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Lecture 11

# Economics 1021A/B Lecture Notes - Lecture 11: Fixed Cost, Variable Cost, Average Cost

Department
Economics
Course Code
ECON 1021A/B
Professor
Michael Parkin
Lecture
11

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CHAPTER 11 SAMPLE QUESTIONS
After completing Chapter 11, I would expect you to be able to complete problems such as the following. These
are questions related to this chapter that have actually appeared on my past midterms. This is only a sample, and
you should not limit your studies to just these questions or topics.
1) When the demand for electricity peaks during the hottest days of summer, Hydro One can generate more
electricity by using more fuel and increasing the working hours of many of its employees. The company cannot,
however, increase electric power production by building additional generating capacity. This means that the
company is operating in the
A) long run.
B) market run.
C) short run.
D) intermediate run.
E) immediate run.
Refer to the table below to answer the following question.
Table 2
Labour
(workers per day)
Output
(teapots per day)
0
1
2
3
4
5
0
3
12
19
23
25
2) Refer to Table 2 which gives Tania's total product schedule. The marginal product when the firm increases
the number of workers from 3 to 4 per day is
A) 2 teapots. B) 9 teapots. C) 4 teapots. D) 6 teapots. E) 7 teapots.
3) When the 7th worker is hired, output increases from 100 units per week to 110 units per week. When the 8th
worker is hired, output increases from 110 units to 118 units. This is an example of
A) diminishing marginal cost.
B) decreasing returns to scale.
C) labour-intensive production.
D) diminishing marginal returns.
E) increasing returns to scale.
4) If the marginal product of the fifth worker is 34, then the total product of five workers
A) is 170.
B) is 6.8.
C) is 24.
D) is 35.
E) cannot be calculated with the information given.