Practice Test

DO NOT WRITE ON THIS TEST!
AP Unit 10 Practice Test
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Suppose the Chicago Cubs could rent out Wrigley Field (the field the players play on) to local youth leagues
for $11,000 per month. The $11,000 per month reflects the ________ of capital.
a. implicit cost
b. explicit cost
c. direct cost
d. total cost
e. average fixed cost
____ 2. Sarah's accountant tells her that she made a profit of $43,002 running a pottery studio in Orlando. Sarah's
husband—an economist—claims Sarah lost $43,002 running her pottery studio. This means her husband is
claiming that she incurred ________ in ________ costs.
a. $86,004; implicit
b. $43,002; implicit
c. $43,002; explicit
d. $86,004; explicit
e. $0; explicit
____ 3. Some highways have one lane, others have two, three, or more. If each lane costs $10 million per mile, an
economist would assume that the total benefit of a three-lane highway must be:
a. less than $10 million per mile.
b. $10 to $20 million per mile.
c. $20 to $30 million per mile.
d. $30 million or more per mile.
e. $0, as the cost of building the highway is a sunk cost.
____ 4. Pauli's Pizza offers the following prices: one slice for $2, two slices for $3.50, three slices for $4.50, four
slices for $5.00. Sal orders two slices. From this we know that Sal's marginal benefit from the second slice
must be at least ________ while the marginal benefit from the third slice must be less than ________.
a. $3.50; $4.50
b. $3.50; $1.00
c. $1.50; $1.00
d. $1.50; $4.50
e. $5.50; $10.50
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Name: ________________________ ID: A
Figure 53-1: Marginal Cost Curve
____ 5. (Figure 53-1: Marginal Cost Curve) Using the marginal cost curve in the figure provided, we can determine
that the total cost of mowing four lawns is approximately:
a. $10.
b. $15.
c. $50.
d. $100.
e. $5
Figure 53-2: Marginal Benefit Curve
____ 6. (Figure 53-2: Marginal Benefit Curve) Using the marginal benefit curve in the figure provided, we can
determine that the marginal benefit of mowing the sixth lawn is approximately:
a. $115.
b. $35.
c. $40.
d. $200.
e. $20.
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Name: ________________________ ID: A
Figure 53-3: Optimal Quantity
____ 7. (Figure 53-3: Optimal Quantity) If the demand for lawn-mowing decreased, the ________ curve in the figure
would shift to the ________ and the optimal quantity would be ________ five lawns mowed.
a. marginal benefit; right; greater than
b. marginal cost; right; less than
c. marginal benefit; left; less than
d. marginal cost; left; greater than
e. marginal benefit; right; equal to
Sigmund tutors five students for the introductory psychology class.
The students differ in their willingness to pay for a one-hour session.
The second column of the table shows their willingness to pay.
Sigmund has estimated his costs of providing tutoring hours
(he has no sunk costs) and these costs appear in the last column.
Students' Hours of Sigmund's
Student Willingness to Pay Tutoring Cost
Peter $25 1 $5
Quincy 15 2 10
Rosemary 5 3 15
Sally 20 4 20
Tomas 10 5 25
Table 53-2: Tutoring
____ 8. (Table 53-2: Tutoring) Sigmund's optimal number of tutoring hours is:
a. 5.
b. 4.
c. 3.
d. 2.
e. 1.
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Name: ________________________ ID: A
____ 9. (Table 53-2: Tutoring) At the optimal hours of tutoring, Sigmund's total net gain is:
a. $60.
b. $50.
c. $30.
d. $15.
e. $5.
____ 10. If the marginal benefit received from a good is equal to the marginal cost of production, then:
a. society's well-being cannot be improved by changing production.
b. society's well-being can be improved if production decreases.
c. society's well-being can be improved if production increases.
d. the market is producing too much of the good.
e. the market is producing too little of the good.
____ 11. If the marginal cost curve is upward-sloping, this means that as output _____, marginal costs will:
a. increases; increase.
b. increases; decrease.
c. decreases; stay constant.
d. increases; stay constant
e. decreases; increase.
Quantity Total
of Labor Output
0 0
1 12
2 22
3 30
4 36
5 40
6 43
7 44
Table 54-1 : Labor and Output
____ 12. (Table 54-1: Labor and Output) Referring to the table, the average product when four workers are employed
is:
a. 4.
b. 36.
c. 10.
d. 6.
e. 9.
____ 13. If two firms are identical in all respects expect that one has more capital than another, the total product curve
for the firm with more capital:
a. must equal the total product curve for the firm with less capital.
b. is upward sloping, while the total product curve for the firm with less capital is
downward sloping.
c. will lie below the total product curve for the firm with less capital.
d. will show no diminishing marginal returns.
e. will lie above the total product curve for the firm with less capital.
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Name: ________________________ ID: A
____ 14. The short run is defined as a:
a. period of time less than 1 year.
b. period of time less than 6 months.
c. period in which some inputs are considered to be fixed in quantity.
d. time period in which some inputs are fixed, but it cannot exceed 1 year.
e. period too short to change any inputs.
____ 15. An input whose quantity can be changed during a particular period is a(n):
a. marginal input.
b. fixed input.
c. complementary input.
d. variable input.
e. necessity input.
____ 16. An input whose quantity cannot be changed during a particular period is a(n):
a. marginal input.
b. fixed input.
c. incremental input.
d. variable input.
e. substitute input.
____ 17. A farm can produce 1,000 bushels of wheat per year with two workers and 1,300 bushels of wheat per year
with three workers. The marginal product of the third worker is:
a. 100 bushels.
b. 300 bushels.
c. 1,300 bushels.
d. 2,300 bushels.
e. 150 bushels.
Labor Total Products
per Day (units per period)
0 0
1 10
2 30
3 70
4 90
5 100
6 107
7 110
8 105
Table 54-2: Total Product and
Marginal Product
____ 18. (Table 54-2: Total Product and Marginal Product) The marginal product of the second worker is:
a. 10.
b. 15.
c. 20.
d. 30.
e. 0.
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Name: ________________________ ID: A
____ 19. Diminishing marginal returns occur when:
a. each additional unit of a variable factor adds more to total output than the previous unit.
b. an additional variable factor adds less to total output than the previous unit.
c. the marginal product of a variable factor is increasing, but at a decreasing rate.
d. total product decreases.
e. an additional variable factor adds the same amount to total output as the previous unit.
Quantity
of Labor
(workers)
Marginal
Product
of Labor
(cabinets per
worker)
0
Quantity of
Cabinets Q
0
1 5 5
2 11 6
3 16 5
4 20 4
5 23 3
6 25 2
7 26 1
8 25 -1
Table 54-3: Production of Cabinets
____ 20. (Table 54-3: Production of Cabinets) The table shows how many cabinets your firm can make with a variable
quantity of labor hired. After which worker does the firm first begin to experience diminishing returns to
labor?
a. first
b. second
c. third
d. fourth
e. fifth
____ 21. The marginal product of labor is the change in:
a. labor divided by the change in total product.
b. total output divided by the change in the quantity of labor.
c. average output divided by the change in the quantity of labor.
d. total costs divided by the change in the quantity of labor.
e. total costs divided by the change in the quantity of output.
____ 22. Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. The average
product of labor is 30, and the marginal product of the twentieth worker is 12. What is the marginal cost of
the last unit produced by the last worker Austin hired?
a. $0.20
b. $5
c. $240
d. $720
e. $60
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Name: ________________________ ID: A
____ 23. When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by
$24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the
last pound of cherries produced is:
a. $40.
b. $19.
c. $4,000.
d. $24,000.
e. $60
____ 24. Kaile Cakes is currently producing 10 cakes per day. The marginal cost of the tenth cake is $24, and average
total cost of 10 cakes is $6. The average total cost of 9 cakes is:
a. $4.
b. $5.
c. $6.
d. $8.
e. $9.
____ 25. A fixed cost:
a. will exist only in the long run.
b. depends on the level of output.
c. will be positive, even if the firm doesn't produce any output in the short run.
d. decreases after the point of diminishing returns is reached.
e. exists in both the short and the long run.
____ 26. Marginal cost is the change in:
a. total cost resulting from a one-unit change in a variable input.
b. total cost resulting from a one-unit change in output.
c. total cost resulting from a one-unit change in average cost.
d. average cost resulting from a one-unit change in output.
e. total variable cost resulting from a one-unit change in a variable intput.
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Name: ________________________ ID: A
Figure 55-3: Short-Run Costs II
____ 27. (Figure 55-3: Short-Run Costs II) Curve 1 is the ________ cost curve.
a. average total
b. average variable
c. marginal
d. total
e. total fixed
____ 28. (Figure 55-3: Short-Run Costs II) Curve 2 is the ________ cost curve.
a. average total
b. average variable
c. marginal
d. total
e. total variable
____ 29. (Figure 55-3: Short-Run Costs II) Curve 3 is the ________ cost curve.
a. average total
b. total
c. marginal
d. average variable
e. total variable
____ 30. (Figure 55-3: Short-Run Costs II) Curve 1 crosses the average variable cost curve at:
a. 3 units of output.
b. approximately 5.3 units of output.
c. the minimum value of Curve 2.
d. the level of output at which diminishing marginal returns begin.
e. the level of output that corresponds to zero average fixed cost.
____ 31. (Figure 55-3: Short-Run Costs II) Curve 1 crosses the average total cost curve at:
a. the minimum value of Curve 2.
b. approximately 4.3 units of output.
c. approximately 2.8 units of output.
d. Point A.
e. the level of output that corresponds to the point of diminishing marginal returns.
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Name: ________________________ ID: A
____ 32. (Figure 55-3: Short-Run Costs II) At six units of output, marginal cost is approximately:
a. $100.
b. $120.
c. $250.
d. $200.
e. $50.
____ 33. (Figure 55-3: Short-Run Costs II) At six units of output, average total cost is approximately:
a. $100.
b. $120.
c. $170.
d. $250.
e. $85.
____ 34. (Figure 55-3: Short-Run Costs II) At six units of output, average variable cost is approximately:
a. $100.
b. $120.
c. $200.
d. $250.
e. $300.
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AP Unit 10 Practice Test
Answer Section
MULTIPLE CHOICE
1. ANS: A PTS: 1 MSC: Critical Thinking
2. ANS: A PTS: 1 MSC: Analytical Thinking
3. ANS: D PTS: 1 MSC: Critical Thinking
4. ANS: C PTS: 1 MSC: Analytical Thinking
5. ANS: C PTS: 1 MSC: Critical Thinking
6. ANS: E PTS: 1 MSC: Critical Thinking
7. ANS: C PTS: 1 MSC: Analytical Thinking
8. ANS: A PTS: 1 MSC: Critical Thinking
9. ANS: B PTS: 1 MSC: Critical Thinking
10. ANS: A PTS: 1 MSC: Fact-Based
11. ANS: A PTS: 1 MSC: Critical Thinking
12. ANS: E PTS: 1 MSC: Critical Thinking
13. ANS: E PTS: 1 MSC: Critical Thinking
14. ANS: C PTS: 1 MSC: Definitional
15. ANS: D PTS: 1 MSC: Definitional
16. ANS: B PTS: 1 MSC: Definitional
17. ANS: B PTS: 1 MSC: Critical Thinking
18. ANS: C PTS: 1 MSC: Critical Thinking
19. ANS: B PTS: 1 MSC: Definitional
20. ANS: B PTS: 1 MSC: Analytical Thinking
21. ANS: B PTS: 1 MSC: Definitional
22. ANS: B PTS: 1 MSC: Analytical Thinking
23. ANS: A PTS: 1 MSC: Critical Thinking
24. ANS: A PTS: 1 MSC: Analytical Thinking
25. ANS: C PTS: 1 MSC: Fact-Based
26. ANS: B PTS: 1 MSC: Definitional
27. ANS: C PTS: 1 MSC: Concept-Based
28. ANS: A PTS: 1 MSC: Concept-Based
29. ANS: D PTS: 1 MSC: Concept-Based
30. ANS: A PTS: 1 MSC: Concept-Based
31. ANS: A PTS: 1 MSC: Concept-Based
32. ANS: D PTS: 1 MSC: Analytical Thinking
33. ANS: C PTS: 1 MSC: Analytical Thinking
34. ANS: B PTS: 1 MSC: Analytical Thinking
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ID: A