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LONG QUIZ AE 11 Midterm For Student

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8 views4 pages

LONG QUIZ AE 11 Midterm For Student

Uploaded by

carda velunta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NAME; SHIELA MAE BARCELONA

DIRECTION: This is a 30-minute exam. Please submit


your answers via Personal Message by exactly 3:30 PM

TEST I: IDENTIFICATION: Identify what is being asked:

1. A mathematical representation that shows the relationship between inputs (like


labor and capital) and the output of goods or services. PRODUCTION
FUNCTION
2. The additional output produced by adding one more unit of a specific input while
keeping other inputs constant. MARGINAL PRODUCT
3. The change in output resulting from a proportional change in all inputs.
RETURNS TO SCALE
4. The total quantity of output produced by a given quantity of inputs TOTAL
PRODUCT
5. A curve that represents all combinations of inputs that produce the same level of
output. ISOQUANT CURVE
6. A period in which at least one factor of production is fixed, leading to a limitation
in output adjustments. SHORT-RUN
7. The additional cost incurred by producing one more unit of output, considering
fixed and variable costs. MARGINAL COST
8. A period in which all factors of production can be varied, allowing firms to adjust
all inputs freely. LONG-RUN
9. The total amount of money generated from the sale of goods or services before
any costs are deducted. TOTAL REVENUE
10. Identify the type of income that includes all expenses, including operating
expenses and taxes. NET INCOME
11. Profit that takes into account both explicit costs and implicit costs, providing
a measure of profitability that considers opportunity costs. ECONOMIC PROFIT
12. Income derived from the core business operations, calculated as gross
income minus operating expenses. OPERATING INCOME
13. Costs that vary directly with the level of production, such as raw materials,
direct labor, and utility costs. VARIABLE COST
14. The value of the next best alternative foregone when a decision is made to
use resources in a particular way. OPPORTUNITY COST
15. A systematic assessment of a market to understand its size, dynamics,
trends, competition, and customer preferences. MARKET ANALYSIS
16. The principle stating that as more units of a variable input are added to a
fixed input, the marginal product of the variable input will eventually decrease.
LAW OF DIMINISHING RETURNS
17. Cost advantages that a firm experiences as it increases its level of
production, leading to a decrease in average costs. ECONOMIES OF SCALE
18. The phenomenon where a firm experiences increasing per-unit costs as it
grows too large, often due to inefficiencies. DISECONOMIES OF SCALE
19. Cost advantages that a firm experiences due to the use of more efficient
production techniques and technologies. TECHNOLOGICAL ECONOMIES
20. Costs that have already been incurred and cannot be recovered, irrelevant for
future decision-making. SUNK COST
TEST I: TRUE OR FALSE: Underline your answer:

1. True or False: Economies of scale only apply to large firms.


2. True or False: Diseconomies of scale occur when a firm's average costs increase as
production increases.
3. True or False: Internal economies of scale are cost advantages that occur within a single
firm.
4. True or False: External economies of scale are benefits that accrue to all firms in an industry
as the industry grows.
5. True or False: The law of diminishing returns states that increasing one input while keeping
others constant will eventually lead to higher marginal returns.
6. True or False: Specialization of labor can lead to economies of scale.
7. True or False: Larger firms are always more profitable than smaller firms.
8. True or False: Automation is a factor that can lead to technical economies of scale.
9. True or False: Economies of scale can lead to reduced prices for consumers.
10. True or False: All industries experience economies of scale to the same extent.
11. True or False: Scenario: A farmer increases the number of workers on a fixed
plot of land but finds that each additional worker contributes less and less to
total output.
12. True or False: Scenario: A factory decides to invest in new machinery, leading
to an immediate increase in production efficiency without any increase in costs.
13. True or False: Scenario: A restaurant adds more tables and staff to
accommodate a growing customer base, resulting in an increase in average
costs per meal served.
14. True or False: Scenario: A toy manufacturer produces a larger quantity of toys
and finds that the average cost per toy decreases as a result.
15. True or False: Scenario: A bakery hires more bakers but keeps the oven
capacity the same, leading to less efficient use of the oven.
16. True or False: Scenario: A company that produces smartphones experiences a
rise in production costs due to overstaffing.
17. True or False: Scenario: A software development firm decides to expand its
team size, but the new members take time to reach full productivity, leading to
initial losses.
18. True or False: Scenario: A clothing manufacturer reduces production to focus
on high-quality, low-quantity items, increasing the average cost per item.
19. True or False: Scenario: A tech company increases its output without changing
its input levels and finds that the cost per unit decreases.
20. True or False: Scenario: A car manufacturer finds that by increasing
production, they can negotiate lower prices for raw materials.
TEST II: MULTIPLE CHOICE: Choose the BEST answer

1. If a production function exhibits increasing returns to scale, what happens when all
inputs are increased by a certain percentage?
A) Output increases by the same percentage.

B) Output increases by less than the percentage of inputs.

C) Output increases by more than the percentage of inputs.

D) Output remains constant.

2. Which of the following is NOT a characteristic of a typical production function?

A) Non-negative output
B) Continuity and smoothness
C) Fixed proportions of inputs
D) Increasing returns to scale at low levels of output
3. Which of the following factors can shift the production function upward?
A) Decrease in labor force
B) Technological advancements
C) Increase in input prices
D) Decrease in demand
4. In the production function Q=f(L,K)Q = f(L, K)Q=f(L,K), what do LLL and KKK
typically represent?
A) Land and Knowledge
B) Labor and Capital
C) Labor and Knowledge
D) Land and Capital

5. What does a production function describe?


A) The relationship between input costs and output prices

B) The relationship between inputs used in production and the resulting


output

C) The relationship between labor and wage rates

D) The relationship between consumer demand and supply

6. Scenario: A car manufacturer finds that by increasing its production from 10,000 to
20,000 units, the average cost per car decreases significantly. What type of economies of
scale is this an example of?
A) Diseconomies of scale

B) Internal economies of scale

C) External economies of scale

D) Constant returns to scale


7. Scenario: A food processing plant introduces a new line of machinery that allows for the
processing of larger batches of ingredients at a lower cost per unit. What does this
illustrate?
A) The importance of labor input

B) Technical economies of scale

C) The law of diminishing returns

D) Average cost pricing

8. Scenario: A manufacturing plant can produce the same number of items using fewer
resources due to improved production techniques. What does this signify in terms of the
production function?
A) An upward shift in the production function

B) Diminishing returns

C) A decrease in total output

D) A constant returns to scale

9. Scenario: A bakery invests in a new automated oven that allows it to bake twice as many
loaves of bread in the same amount of time. What is the likely impact on the production
function?
A) It will shift downward due to increased costs.

B) It will remain unchanged as the input types are the same.

C) It will shift upward due to increased efficiency and output.

D) It will demonstrate diminishing returns.

10. Scenario: A tech company notices that as it scales up production of its software, it can
negotiate lower prices for server space. This reflects which of the following concepts?
A) Marginal returns

B) Technical inefficiencies

C) External economies of scale

D) Constant returns to scale

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