Question 1

Economic profits are determined by subtracting total revenue and implicit costs.

Accepted Answer

A) True 
 B)False

Question 2

The firm's short-run cost curves shows how ________ vary with the quantity produced when at least one input is fixed.

Accepted Answer

A) technology 
B) production costs 
C) economy of scales 
D) none of the above 
A) technology 
B) production costs 
C) economy of scales 
D) none of the above

Question 3

You are the manager and owner of E-bulbs Inc.and you know that your factory experiences economies of scale.You want to quantify the extent of scale economies in the production of E-bulbs Inc.so you need to find:

Accepted Answer

A) diseconomies of scale. 
B) minimum efficient scale. 
C) diminishing marginal productivity. 
D) diminishing marginal returns. 
A) diseconomies of scale. 
B) minimum efficient scale. 
C) diminishing marginal productivity. 
D) diminishing marginal returns.

Question 4

When the long-run cost curve is negatively sloped the firm is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 5

A fixed cost can be thought of as:

Accepted Answer

A) a cost that changes as output increases. 
B) a cost that must be paid even if output equals zero. 
C) a cost that is paid only when output equals zero. 
D) total costs ignoring opportunity costs. 
A) a cost that changes as output increases. 
B) a cost that must be paid even if output equals zero. 
C) a cost that is paid only when output equals zero. 
D) total costs ignoring opportunity costs.

Question 6

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

Accepted Answer

Jimmy is giving up $30,000 in

Question 7

-As output increases,average fixed costs:

Accepted Answer

A) decrease. 
B) initially decrease and then increase. 
C) remain constant. 
D) increase. 
A) decrease. 
B) initially decrease and then increase. 
C) remain constant. 
D) increase.

Question 8

One of the main differences between the long run and the short run is that:

Accepted Answer

A) the firm can earn a profit. 
B) the firm can operate at a loss. 
C) there are no diminishing returns in the short run. 
D) there are no diminishing returns in the long run. 
A) the firm can earn a profit. 
B) the firm can operate at a loss. 
C) there are no diminishing returns in the short run. 
D) there are no diminishing returns in the long run.

Question 9

If a firm's production process exhibits economies of scale for all levels of output,then the firm's long-run average cost curve will be:

Accepted Answer

A) horizontal. 
B) positively sloped. 
C) negatively sloped. 
D) U-shaped. 
A) horizontal. 
B) positively sloped. 
C) negatively sloped. 
D) U-shaped.

Question 10

Diseconomies of scale can occur for:

Accepted Answer

A) coordination problems. 
B) minimum efficient scale problems. 
C) increasing input costs. 
D) A and C are correct. 
A) coordination problems. 
B) minimum efficient scale problems. 
C) increasing input costs. 
D) A and C are correct.

Question 11

A firm's short-run total cost (TC)is equal to:

Accepted Answer

A) fixed costs plus variable costs. 
B) variable cost minus total cost. 
C) total cost divided by variable cost. 
D) fixed cost minus variable cost. 
A) fixed costs plus variable costs. 
B) variable cost minus total cost. 
C) total cost divided by variable cost. 
D) fixed cost minus variable cost.

Question 12

-Refer to Figure 8.3.If two microwave ovens are produced,Micro Oven's total variable costs are:

Accepted Answer

A) $350. 
B) $425. 
C) $500. 
D) indeterminate from this information. 
A) $350. 
B) $425. 
C) $500. 
D) indeterminate from this information.

Question 13

The gap between average total cost and the average variable cost is always the average fixed cost.

Accepted Answer

A) True 
 B)False

Question 14

Dan owns a factory that manufactures smartphones.He has a lot of costs every month to keep his factory running.Which of the following is one of Dan's fixed costs?

Accepted Answer

A) plastic used to make the smartphones 
B) his electricity bill for the factory 
C) his mortgage on the factory 
D) memory devices used to store music and video on the smartphones 
A) plastic used to make the smartphones 
B) his electricity bill for the factory 
C) his mortgage on the factory 
D) memory devices used to store music and video on the smartphones

Question 15

Recall the application about idle capital and short-run marginal cost with a firm that simply digs holes and has a fixed amount of capital (10 standard shovels)and can vary the number of workers,Why is the marginal cost constant for the first 10 units of output?

Accepted Answer

A) The average total cost is falling. 
B) The firm does not experience diminishing returns. 
C) The average total cost is raising. 
D) none of the above 
A) The average total cost is falling. 
B) The firm does not experience diminishing returns. 
C) The average total cost is raising. 
D) none of the above

Question 16

Which type of cost always increases immediately when output increases?

Accepted Answer

A) fixed costs 
B) overhead costs 
C) total variable costs 
D) sunk costs 
A) fixed costs 
B) overhead costs 
C) total variable costs 
D) sunk costs

Question 17

As output increases,it is always true that:

Accepted Answer

A) average total cost decreases. 
B) average variable cost is above marginal cost. 
C) average fixed costs decrease. 
D) total fixed costs increase. 
A) average total cost decreases. 
B) average variable cost is above marginal cost. 
C) average fixed costs decrease. 
D) total fixed costs increase.

Question 18

Suppose that an increase in the scale of production at CR Cabinets Inc.leads to no change in average costs,CR Cabinets Inc.experiences:

Accepted Answer

A) minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant returns to scale. 
A) minimum efficient scale. 
B) economies of scale. 
C) diseconomies of scale. 
D) constant returns to scale.

Question 19

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

Accepted Answer

If the firm decides to produce

Question 20

-Refer to Figure 8.2.The marginal product of the sixth worker is ________.

Accepted Answer

A) 0 
B) 5 
C) -5 
D) 50 
A) 0 
B) 5 
C) -5 
D) 50

Economic profits are determined by subtracting total revenue and implicit costs.

The firm's short-run cost curves shows how ________ vary with the quantity produced when at least one input is fixed.

You are the manager and owner of E-bulbs Inc.and you know that your factory experiences economies of scale.You want to quantify the extent of scale economies in the production of E-bulbs Inc.so you need to find:

When the long-run cost curve is negatively sloped the firm is experiencing economies of scale.

A fixed cost can be thought of as:

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

-As output increases,average fixed costs:

One of the main differences between the long run and the short run is that:

If a firm's production process exhibits economies of scale for all levels of output,then the firm's long-run average cost curve will be:

Diseconomies of scale can occur for:

A firm's short-run total cost (TC)is equal to:

-Refer to Figure 8.3.If two microwave ovens are produced,Micro Oven's total variable costs are:

The gap between average total cost and the average variable cost is always the average fixed cost.

Dan owns a factory that manufactures smartphones.He has a lot of costs every month to keep his factory running.Which of the following is one of Dan's fixed costs?

Recall the application about idle capital and short-run marginal cost with a firm that simply digs holes and has a fixed amount of capital (10 standard shovels)and can vary the number of workers,Why is the marginal cost constant for the first 10 units of output?

Which type of cost always increases immediately when output increases?

As output increases,it is always true that:

Suppose that an increase in the scale of production at CR Cabinets Inc.leads to no change in average costs,CR Cabinets Inc.experiences:

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

-Refer to Figure 8.2.The marginal product of the sixth worker is ________.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 8: Production Technology and Cost

Economic profits are determined by subtracting total revenue and implicit costs.

The firm's short-run cost curves shows how ________ vary with the quantity produced when at least one input is fixed.

You are the manager and owner of E-bulbs Inc.and you know that your factory experiences economies of scale.You want to quantify the extent of scale economies in the production of E-bulbs Inc.so you need to find:

When the long-run cost curve is negatively sloped the firm is experiencing economies of scale.

A fixed cost can be thought of as:

Jimmy was working for an accounting firm earning $30,000 per year.He has $100,000 in an investment account earning 10% per year.If he decided to invest the $100,000 in a new business and quit his job to work full-time at this new business,what is his implicit cost of this new business?

-As output increases,average fixed costs:

One of the main differences between the long run and the short run is that:

If a firm's production process exhibits economies of scale for all levels of output,then the firm's long-run average cost curve will be:

Diseconomies of scale can occur for:

A firm's short-run total cost (TC)is equal to:

-Refer to Figure 8.3.If two microwave ovens are produced,Micro Oven's total variable costs are:

The gap between average total cost and the average variable cost is always the average fixed cost.

Dan owns a factory that manufactures smartphones.He has a lot of costs every month to keep his factory running.Which of the following is one of Dan's fixed costs?

Recall the application about idle capital and short-run marginal cost with a firm that simply digs holes and has a fixed amount of capital (10 standard shovels)and can vary the number of workers,Why is the marginal cost constant for the first 10 units of output?

Which type of cost always increases immediately when output increases?

As output increases,it is always true that:

Suppose that an increase in the scale of production at CR Cabinets Inc.leads to no change in average costs,CR Cabinets Inc.experiences:

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

-Refer to Figure 8.2.The marginal product of the sixth worker is ________.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters