishing marginal productivity.
E) With 4 workers, the firm's average product of labour is 13.
Answer: B
Diff: 3
Skill: Applied
User2: Quantitative
workers and then increases production to 44 baskets per day with 4 workers, then which of the following
statements is true?
A) The marginal product of the fourth worker is 11.
B) With 4 workers, the marginal product is above the average product.
C) The firm has not yet reached the point of diminishing marginal productivity.
D) The firm has passed the point of diminishing marginal productivity.
E) With 4 workers, the firm's average product of labour is 8.
Answer: D
Diff: 3
Skill: Applied
User2: Quantitative
29
statements is definitely true?
A) The firm has passed the point of diminishing marginal productivity.
B) The marginal productivity of the fourth worker is 9.
C) The firm has passed the point of diminishing average productivity.
D) With 4 workers, the average product is greater than the marginal product.
E) With 4 workers, the marginal product is greater than the average product.
Answer: E
Diff: 2
Skill: Applied
User2: Quantitative
statements is definitely true?
A) Marginal product for this firm is rising.
B) The marginal product of the fourth worker is 9.
C) Average product for this firm is rising.
D) The firm has passed the point of diminishing marginal productivity.
E) With 4 workers, the average product is greater than the marginal product.
Answer: C
Diff: 3
Skill: Applied
User2: Quantitative
32) Consider a house-construction firm with fixed capital. The firm can build 8 houses per year with 16
workers and 8.8 houses per year with 17 workers. If it is currently building 8.8 houses per year, which of
the following is true?
A) Average product is at a maximum with 16 workers.
B) Average product is at a maximum with 17 workers.
C) The marginal product is below the average product.
D) The firm has already passed the point of diminishing marginal productivity.
E) The firm has not yet reached the point of diminishing average productivity.
Answer: E
Diff: 3
Skill: Applied
User2: Quantitative
30
33) If increasing quantities of a variable factor are applied to a given quantity of fixed factors, then the
law of diminishing returns tells us that
A) the marginal product and the average product of the variable factor will eventually decrease.
B) the marginal product will eventually decrease with constant average product.
C) the average product will eventually decrease with constant marginal product.
D) the average product will eventually decrease, but only if total product is held constant.
E) total product will eventually begin to fall.
Answer: A
Diff: 1
Skill: Recall
User2: Qualitative
34) When a firm's total-product curve is increasing at a decreasing rate

A) average product is zero.
B) marginal product is positive but declining.
C) the marginal-product curve lies below the average-product curve.
D) marginal product is negative and decreasing.
E) average product is falling.
Answer: B
Diff: 2
Skill: Recall
User2: Qualitative
35) Diminishing marginal product of labour is said to exist when there is

A) an increase in the amount of capital available for each unit of labour.
B) a reduction in the level of labour input that causes output to increase.
C) an increase in the division and specialization of labour.
D) technological advancement.
E) a successively smaller increase in output with each successive unit increase in labour input.
Answer: E
Diff: 2
Topic: 7.3b. law of diminishing returns
Skill: Recall
User2: Qualitative
31
36) The law of diminishing returns states that if increasing quantities of a variable factor are applied to a
given quantity of fixed factors, then
A) the MP and the AP of the variable factor will eventually decrease.
B) the MP will eventually decrease with constant AP.
C) the AP will eventually decrease with constant MP.
D) the AP will eventually decrease, but only if TP is held constant.
E) TP will eventually begin to fall.
Answer: A
Diff: 2
Skill: Recall
User2: Qualitative
37) The point of diminishing marginal productivity is the point where

A) marginal product has reached its maximum.
B) average product has reached its maximum.
C) the marginal product begins to fall at an increasing rate.
D) the total product begins to fall.
E) the marginal product curve lies below the average product curve.
Answer: A
Diff: 2
Skill: Recall
User2: Qualitative
38) Suppose sport-fishermen on the Campbell River in British Columbia are catching fewer fish and are
having to fish many more hours to catch them. However, the total number of fish caught on the river
continues to increase. The river is experiencing
A) diminishing total returns.
B) constant marginal returns.
C) increasing marginal returns.
D) diminishing marginal returns.
E) increasing average returns.
Answer: D
Diff: 2
Skill: Applied
User2: Qualitative
32
7.4 Costs in the Short Run
1) In economics, the term "fixed costs" means

A) implicit costs.
B) opportunity costs.
C) costs that are never accounted for.
D) costs incurred in the past that involve no implicit costs.
E) costs that do not vary with the level of output produced.
Answer: E
Diff: 1
Topic: 7.4. short-run costs and cost-curves
Skill: Recall
Learning Obj.: 7-4 Explain the difference between fixed and variable costs, and the relationships among total costs,
average costs, and marginal costs.
User2: Qualitative
The following data show the total output for a firm when specified amounts of labour are combined with a fixed
amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25 and the
cost of the capital is $100.
Labour per unit of time Total output

0 0
1 25
2 75
3 175
4 250
5 305
TABLE 7-4
2) Refer to Table 7-4. Average fixed costs for 305 units of output is approximately
A) 33 cents.
B) 41 cents.
C) 45 cents.
D) 74 cents.
E) $3.05.
Answer: A
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
33
3) Refer to Table 7-4. Average variable costs for 175 units of output is approximately
A) 25 cents.
B) 32 cents.
C) 43 cents.
D) 57 cents.
E) $1.00.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
4) Refer to Table 7-4. The average total cost for 250 units of output is approximately
A) 33 cents.
B) 40 cents.
C) 63 cents.
D) 80 cents.
E) $1.00.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
5) Refer to Table 7-4. The total cost of producing 175 units of output is
A) $75.
B) $100.
C) $150.
D) $175.
E) $350.
Answer: D
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
34
6) Refer to Table 7-4. The average total cost of producing 75 units of output is
A) $1.
B) $2.
C) $0.80.
D) $0.67.
E) $1.33.
Answer: B
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
7) Refer to Table 7-4. The total variable cost of producing 305 units of output is
A) $100.
B) $125.
C) $225.
D) $305.
E) $325.
Answer: B
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
8) Refer to Table 7-4. The total fixed cost of producing 305 units of output is
A) $100.
B) $125.
C) $112.50.
D) $225
E) $305.
Answer: A
Diff: 1
Skill: Applied
User1: Table
User2: Quantitative
35
9) In the short run time horizon for a firm, total fixed costs
A) decrease and then increase as output increases.
B) decrease as output increases.
C) do not vary with output.
D) increase and then decrease as output increases.
E) are equal to total variable costs.
Answer: C
Diff: 1
Skill: Recall
User2: Qualitative
10) Jodi recently went into business producing widgets. Which of the following would be a fixed cost for
her firm?
1. labour costs of $1000 per month
2. raw material costs of $5000 per month
3. a one-year lease on a building of $12 000
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 2 and 3
Answer: C
Diff: 1
Skill: Applied
User2: Qualitative
11) Marginal cost is defined as the

A) change in total cost resulting from an additional unit of output.
B) change in fixed cost resulting from an additional unit of output.
C) difference between average total cost and average variable cost.
D) cost per unit when the firm is operating at capacity.
E) cost of an additional unit of a variable factor of production.
Answer: A
Diff: 1
Skill: Recall
User2: Qualitative
36
12) A firm's short-run cost curves, as conventionally drawn, show that
A) AFC increases as output increases.
B) ATC = TFC + TVC.
C) AVC decreases as long as MC > AVC.
D) the MC curve intersects the AVC and ATC curves at their maximum points.
E) ATC decreases and then increases as output increases.
Answer: E
Diff: 2
Skill: Applied
User2: Qualitative
13) Consider a firm's short-run cost curves. If average total cost is increasing as output rises, then
A) total fixed costs must be increasing.
B) average fixed costs must be increasing.
C) average variable cost must be increasing.
D) marginal cost must be below average total cost.
E) average total cost is no longer equal to the sum of average variable cost and average fixed cost.
Answer: C
Diff: 2
Skill: Recall
User2: Qualitative
14) Consider a firm's short-run cost curves. Which one of the following types of cost declines over the
whole range of output?
A) average fixed cost
B) marginal cost
C) total fixed cost
D) average variable cost
E) total variable cost
Answer: A
Diff: 1
Skill: Recall
User2: Qualitative
37
15) The vertical distance between the total cost curve and the total variable cost curve is
A) marginal cost.
B) average fixed cost.
C) average total cost.
D) total fixed cost.
E) average variable cost.
Answer: D
Diff: 1
Skill: Recall
User2: Qualitative
16) Suppose a firm is producing 100 units of output, incurring a total cost of $10 000 and total variable
cost of $6000. It can be concluded that average fixed cost is
A) $40.
B) $60.
C) $100.
D) $160.
E) $4000.
Answer: A
Diff: 2
Skill: Applied
User2: Quantitative
17) Suppose a firm is producing 500 units of output, incurring a total cost of $700 000 and total fixed cost
of $100 000. It can be concluded that average variable cost is
A) $200.
B) $600.
C) $1200.
D) $1400.
E) $1600.
Answer: C
Diff: 3
Skill: Applied
User2: Quantitative
38
18) Suppose a firm is producing 250 units of output. At this level of output, average fixed costs are $20
per unit and average variable costs are $80 per unit. It can be concluded that total cost is
A) $100.
B) $0.40 per unit.
C) $40 per unit.
D) $2500.
E) $25 000.
Answer: E
Diff: 3
Skill: Applied
User2: Quantitative
19) Suppose a firm is producing 10 000 units of output. At this level of output, average total cost is $200
and average fixed cost is $20. It can be concluded that total variable cost is
A) $180.
B) $1800.
C) $18 000.
D) $180 000.
E) $1 800 000.
Answer: E
Diff: 3
Skill: Applied
User2: Quantitative
20) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short-
run costs are as follows:
ATC = $0.37 per unit
AVC = $0.32 per unit
AFC = $0.05 per unit
MC = $0.43 per unit
Given these short-run costs, as the firm increases its output, which of the following statements is true?
A) Marginal product of the variable factor must be decreasing.
B) Marginal product of the variable factor must be increasing.
C) The point of diminishing average product of the variable factor has not yet been reached.
D) Average product of the variable factor must be increasing.
E) Marginal product of the variable factor is at its minimum point.
Answer: A
Diff: 3
Skill: Applied
User2: Quantitative
39
21) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short
run costs are as follows:
ATC = $0.37 per unit
AVC = $0.32 per unit
AFC = $0.05 per unit
MC = $0.43 per unit
Given these short run costs, which of the following statements is true?
A) The firm is operating with excess capacity.
B) The firm is operating at capacity.
C) The firm is operating above capacity.
D) The firm has no capacity constraints.
E) The firm is producing a level of output where capacity is increasing.
Answer: C
Diff: 2
Skill: Applied
User2: Quantitative
22) Consider the short-run costs of a firm. Suppose the firm's total fixed costs are $100 and average
variable costs are constant regardless of output. Which of the following is then true?
A) Marginal cost will equal average total cost.
B) Average total cost will decrease when output is increased.
C) Marginal cost will be less than average variable cost.
D) Average total costs will be constant.
E) Marginal cost will be rising as output rises.
Answer: B
Diff: 3
Skill: Applied
User2: Qualitative
40
23) Suppose that a firm's capital is fixed and one more unit of labour is hired, thereby increasing the
firm's total output. Which of the following statements can be correct?
1. Marginal cost would remain constant.
2. Marginal cost would increase.
3. Marginal cost would decrease.
A) 1 only
B) 2 only
C) 3 only
D) Any of 1, 2, and 3 is possible.
E) None are possible.
Answer: D
Diff: 3
Skill: Applied
User2: Qualitative
24) A firm's capacity is defined as the level of output where

A) the upper limit on what can be produced is reached.
B) average total cost is at its maximum.
C) marginal cost equals average variable cost.
D) average fixed costs are at a minimum.
E) short-run average total cost is at its minimum.
Answer: E
Diff: 1
Skill: Recall
User2: Qualitative
25) When a plant is operating at the level of output where its short-run average total cost is at its
minimum,
A) average fixed cost is at a minimum.
B) marginal cost is at a minimum.
C) average variable cost is at a minimum.
D) the plant is operating at its capacity.
E) more of the variable factor of production should be employed.
Answer: D
Diff: 1
Skill: Recall
User2: Qualitative
41
26) Short-run cost curves for a firm are eventually upward-sloping because of the effects of
A) the increasing price of variable inputs.
B) diminishing marginal product.
C) increasing fixed costs.
D) increasing marginal productivity of the variable inputs.
E) decreasing total product.
Answer: B
Diff: 2
Skill: Recall
User2: Qualitative
27) A firm's short-run marginal cost curve is decreasing when

A) average fixed cost is increasing.
B) total fixed cost is decreasing.
C) marginal product is decreasing.
D) marginal product is increasing.
E) capacity is reached.
Answer: D
Diff: 2
Skill: Recall
User2: Qualitative
28) When a firm's marginal cost is rising, we know that

A) average fixed cost must be rising.
B) average variable cost must be rising.
C) average total cost must be rising.
D) marginal product must be zero.
E) marginal product must be falling.
Answer: E
Diff: 3
Skill: Recall
User2: Qualitative
42
29) Consider a firm's short-run cost curves. When capital is a fixed factor, a rise in the cost of labour
A) shifts the marginal cost curve upwards.
B) shifts the AVC curve down.
C) shifts the total product curve downwards.
D) leaves the MC curve unchanged.
E) leaves the ATC curve unchanged.
Answer: A
Diff: 1
Skill: Applied
User2: Qualitative
30) Suppose Jodi's widget business is using two inputs, labour and capital. If the price of labour increases,
which of the following will happen?
A) Jodi will shut down her business.
B) The firm's average total cost curve will shift upward.
C) The firm's marginal cost curve will remain unchanged.
D) Jodi will hire more labour.
E) The firm's average fixed cost curve will shift upward.
Answer: B
Diff: 2
Skill: Applied
User2: Qualitative
31) Suppose a firm producing digital cameras is operating such that marginal costs are higher than
average costs. If the firm produces one more camera, average costs will
A) rise.
B) fall.
C) reach a point of diminishing returns.
D) remain constant.
E) reach their maximum.
Answer: A
Diff: 2
Skill: Applied
User2: Qualitative
43
32) A firm that is maximizing its profits by producing a certain level of output must also be
A) minimizing its cost of producing that output.
B) maximizing its sales.
C) minimizing its variable costs.
D) maximizing its output.
E) maximizing its revenue.
Answer: A
Diff: 2
Skill: Recall
User2: Qualitative
The following data show the total output for a firm when different amounts of labour are combined with a fixed
amount of capital. Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
Labour per period Total output per period

0 0
1 10
2 30
3 90
4 132
5 150
TABLE 7-3
33) Refer to Table 7-3. The average total cost when producing 150 units of output is approximately
A) 33 cents.
B) 40 cents.
C) 67 cents.
D) 80 cents.
E) $1.50.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
44
34) Refer to Table 7-3. The average total cost when producing 90 units of output is approximately
A) 27 cents.
B) 30 cents.
C) 33 cents.
D) 89 cents.
E) $26.67.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
35) Refer to Table 7-3. The average total cost when this firm is producing zero units of output is
A) $50.
B) $0.
C) undefined.
D) $1.
E) There is not enough information to determine this.
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
36) Refer to Table 7-3. The average total cost when this firm is producing 10 units of output is
A) 60 cents.
B) $1.
C) $6.
D) $10.
E) $60.
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
45
37) Refer to Table 7-3. The average variable cost when this firm is producing 10 units of output is
A) $0.10.
B) $0.50.
C) $0.60.
D) $1.00.
E) $6.00.
Answer: D
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
38) Refer to Table 7-3. The average variable cost when this firm is producing 90 units of output is
A) 17 cents.
B) 33 cents.
C) 68 cents.
D) 89 cents.
E) 98 cents.
Answer: B
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
39) Refer to Table 7-3. The average variable cost when producing 132 units of output is approximately
A) 24 cents.
B) 30 cents.
C) 45 cents.
D) 68 cents.
E) 89 cents.
Answer: B
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
46
40) Refer to Table 7-3. If this firm is producing 20 units of output per period its marginal cost is
A) $1.00.
B) 50 cents.
C) $1.67.
D) 16.7 cents.
E) $10.00.
Answer: B
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
41) Refer to Table 7-3. If this firm is producing 111 units of output per period, its marginal cost is
A) $1.00.
B) 16.7 cents.
C) 76 cents.
D) 24 cents.
E) 38 cents.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
42) Refer to Table 7-3. At what level of output does average variable cost reach a minimum?
A) 30
B) 90
C) 132
D) 150
E) AVC declines continuously over the range of output shown.
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
47
43) Refer to Table 7-3. At what level of output does average total cost reach a minimum?
A) 30
B) 90
C) 132
D) 150
E) ATC declines continuously over the range of output shown.
Answer: E
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
48
The diagram below shows some short-run cost curves for a firm.
FIGURE 7-2
44) Refer to Figure 7-2. Which of the following choices correctly identifies the cost curves in part (i) of the
figure?
A) Curve 1 is the total cost curve.
Curve 2 is the total variable cost curve.
Curve 3 is the total fixed cost curve.
B) Curve 1 is the total fixed cost curve.
Curve 3 is the total cost curve.
C) Curve 1 is the total variable cost curve.
Curve 2 is the total cost curve.
Curve 3 is the total fixed cost curve.
D) Curve 1 is the total marginal cost curve.
Curve 2 is the total average cost curve.
Curve 3 is the total average fixed cost curve.
49
E) Curve 1 is the total cost curve.
Curve 3 is the average fixed cost curve.
Answer: A
Diff: 2
Skill: Recall
User1: Graph
User2: Qualitative
45) Refer to Figure 7-2. Which of the following choices correctly identifies the cost curves in part (ii) of the
figure?
A) Curve 4 is the marginal cost curve.
Curve 6 is the average variable cost curve.
Curve 7 is the average total cost curve.
B) Curve 4 is the average total cost curve.
Curve 5 is the marginal cost curve.
C) Curve 4 is the average fixed cost curve.
Curve 6 is the marginal cost curve.
D) Curve 4 is the marginal cost curve.
E) Curve 4 is the marginal cost curve.
Answer: D
Diff: 2
Skill: Recall
User1: Graph
User2: Qualitative
50
The table below provides information on output per month and short-run costs for a firm producing outdoor wooden
lounge chairs. All costs are in dollars.
Total Fixed Total Variable

Q Total Cost
Cost Cost
5 200 200 400
10 200 220 420
15 200 240 440
20 200 260 460
25 200 350 550
30 200 810 1010
TABLE 7-5
46) Refer to Table 7-5. What is the average variable cost of producing 10 chairs?
A) $22
B) $42
C) $200
D) $220
E) $420
Answer: A
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
47) Refer to Table 7-5. What is the average variable cost of producing 20 chairs?
A) $22
B) $23
C) $260
D) $460
E) $13
Answer: E
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
51
48) Refer to Table 7-5. What is the average total cost of producing 25 chairs?
A) $13
B) $14
C) $22
D) $23
E) $550
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
49) Refer to Table 7-5. What is the average total cost of producing 30 chairs?
A) $13
B) $14
C) $22
D) $23
E) $33.67
Answer: E
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
50) Refer to Table 7-5. Given the information in the table about short-run costs, this firm would minimize
the average variable cost of production when producing
A) 10 chairs.
B) 15 chairs.
C) 20 chairs.
D) 25 chairs.
E) 30 chairs.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
52
51) Refer to Table 7-5. Given the information in the table about short-run costs, this firm would minimize
the average total cost of production when producing
A) 10 chairs.
B) 15 chairs.
C) 20 chairs.
D) 25 chairs.
E) 30 chairs.
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
52) Refer to Table 7-5. At what level of output is this firm at its capacity?
A) 10 chairs
B) 15 chairs
C) 20 chairs
D) 25 chairs
E) 30 chairs
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
53
The table below shows output, marginal cost, and average variable cost for the production of pairs of shoes. All costs
are in dollars.
Marginal Average
Output Cost Variable Cost
50 60 140
70 45 115
90 35 95
110 30 80
130 35 65
150 60 60
170 105 65
190 180 75
210 230 90
230 290 110
TABLE 7-6
53) Refer to Table 7-6. The firm's marginal product of its variable factor is maximized when it produces
________ units of output.
A) 50
B) 90
C) 100
D) 110
E) 170
Answer: D
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
54) Refer to Table 7-6. Suppose there are no fixed costs. The firm reaches it's capacity level of output when
its output is equal to ________ units.
A) 50
B) 110
C) 150
D) 190
E) 210
Answer: C
Diff: 2
Skill: Applied
User1: Table
User2: Quantitative
54
55) Refer to Table 7-6. If the firm produces 130 pairs of shoes, and the fixed cost is $550, then the firm's
total cost is
A) $7000.
B) $8000.
C) $9000.
D) $10 000.
E) $12 000.
Answer: C
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
56) Refer to Table 7-6. Suppose this firm is producing 210 pairs of shoes per time period and that the
variable factor of production is labour. Which of the following statements best describes this firm's
production?
A) Additional units of labour employed will increase the average variable cost of producing shoes.
B) Marginal cost is higher than average variable cost, so average product must be rising.
C) Marginal cost is higher than average variable cost, so marginal product must be rising.
D) Each additional unit of labour employed reduces the average variable cost of the pairs of shoes.
E) The firm is producing below its capacity.
Answer: A
Diff: 3
Skill: Applied
User1: Table
User2: Quantitative
55
Another random document with
no related content on Scribd:
unintentionally sunk as the result of a cannon shot, and spot and red sailed
into harbour. With Thomas's miss I scored eleven. Unfortunately, off my
next stroke, Thomas again went down.
"Billiards," he said.
"You don't think I want to put the rotten thing down, do you? It's such a
blessed rabbit. Directly it sees a hole anywhere it makes for it. Hallo, six
more. I shall now give what they call a miss in baulk."
"Oh, good miss," cried Myra, as spot rested over the middle pocket.
"That was a googly. You both thought it would break the other way."
The game went on slowly. When Thomas was ninety and I was ninety-
nine, there was a confused noise without, and Archie and Miss Blair burst
into the room. At least only Archie actually burst; Miss Blair entered
sedately.
"Who's winning?" cried Archie.
"What an absurd question," I said. "As if we should tell you."
"All right. Dahl—Miss Blair, have you ever seen billiards played really
well?"
"Never."
"Then now's your chance. Ninety, ninety-nine—they've only just begun.

This is Thomas's first break, I expect. There—he's got a clear board. You
get five extra for that, and the other man is rubiconed. Ninety-nine all. Now,
it is only a question of who misses first."
I put down my cue.
"Thomas," I began, "we have said some hard things about each other to-
night, but when I listen to Archie I feel very friendly towards you."
"Archibald," said Thomas, "is a beastly name."

"So I told Miss Blair. For a man who was, so to speak, born with a
silver billiard-table in his mouth to come here and make fun of two
persevering and, in my case, promising players, is——"
"You'll never finish that sentence," said Myra. "Try some more
billiards."
"It was almost impossible to say what I wanted to say grammatically," I

answered, and I hit my ball very hard up the table at the white.
"It's working across," said Archie, after the second bounce; "it must hit
the red soon. I give it three more laps."
"It's going much more slowly now," said Miss Blair.
"Probably it's keeping a bit of a sprint for the finish. Wait till it gets its
second wind. No, I'm afraid it's no good; it ought to have started sooner.
Hallo, yes, it's—— Got him!"
"It hasn't finished yet," I said calmly. "Look—there!"
"Jove!" said Archie, shaking my hand, "that's the longest loser I've ever
seen. My dear old man, what a performer. The practice you must have had.
The years you must have devoted to the game. I wonder—could you
possibly spare an hour or two to-morrow to play cricket for us?"
CHAPTER IV
A FEW WIRES
A hundred and eighty for none. The umpire waved his lily hand, and the
scorer entered one more "four" in his book. Seeing that the ball had gone
right through a bicycle which was leaning up against the pavilion, many
people (the owner of the bicycle, anyhow) must have felt that the actual
signalling of a boundary was unnecessary; but our umpire is a stickler for
the etiquette of the game. Once when—— But no, on second thoughts, I
sha'n't tell you that story. You would say it was a lie—as indeed it is.
"Rotten," said Archie to me, as we crossed over. (A good captain always

confides in his wicket-keeper.)
"Don't take Simpson off," I said. "I like watching him."
"I shall go on again myself soon."
"Oh, it's not so bad as that. Don't lose heart."
The score was two hundred when we met again.
"I once read a book by a lady," I said, "in which the hero started the
over with his right hand and finished it with his left. I suppose Simpson
couldn't do that?"
"He's a darned rotten bowler, anyway."
"His direction is all right, but his metre is so irregular."
At the end of the next over, "What shall I do?" asked Archie in despair.
"Put the wicket-keeper on," I said at once.
The idea was quite a new one to him. He considered it for a moment.
"Can you bowl?" he said at last.
"No."
"Then what on earth——"
"Look here; you've tried 'em with people who can bowl, and they've
made two hundred and twenty in an hour and a half; somebody who can't
bowl will be a little change for them. That's one reason. The second is that
we shall all have a bit of a rest while I'm taking my things off. The third is
that I bet Myra a shilling——"
Archie knelt down, and began to unbuckle my pads. "I'll 'keep' myself,"
he said. "Are you fast or slow?"
"I haven't the faintest idea. Just as it occurs to me at the moment, I

expect."
"Well, you're quite right; you can't be worse than some of us. Will you
have a few balls down first?"
"No, thanks; I should like to come as a surprise to them."
"Well, pitch 'em up anyhow."
"I shall probably vary my length—if possible without any alteration of

action."
I am now approaching the incredible. The gentle reader, however, must

not be nasty about it; he should at least pretend to believe, and his best way
of doing this is to listen very silently to what follows. When he has heard
my explanation I shall assume that he understands.
Bowling is entirely a question of when you let go of the ball. If you let
go too soon the result is a wide over the batsman's head; if too late, a nasty
crack on your own foot. Obviously there are spaces in between. By the law
of averages one must let go at the right moment at least once. Why not then
at the first ball? And in the case of a person like myself, who has a very
high action and a good mouth—I mean who has a very high delivery, such a
ball (after a week of Simpsons and Archies) would be almost unplayable.
Very well then; I did let go at the right moment, but, unfortunately, I
took off from the wrong crease. The umpire's cry of "No-ball" and the
shattering of the Quidnunc's wicket occurred simultaneously.
"Good ball," said Archie. "Oh, bad luck!"

I tried to look as though, on the whole, I preferred it that way—as being
ultimately more likely to inspire terror in the batsman at my end. Certainly,
it gave me confidence; made me over-confident in fact, so that I held on to
the next ball much too long, and it started bouncing almost at once.
The Quidnunc, who was convinced by this that he had been merely
having a go at the previous ball, shouldered his bat and sneered at it. He
was still sneering when it came in very quickly, and took the bottom of the
leg stump. (Finger spin, chiefly.)
Archie walked up slowly, and gazed at me.
"Well?" I said jauntily.
"No, don't speak. I just want to look, and look, and look. It's wonderful.
No elastic up the sleeve, or anything."
"This is where it first pitched," said the Major, as he examined the

ground.
"Did you think of letting in a brass tablet?" I inquired shortly.
"He is quite a young man," went on Archie dreamily, "and does not care
to speak about his plans for the future. But he is of opinion that——"
"Break, break, break," said Simpson. "Three altogether."
"Look here, is there anybody else who wants to say anything? No? Then
I'll go on with my over."
Archie, who had begun to walk back to his place, returned thoughtfully
to me.
"I just wanted to say, old chap, that if you're writing home to-night
about it, you might remember me to your people."
Blair was about the only person who didn't insult me. This was because
he had been fielding long-on; and as soon as the wicket fell he moved round
about fifty yards to talk to Miss Fortescue. What people can see in her——
Well, directly my next ball was bowled he started running as hard as he
could to square leg, and brought off one of the finest catches I've ever seen.
"The old square-leg trap," said Archie. "But you cut it rather fine, didn't
you? I suppose you knew he was a sprinter?"
"I didn't cut it at all—I was bowling. Go away."
Yes, I confess it. I did the hat trick. It was a good length half-volley, and
the batsman, who had watched my first three balls, was palpably nervous.
Archie walked round and round me in silence for some time, and then went
over to Thomas.
"He's playing tennis with me this evening," he began.
"I was beaten at billiards by him last night," said Thomas proudly.
"He's going to let me call him by his Christian name."
"They say he's an awfully good chap when you know him," replied
Thomas.
I got another wicket with the last ball of the over, and then we had
lunch. Myra was smiling all over her face when we came in, but beyond a
"Well bowled, Walter" (which I believe to be Brearley's name), would have
nothing to do with me. Instead she seized Archie, and talked long and
eagerly to him. And they both laughed a good deal.
"Arkwright," I heard Archie say at the end. "He's sure to be there, and
would do it like a shot."
Like a wise captain Archie did not put me on after lunch, and Simpson
soon began to have the tail in difficulties. Just after the eighth wicket fell a
telegram came out. Archie took it and handed it to me. "From Maclaren, I
expect," he said with a grin.
"You funny ass; I happen to know it's from Dick. I asked him for a wire
about the Kent match."
"Oh, did Kent win?" said Archie, looking over my shoulder. As I
opened it, the others came up, and I read—
"Please be in attendance for next Test Match."

"HAWKE"
I got three more that afternoon. One from Fry, one from Leveson-
Gower, and one from Maclaren. They all came from Lord's, and I've half a
mind to take my telegrams with me, and go. Then Myra would probably get
six months in the second division.
"But I shouldn't mind that," said Myra. "You could easily bowl—I mean
bail—me out."
A silly joke, I call it.
CHAPTER V
AT PLAY
I selected a handkerchief, gave a last look at the weather, which was

beastly, and went down (very late) to breakfast. As I opened the door there
was a sudden hush. Everybody looked eagerly at me. Then Miss Fortescue
tittered.
Well, you know how one feels when that happens. I put my hand
quickly to my tie—it was still there. I squinted down my nose, but there
was no smut. To make quite sure I went over to the glass. Then Simpson
exploded.
Yet nobody spoke. They all sat there watching me, and at last I began to
get nervous. I opened my mouth to say "Good-morning," but before I got it
out Miss Blair gave a little shriek of excitement. That upset me altogether. I
walked up to the tea-pot, and pouring myself out a cup said, with
exaggerated carelessness, "Rotten day, isn't it?"
And then came the laughter—shout after shout.
I held out my hand to Myra. "Good-bye," I said, "I'm going home.

Thank you for a very jolly time, but I'm not going to be bullied."
"Oh, you dear," she gurgled.
"I am rather sweet before breakfast," I admitted, "but how——"
"It was too heavenly of you. I never thought you would."
"I think I shall go back to bed."
"It was rather rough luck," said Archie, "but of course the later you are
the worse it is for you."
"And the higher the fewer. Quite so. If this is from Breakfast Table
Topics in The Daily Mirror, I haven't seen them to-day; but I'll do my best."
"Archie, explain."
Archie took up a piece of paper from the table, and explained. "It's like
this," he said. "I came down first and looked at the weather, and said——"
"Anyone would," I put in quickly.
"Well, then, Blair came in and said, 'Beastly day,' and then Simpson
—— Well, I thought I'd write down everybody's first remark, to see if
anybody let the weather alone. Here they are."
"It's awful," put in Myra, "to have one's remarks taken down straight
off. I've quite forgotten what I said."
This was the list:
Archie: "Bother." (So he says.)
Blair: "What a beastly day!"
Simpson: "What a jolly day!"
The Major: "Well, not much cricket to-day, hey?"
Myra: "Oh dear, what a day!"
Miss Blair: "What a terrible day!"
Miss Fortescue: "Oh, you poor men—what a day!"
Thomas: "Rotten day, isn't it?"
Me: "Rotten day, isn't it?"
"I don't think much of Thomas's remark," I said.
Later on in the morning we met (all except the Major, that is) in the
room which Myra calls hers and Archie calls the nursery, and tried to think
of something to do.
"I'm not going to play bridge all day for anyone," said Archie.
"The host should lay himself out to amuse his guests," said Myra.
"Otherwise, his guests will lay him out," I warned him, "to amuse
themselves."
"Well, what do you all want to do?"
"I should like to look at a photograph album," said Thomas.
"Stump cricket."
"What about hide-and-seek?"
"No, I've got it," cried Archie; "we'll be boy scouts."
"Hooray!" cried everybody else.
Archie was already on his hands and knees. "Ha!" he said, "is that the
spoor of the white ant that I see before me? Spoorly not. I have but been
winded by the water-beetle.
"Sound, sound the trumpet, beat the drum,

To all the scouting world proclaim
One crowded stalk upon the turn
Is worth an age without a name."
"Archie!" shrieked Myra in horror. "It is too late," she added, "all the
ladies have swooned."
We arranged sides. Myra and I and Simpson and Thomas against the
others. They were to start first.
"This isn't simply hide-and-seek," said Archie, as they went off. "You've
got to track us fairly. We shall probably 'blaze' door-posts. When you hear
the bleat of a tinned sardine that means we're ready. Keep your eyes
skinned, my hearties, and heaven defend the right."
"We ought to have bare knees really," said Myra, when they'd gone.
"Boy scouts always do. So that when they go through a bed of nettles they
know they've been."
"I shall stalk the stairs to begin with," I said. "Simpson, you go down
the back way and look as much like a vacuum-cleaner as possible. Then
they won't notice you. Thomas and Myra—— Hush! Listen! Was that the
bleat of a fresh sardine or the tinned variety?"
"Tinned," said Myra. "Let's go."

We went. I took the Queen Anne staircase on my—in the proper
stalking position. I moved very slowly, searching for spoor. Half-way down
the stairs my back fin slipped and I shot over the old oak at a tremendous
pace, landing in the hall like a Channel swimmer. Looking up, I saw
Thomas in front of me. He was examining the door for "blazes." Myra was
next to him, her ear to the ground, listening for the gallop of horses' hoofs. I
got up and went over to them.
"Hast seen aught of a comely wench in parlous case, hight Mistress

Dahlia?" I asked Thomas.
"Boy scouts don't talk like that," he said gruffly.
"I beg your pardon. I was thinking that I was a Cavalier and you were a
Roundhead. Now I perceive that you are just an ordinary fathead."
"Why," said Myra at the foot of the stairs, "what does this button mean?
Have I found a clue?"
I examined it, and then I looked at my own coat.
"You have," I said. "Somebody has been down those stairs quite
recently, for the button is still warm."
"Where is Scout Simpson?"
At that moment he appeared breathless with excitement.
"I have had an adventure," he said hurriedly, without saluting. "I was on
the back stairs looking like a vacuum-cleaner when suddenly Archie and
Miss Blair appeared. They looked right at me, but didn't seem to penetrate
my disguise. Archie, in fact, leant against me, and said to Miss Blair: 'I will
now tell you of my secret mission. I carry caviare—I mean despatches—to
the general. Breathe but a word of this to the enemy, and I miss the half-
holiday on Saturday. Come, let us be going, but first to burn the secret
code.' And—and then he struck a match on me, and burned it."
Myra gurgled and hastily looked solemn again. "Proceed, Scout
Simpson," she said, "for the night approaches apace."
"Well, then they started down the stairs, and I went after them on my—
scouting, you know. I made rather a noise at one corner, and Archie looked
round at me, and said to Miss Blair: 'The tadpoles are out full early. See
yonder where one lies basking.' And he came back, and put his foot on me
and said, 'Nay, 'tis but a shadow. Let us return right hastily. Yet tarry a
moment, what time I lay a false trail.' So they tarried and he wrote a note
and dropped it on me. And, afterwards, I got up and here it is."
"The secret despatch," cried Myra.
"It's addressed to the Scoutmistress, and it says outside: 'Private, not to

be opened till Christmas Day.'"
Myra opened it and read: "Your blessed scouts are everywhere. Let me
just have five minutes with her in the nursery, there's a dear. I'd do as much
for you."
But she didn't read it aloud, and I didn't see it till some time afterwards.
She simply put it away, and smiled, and announced that the scouts would
now adjourn to the billiard-room for pemmican and other refreshments;
which they did. The engagement was announced that evening.
CHAPTER VI
IN AND OUT
"Well," said Thomas, "how are we going to celebrate the joyful event?"
We were sitting on the lawn, watching Blair and Miss Fortescue play
croquet. Archie and Dahlia were not with us; they had (I suppose) private
matters to discuss. Our match did not begin for another hour, happily for the
lovers; happily also for the croquet-players, who had about fifty-six more
hoops, posts, flags and what not to negotiate.
"It's awfully difficult to realise it," said Myra. "My own brother! Just
fancy—I can hardly believe it."
"I don't think there can be any doubt," I said. "Something's happened to
him, anyhow—he's promised to put me in first to-day."
"Let's have a dance to-morrow night," continued Thomas, relentlessly

pursuing his original idea. "And we'll all dance with Miss Blair."
"Yes. Archie would like that."
"I remember, some years ago, when I was in Spain," said Simpson——
"This," I murmured appreciatively, "is how all the best stories begin."
And I settled myself more comfortably in my chair.
"No," said Simpson, "I'm wrong there. It was in Hampstead." And he

returned to his meditations.
"Tell you what," said Thomas, "you ought to write 'em an ode,
Simpson."
"There's nothing that rhymes with the lady."
"There's hair," I said quite unintentionally.
"I meant with Dahlia."
"My dear man, there are heaps. Why, there's azalea."
"That's only one."
"Well, there are lots of different kinds of azalea."
"Any rhymes for Archie and Mannering?" said Simpson scornfully.

"Certainly. And Simpson. You might end with him—
"'Forgive the way the metre limps on,

It's always like that with Samuel Simpson.'
You get the idea?"
"Hush," said Myra, "Miss Fortescue has passed under a hoop."
But it is time that we got on to my innings. Archie managed to win the

toss, and, as he had promised, took me in with him. It was the proudest and
most nervous moment of my life.
"I've never been in first before," I said, as we walked to the wickets. "Is
there any little etiquette to observe?"
"Oh, rather. Especially, if you're going to take first ball."
"Oh, there's no doubt about my taking the first ball."
"In that case the thing to remember is, that when the umpire calls 'play'
the side refusing to play loses the match."
"Then it all rests on me? Your confidence in me must be immense. I

think I shall probably consent to play."
I obtained guard and took my stand at the wicket. Most cricketers

nowadays, I am told, adopt the "two-eyed stance," but for myself I still stick
to the good old two-legged one. It seems to me to be less wearing. My style,
I should observe, blends happily the dash of a Joseph Vine with the patience
of a Kenneth Hutchings; and after a long innings I find a glass of—— I've
forgotten the name of it now, but I know I find it very refreshing.
Being the hero (you will admit that—after my hat trick) of this true
story, I feel I must describe my innings carefully. Though it only totalled
seventeen, there was this to be said for it: it is the only innings of less than a
hundred ever made by a hero.
It began with a cut to square leg, for which we ran a forced single, and
followed on with a brace of ones in the direction of fine slip. After that, I
stopped the bowler in the middle of his run-up, and signalled to a spectator
to move away from the screen. This was a put-up job with Myra, and I
rather hoped they would give me something for it, but apparently they
didn't. At the end of the over, I went up and talked to Archie. In first-class
cricket, the batsmen often do this, and it impresses the spectators
immensely.
I said, "I bet you a shilling I'm out next over."
He said, "I won't take you."
I said, "Then I huff you," and went back to my crease.
My next scoring stroke was a two-eyed hook over point's head, and then
Archie hit three fours running. I had another short conversation with him, in
the course of which I recited two lines from Shakespeare and asked him a
small but pointed conundrum, and afterwards I placed the ball cleverly to
mid-off, the agility of the fieldsman, however, preventing any increment,
unearned or otherwise. Finally, I gave my cap to the umpire, made some
more ones, changed my bat, and was caught at the wicket.
"I hit it," I said, as I walked away. I said it to nobody in particular, but
the umpire refused to alter his decision.
"I congratulate you," said Miss Blair, when I was sitting down again.
"I was just going to do that to you," I said.
"Oh, but you were kind enough to do that last night."
"Ah, this is extra. I've just been batting out there with your young man.
Perhaps you noticed?"
"Well, I think I must have."
"Yes. Well, I wanted to tell you that I think he has quite an idea of the
game, and that with more experience he would probably be good enough to
play for—for Surrey. Second eleven. Yes. At hockey."
"Thank you so much. You've known him a long time, haven't you?"
"We were babes together, madam. At least, simultaneously. We actually

met at school. He had blue eyes and curly hair, and fought the captain on
the very first day. On the second day his hair was still curly, but he had
black eyes. On the third day he got into the cricket eleven, and on the fourth
he was given his footer cap. Afterwards he sang in the choir, and won the
competition for graceful diving. It was not until his second term that the
headmaster really began to confide in him. By the way, is this the sort of
thing you want?"
"Yes," smiled Dahlia. "Something like that."
"Well, then we went to Cambridge together. He never did much work,

but his algebra paper in the Little Go was so brilliant that they offered him
the Senior Wranglership. He refused on the ground that it might interfere
with his training for the tug of war, for which he had just obtained his blue
—and—— It's a great strain making all this up. Do you mind if I stop
now?"
"Of course I know that isn't all true, but he is like that, isn't he?"
"He is. He put me in first to-day."
"I know you really are fond of him."
"Lorblessyou—yes."
"That makes you my friend, too."
"Of course." I patted her hand. "That reminds me—as a friend I feel
bound to warn you that there is a person about in the neighbourhood called
Samuel Simpson who meditates an evil design upon you and yours. In
short, a poem. In this he will liken you to the azalea, which I take to be a
kind of shrubby plant."
"Yes?"
"Yes, well, all I want to say is, if he comes round with the hat
afterwards, don't put anything in."
"Poor man," smiled Dahlia. "That's his living, isn't it?"
"Yes. That's why I say don't put anything in."
"I see. Oh, there—he's out. Poor Archie."
"Are you very sorry?" I said, smiling at her. "I'm just going, you know."
"Between ourselves," I said later to Myra, "that isn't at all a bad girl."
"Oh, fancy!"
"But I didn't come to talk about her. I came to talk about my seventeen."
"Yes, do let's."
"Yes. Er—you begin."
CHAPTER VII
ALL OVER
"May I have a dance?" I asked Miss Blair.
She put her head on one side and considered.
"One, two, three—the next but five," she said.
"Thank you. That sounds a lot; is it only one?"
"You may have two running then, if you like."

"What about two running, and one hopping, and one really gliding?
Four altogether."
"We'll see," said Miss Blair gravely.
Myra, who was being very busy, came up and dragged me away.
"I want to introduce you to somebody. I say, have you seen Thomas?"
"It's no earthly good introducing me to Thomas again."
"He's so important because he thinks the dance was his idea; of course
I'd meant to have it all along. There she is—her name's Dora Dalton. I think
it's Dora."
"I shall call her Dora, anyhow."
I was introduced, and we had a very jolly waltz together. She danced
delightfully; and when we had found a comfortable corner she began to
talk.
She said, "Do you play cricket?"
I was rather surprised, but I kept quite cool, and said, "Yes."
"My brother's very fond of it. He is very good too. He was playing here
yesterday against Mr Mannering's team, and made six, and then the umpire
gave him out; but he wasn't out really, and he was very angry. I don't
wonder, do you?"
I had a sudden horrible suspicion.
"Did you say your name was Dora—I mean his name was Dalton?"
"Yes. And just because he was angry, which anybody would be, the
wicket-keeper was very rude, and told him to go home and—and bake his
head."
"Not bake," I said gently, my suspicion having now become almost a
certainty. "Boil."
"Go home, and boil his head," she repeated indignantly.
"And did he?"
"Did he what?"
"Er—did he understand—I mean, don't you think your brother may

have misunderstood? I can't believe that a wicket-keeper would ever
demean himself by using the word 'boil.' Not as you might say boil. 'Cool
his head' was probably the expression—it was a very hot day, I remember.
And ... ah, there's the music beginning again. Shall we go back?"
I am afraid Miss Dalton's version of the incident was not quite accurate.
What had happened was this: I had stumped the fellow, when he was
nearly a mile and a half outside his crease; and when he got back to it some
minutes later, and found the umpire's hand up, he was extremely indignant
and dramatic about it. Quite to myself, sotto voce as it were, I murmured,
"Oh, go home!" and I may have called attention in some way to the "bails."
But as to passing any remarks about boiling heads—well, it simply never
occurred to me.
I had a dance with Myra shortly after this. She had been so busy and
important that I felt quite a stranger. I adapted my conversation accordingly.
"It's a very jolly floor, isn't it?" I said, as I brought her an ice.
"Oh yes!" said Myra in the same spirit.
"Have you been to many floors—I mean dances, lately?"
"Oh yes!"
"So have I. I think dances have been very late lately. I think when the
floor's nice it doesn't matter about the ices. Don't you think the band is
rather too elastic—I mean keeps very good time? I think so long as the time
is good it doesn't matter about the floor."
"Oh, isn't it?" said Myra enthusiastically.
There was a pleasant pause while we both thought of something else to

say.
"Have you," we began.
"I beg your pardon," we said at once.
"I was going to say," Myra went on, "have you read any nice books
lately, or are you fonder of tennis?"
"I like reading nice books about tennis," I said. "If they are nice books,
and are really about tennis. Er—do you live in London?"
"Yes. It is so handy for the theatres, isn't it? There is no place exactly
like London, is there? I mean it's so different."
"Well, of course, up in Liverpool we do get the trams, you know, now....

I say, I'm tired of pretending I've only just met you. Let's talk properly."
At this moment we heard a voice say, "Let's try in here," and Archie and
Dahlia appeared.
"Hallo! here's the happy pair," said Myra.
They came in and looked at us diffidently. I leant back and gazed at the
ceiling.
"Were you just going?" said Archie.
"We were not," I said.
"Then we'll stay and talk to you."
"We were in the middle of an important conversation."

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Microeconomics Canadian 15th Edition McConnell

7.1 What Are Firms?

1) A single proprietorship is a form of business organization which

6) Which of the following statements is NOT true of a corporation?

8) Which of the following statements about the organization of firms is true?

11) Real capital includes

12) Undistributed profits of a firm are

14) An example of debt financing for any form of business organization is

2) Economists use the notation Q = f(L,K) to describe

3) The equation Q = 0.5KL - (0.4)L + 2L2 is an example of

9) The opportunity cost to a firm of using an asset is zero if

Total Revenues ($) 500 000

Total Costs ($)

Total Revenues ($) 250 000

Total Costs ($)

1) What information is provided by average, marginal, and total product curves?

10) Refer to Figure 7-1. Total product is increasing at a decreasing rate

13) In the short run, the firm's product curves show

14) In the short run, the firm's product curves show

Labour per period Total output per period

Labour per unit of time Total output

34) When a firm's total-product curve is increasing at a decreasing rate

35) Diminishing marginal product of labour is said to exist when there is

37) The point of diminishing marginal productivity is the point where

1) In economics, the term "fixed costs" means

Labour per unit of time Total output

11) Marginal cost is defined as the

24) A firm's capacity is defined as the level of output where

27) A firm's short-run marginal cost curve is decreasing when

28) When a firm's marginal cost is rising, we know that

Labour per period Total output per period

Total Fixed Total Variable

"Who's winning?" cried Archie.

"What an absurd question," I said. "As if we should tell you."

"Then now's your chance. Ninety, ninety-nine—they've only just begun.

I put down my cue.

"Archibald," said Thomas, "is a beastly name."

"It was almost impossible to say what I wanted to say grammatically," I

"It's going much more slowly now," said Miss Blair.

"It hasn't finished yet," I said calmly. "Look—there!"

"Rotten," said Archie to me, as we crossed over. (A good captain always

"Don't take Simpson off," I said. "I like watching him."

"I shall go on again myself soon."

"Oh, it's not so bad as that. Don't lose heart."

The score was two hundred when we met again.

"He's a darned rotten bowler, anyway."

"His direction is all right, but his metre is so irregular."

"Put the wicket-keeper on," I said at once.

"Can you bowl?" he said at last.

"Then what on earth——"

"I haven't the faintest idea. Just as it occurs to me at the moment, I

"No, thanks; I should like to come as a surprise to them."

"Well, pitch 'em up anyhow."

"I shall probably vary my length—if possible without any alteration of

I am now approaching the incredible. The gentle reader, however, must