Question 1

Situation 22-1
  
-Refer to Situation 22-l.What will Diane's total costs be if she sells 2,500 donuts in her first week and then goes out of business?

Accepted Answer

A)  $20,750 
B)  $10,950 
C)  $20,880 
D)  $30,500 
A)  $20,750 
B)  $10,950 
C)  $20,880 
D)  $30,500

Question 2

Exhibit 22-3
  
-Refer to Exhibit 22-3.The marginal cost figures in blanks (F)and (G)are,respectively,

Accepted Answer

A)  $2.00 and $1.33. 
B)  $2.00 and $1.60. 
C)  $20.00 and $13.33. 
D)  $2.00 and $2.66. 
E)  none of the above 
A)  $2.00 and $1.33. 
B)  $2.00 and $1.60. 
C)  $20.00 and $13.33. 
D)  $2.00 and $2.66. 
E)  none of the above

Question 3

Unit cost refers to

Accepted Answer

A)  average variable cost. 
B)  average fixed cost. 
C)  marginal cost. 
D)  average total cost. 
E)  c or d 
A)  average variable cost. 
B)  average fixed cost. 
C)  marginal cost. 
D)  average total cost. 
E)  c or d

Question 4

The "visible hand" is a metaphor used to describe

Accepted Answer

A)  market coordination. 
B)  managerial coordination. 
C)  the separation of ownership from control. 
D)  how price changes motivate individual coordination. 
A)  market coordination. 
B)  managerial coordination. 
C)  the separation of ownership from control. 
D)  how price changes motivate individual coordination.

Question 5

Which of the following is false?

Accepted Answer

A)  Average fixed cost continually declines as output increases. 
B)  Marginal cost is equal to the change in total cost divided by the change in quantity of output. 
C)  The law of diminishing marginal returns states that, in the long run, as ever larger amounts of a variable input are combined with fixed inputs, eventually the marginal physical product of the variable input will decline. 
D)  The vertical distance between the AVC curve and the ATC curve declines as more output is produced. 
A)  Average fixed cost continually declines as output increases. 
B)  Marginal cost is equal to the change in total cost divided by the change in quantity of output. 
C)  The law of diminishing marginal returns states that, in the long run, as ever larger amounts of a variable input are combined with fixed inputs, eventually the marginal physical product of the variable input will decline. 
D)  The vertical distance between the AVC curve and the ATC curve declines as more output is produced.

Question 6

As the marginal physical product of a variable input __________,the marginal cost __________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  b and c 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  b and c

Question 7

Exhibit 22-7
  
-Refer to Exhibit 22-7.The average total cost of producing 4 units of output is

Accepted Answer

A)  $11.25. 
B)  $5.00. 
C)  $3.50. 
D)  $27.50. 
E)  There is not enough information to answer this question. 
A)  $11.25. 
B)  $5.00. 
C)  $3.50. 
D)  $27.50. 
E)  There is not enough information to answer this question.

Question 8

"Managerial coordination" refers to the

Accepted Answer

A)  behavior of a worker who is putting forth less than the agreed-to effort. 
B)  process whereby individuals perform certain tasks based on changes in market forces. 
C)  process whereby persons share in the profits of a business firm. 
D)  process whereby managers direct employees to perform certain tasks. 
A)  behavior of a worker who is putting forth less than the agreed-to effort. 
B)  process whereby individuals perform certain tasks based on changes in market forces. 
C)  process whereby persons share in the profits of a business firm. 
D)  process whereby managers direct employees to perform certain tasks.

Question 9

If the marginal productivity of labor is falling,it follows that

Accepted Answer

A)  the average productivity of labor is rising. 
B)  marginal cost is falling. 
C)  marginal cost is rising. 
D)  average productivity of labor is falling. 
E)  c and d 
A)  the average productivity of labor is rising. 
B)  marginal cost is falling. 
C)  marginal cost is rising. 
D)  average productivity of labor is falling. 
E)  c and d

Question 10

Exhibit 22-1
  
-Refer to Exhibit 22-1.The numbers that go in blanks (A)and (B)are,respectively,

Accepted Answer

A)  20 and 30. 
B)  0 and 21. 
C)  20 and 25 
D)  1 and 2. 
E)  20 and 21. 
A)  20 and 30. 
B)  0 and 21. 
C)  20 and 25 
D)  1 and 2. 
E)  20 and 21.

Question 11

Which of these statements is false?

Accepted Answer

A)  There are no fixed costs in the long run. 
B)  Total costs are equal to total fixed costs plus total variable costs. 
C)  In the short run, all inputs are fixed inputs. 
D)  A fixed cost is a cost that does not change as output changes. 
A)  There are no fixed costs in the long run. 
B)  Total costs are equal to total fixed costs plus total variable costs. 
C)  In the short run, all inputs are fixed inputs. 
D)  A fixed cost is a cost that does not change as output changes.

Question 12

As a firm produces more units of a good,its

Accepted Answer

A)  fixed costs remain constant in the short run and its variable costs rise. 
B)  variable costs decline in the short run and its fixed costs rise. 
C)  fixed and variable costs remain constant in the short run. 
D)  variable costs remain constant in the short run and its fixed costs fall. 
E)  none of the above 
A)  fixed costs remain constant in the short run and its variable costs rise. 
B)  variable costs decline in the short run and its fixed costs rise. 
C)  fixed and variable costs remain constant in the short run. 
D)  variable costs remain constant in the short run and its fixed costs fall. 
E)  none of the above

Question 13

A firm can use a given plant more intensively and it can change the size of a plant.When it uses a given plant more intensively,it is holding one factor __________ and therefore the time period of production is most likely the __________.

Accepted Answer

A)  fixed; short run 
B)  fixed; long run 
C)  more important than another; long run 
D)  more important than another; short run 
A)  fixed; short run 
B)  fixed; long run 
C)  more important than another; long run 
D)  more important than another; short run

Question 14

Give a numerical example that to illustrates the average-marginal rule.

Accepted Answer

A teacher has graded 10 exams and found

Question 15

Exhibit 22-2
  
-Refer to Exhibit 22-2.Diminishing marginal returns set in with the addition of which unit of the variable input?

Accepted Answer

A)  the first 
B)  the second 
C)  the third 
D)  the fourth 
E)  the fifth 
A)  the first 
B)  the second 
C)  the third 
D)  the fourth 
E)  the fifth

Question 16

Situation 22-1
  
-Refer to Situation 22-l.What will Diane's average total costs be if she sells 2,500 donuts in her first week and then goes out of business?

Accepted Answer

A)  $8.30 
B)  $1.81 
C)  $1.08 
D)  $9.71 
A)  $8.30 
B)  $1.81 
C)  $1.08 
D)  $9.71

Question 17

In a college course it is likely that there will be ___________ shirking in a group project than in an individual project because the costs of shirking are relatively _________ in the group project.

Accepted Answer

A)  less; higher 
B)  more; higher 
C)  less; lower 
D)  more; lower 
A)  less; higher 
B)  more; higher 
C)  less; lower 
D)  more; lower

Question 18

Economists predict that the __________ the cost of shirking to an individual,the __________ shirking that individual will undertake,ceteris paribus.

Accepted Answer

A)  lower; less 
B)  higher; less 
C)  lower; more 
D)  higher; more 
E)  b and c 
A)  lower; less 
B)  higher; less 
C)  lower; more 
D)  higher; more 
E)  b and c

Question 19

If the owner of a firm earns zero economic profit,he or she has earned total revenue equal to his or her

Accepted Answer

A)  implicit costs. 
B)  explicit costs. 
C)  accounting profit. 
D)  implicit costs plus explicit costs. 
E)  none of the above 
A)  implicit costs. 
B)  explicit costs. 
C)  accounting profit. 
D)  implicit costs plus explicit costs. 
E)  none of the above

Question 20

The average-marginal rule states:

Accepted Answer

A)  when the marginal magnitude is rising, so must the average magnitude be rising. 
B)  when the marginal magnitude is falling, so must the average magnitude be falling. 
C)  when the marginal magnitude is below the average magnitude, the average magnitude falls. 
D)  when the average magnitude rises, the marginal magnitude falls. 
E)  a and b 
A)  when the marginal magnitude is rising, so must the average magnitude be rising. 
B)  when the marginal magnitude is falling, so must the average magnitude be falling. 
C)  when the marginal magnitude is below the average magnitude, the average magnitude falls. 
D)  when the average magnitude rises, the marginal magnitude falls. 
E)  a and b

Exam 22: Production and Costs

Situation 22-1 -Refer to Situation 22-l.What will Diane's total costs be if she sells 2,500 donuts in her first week and then goes out of business?

Exhibit 22-3 -Refer to Exhibit 22-3.The marginal cost figures in blanks (F)and (G)are,respectively,

Unit cost refers to

The "visible hand" is a metaphor used to describe

Which of the following is false?

As the marginal physical product of a variable input __________,the marginal cost __________.

Exhibit 22-7 -Refer to Exhibit 22-7.The average total cost of producing 4 units of output is

"Managerial coordination" refers to the

If the marginal productivity of labor is falling,it follows that

Exhibit 22-1 -Refer to Exhibit 22-1.The numbers that go in blanks (A)and (B)are,respectively,

Which of these statements is false?

As a firm produces more units of a good,its

A firm can use a given plant more intensively and it can change the size of a plant.When it uses a given plant more intensively,it is holding one factor __________ and therefore the time period of production is most likely the __________.

Give a numerical example that to illustrates the average-marginal rule.

Exhibit 22-2 -Refer to Exhibit 22-2.Diminishing marginal returns set in with the addition of which unit of the variable input?

Situation 22-1 -Refer to Situation 22-l.What will Diane's average total costs be if she sells 2,500 donuts in her first week and then goes out of business?

In a college course it is likely that there will be ___________ shirking in a group project than in an individual project because the costs of shirking are relatively _________ in the group project.

Economists predict that the __________ the cost of shirking to an individual,the __________ shirking that individual will undertake,ceteris paribus.

If the owner of a firm earns zero economic profit,he or she has earned total revenue equal to his or her

The average-marginal rule states:

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

As the marginal physical product of a variable input ,the marginal cost .

A firm can use a given plant more intensively and it can change the size of a plant.When it uses a given plant more intensively,it is holding one factor and therefore the time period of production is most likely the .

In a college course it is likely that there will be ___ shirking in a group project than in an individual project because the costs of shirking are relatively _ in the group project.

Economists predict that the the cost of shirking to an individual,the shirking that individual will undertake,ceteris paribus.