Question 1

Exhibit 22-11
  
-Refer to Exhibit 22-11.Average variable cost at two units of output is

Accepted Answer

A)  $50. 
B)  $60. 
C)  $100. 
D)  $110. 
E)  There is not enough information provided to answer this question. 
A)  $50. 
B)  $60. 
C)  $100. 
D)  $110. 
E)  There is not enough information provided to answer this question.

Question 2

Exhibit 22-9
  
-Refer to Exhibit 22-9.Let MC1 and ATC1 represent the initial cost curves of a peanut butter producer.In which of the following cases is it most likely that the firm's curves will shift leftward to MC2 and ATC2?

Accepted Answer

A)  The market price of peanuts decreases. 
B)  There is an improvement in technology in the production of peanut butter. 
C)  The government raises taxes paid by peanut butter producers. 
D)  a and b 
A)  The market price of peanuts decreases. 
B)  There is an improvement in technology in the production of peanut butter. 
C)  The government raises taxes paid by peanut butter producers. 
D)  a and b

Question 3

The marginal cost curve cuts through the AVC,ATC,and AFC curves at their lowest points.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following situations would prompt individuals to try to form a team (firm),according to Alchian and Demsetz.

Accepted Answer

A)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 90 units of good X each day working together. 
B)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 120 units of good X each day working together. 
C)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 100 units of good X each day working together. 
D)  Jones produces more working alone than Smith or Brown produce working alone. 
E)  Jones produces more working as a member of a team than Smith or Brown produce working as a member of a team. 
A)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 90 units of good X each day working together. 
B)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 120 units of good X each day working together. 
C)  Jones, Smith, and Brown together produce 100 units of good X each day working alone and 100 units of good X each day working together. 
D)  Jones produces more working alone than Smith or Brown produce working alone. 
E)  Jones produces more working as a member of a team than Smith or Brown produce working as a member of a team.

Question 5

Exhibit 22-4
  
-Refer to Exhibit 22-4.Curve A is a(n)__________ cost curve.

Accepted Answer

A)  marginal 
B)  average variable 
C)  average total 
D)  average fixed 
A)  marginal 
B)  average variable 
C)  average total 
D)  average fixed

Question 6

Situation 22-2
  
-Refer to Situation 22-2.How many widgets is Alejandro producing?

Accepted Answer

A)  10 
B)  15 
C)  20 
D)  25 
E)  There is not enough information to answer the question. 
A)  10 
B)  15 
C)  20 
D)  25 
E)  There is not enough information to answer the question.

Question 7

Making a manager a residual claimant is often a way of

Accepted Answer

A)  forming a partnership. 
B)  increasing the efficiency of a nonprofit firm. 
C)  reducing the incentive of the manager to shirk. 
D)  redirecting the firm to the objective of revenue maximization. 
A)  forming a partnership. 
B)  increasing the efficiency of a nonprofit firm. 
C)  reducing the incentive of the manager to shirk. 
D)  redirecting the firm to the objective of revenue maximization.

Question 8

Marginal cost is the change in

Accepted Answer

A)  total cost that results from a change in output. 
B)  total revenue that results from a change in output. 
C)  fixed cost that results from a change in output. 
D)  a and b 
E)  all of the above 
A)  total cost that results from a change in output. 
B)  total revenue that results from a change in output. 
C)  fixed cost that results from a change in output. 
D)  a and b 
E)  all of the above

Question 9

Exhibit 22-14
   
Assume that labor is the only variable input.
-Refer to Exhibit 22-14.What is the marginal cost of producing this good with 1 and 2 laborers working [blanks (E)and (F)],respectively?

Accepted Answer

A)  $600; $300 
B)  $60; $30 
C)  $8; $12 
D)  $6; $8 
E)  none of the above 
A)  $600; $300 
B)  $60; $30 
C)  $8; $12 
D)  $6; $8 
E)  none of the above

Question 10

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

Accepted Answer

A)  $5.33 and $10.00. 
B)  $1.33 and $2.00. 
C)  $1.33 and $1.43. 
D)  $13.33 and $20. 
E)  none of the above 
A)  $5.33 and $10.00. 
B)  $1.33 and $2.00. 
C)  $1.33 and $1.43. 
D)  $13.33 and $20. 
E)  none of the above

Question 11

Exhibit 22-4
  
-Refer to Exhibit 22-4.Curve D is a(n)__________ cost curve.

Accepted Answer

A)  marginal 
B)  average variable 
C)  average total 
D)  average fixed 
A)  marginal 
B)  average variable 
C)  average total 
D)  average fixed

Question 12

Exhibit 22-6
  
-Refer to Exhibit 22-6.The curve labeled "J" represents the firm's __________ cost curve.

Accepted Answer

A)  marginal 
B)  average fixed 
C)  average variable 
D)  total variable 
E)  average total 
A)  marginal 
B)  average fixed 
C)  average variable 
D)  total variable 
E)  average total

Question 13

Exhibit 22-3
  
-Refer to Exhibit 22-3.The average fixed cost of producing 10 units of output is

Accepted Answer

A)  $50.00. 
B)  $10.00. 
C)  $2.50. 
D)  $1.00. 
E)  $500.00. 
A)  $50.00. 
B)  $10.00. 
C)  $2.50. 
D)  $1.00. 
E)  $500.00.

Question 14

Exhibit 22-7
  
-Refer to Exhibit 22-7.The marginal cost of producing the seventh unit of output is

Accepted Answer

A)  $85.00. 
B)  $12.14. 
C)  $21.00. 
D)  $5.00. 
A)  $85.00. 
B)  $12.14. 
C)  $21.00. 
D)  $5.00.

Question 15

An unrecoverable cost that should be disregarded in any current or future decision is also called a(n)__________ cost.

Accepted Answer

A)  sunk 
B)  explicit 
C)  implicit 
D)  variable 
A)  sunk 
B)  explicit 
C)  implicit 
D)  variable

Question 16

Exhibit 22-13
  
-Refer to Exhibit 22-13. What dollar amounts go in blanks (K)and (L)?

Accepted Answer

A)  $280; $400 
B)  $28; $40 
C)  $260; $360 
D)  $50; $400 
E)  There is not enough information to answer this question. 
A)  $280; $400 
B)  $28; $40 
C)  $260; $360 
D)  $50; $400 
E)  There is not enough information to answer this question.

Question 17

Minimum efficient scale refers to the

Accepted Answer

A)  smallest plant size a firm can utilize and still maintain production. 
B)  lowest point on a given SRATC curve. 
C)  output level at which the LRATC curve touches each SRATC curve. 
D)  lowest output level at which average total costs are minimized. 
A)  smallest plant size a firm can utilize and still maintain production. 
B)  lowest point on a given SRATC curve. 
C)  output level at which the LRATC curve touches each SRATC curve. 
D)  lowest output level at which average total costs are minimized.

Question 18

You paid $25 for your ticket to the football game,only to see your favorite team losing 28-0 at the end of the first quarter.That $25 should now be regarded as a(n)__________ cost that economists say should be __________ in your decision on whether or not to stay at the game or leave.

Accepted Answer

A)  explicit; included 
B)  explicit; disregarded 
C)  sunk; included 
D)  sunk; disregarded 
A)  explicit; included 
B)  explicit; disregarded 
C)  sunk; included 
D)  sunk; disregarded

Question 19

Exhibit 22-2
  
-Refer to Exhibit 22-2.The dollar amounts that go in blanks (C)and (D)are,respectively,

Accepted Answer

A)  $10.00 and $1.00. 
B)  $30.00 and $34.00. 
C)  $3.00 and $4.00. 
D)  $6.67 and $10.00. 
E)  $1.00 and $1.50. 
A)  $10.00 and $1.00. 
B)  $30.00 and $34.00. 
C)  $3.00 and $4.00. 
D)  $6.67 and $10.00. 
E)  $1.00 and $1.50.

Question 20

At 500 units of output,total cost is $35,000 and total variable cost is $22,000.What does total fixed cost equal at 500 units?

Accepted Answer

A)  $57,000 
B)  $900 
C)  $13,000 
D)  $34 
E)  There is not enough information provided to answer this question. 
A)  $57,000 
B)  $900 
C)  $13,000 
D)  $34 
E)  There is not enough information provided to answer this question.

Exam 22: Production and Costs

Exhibit 22-11 -Refer to Exhibit 22-11.Average variable cost at two units of output is

Exhibit 22-9 -Refer to Exhibit 22-9.Let MC1 and ATC1 represent the initial cost curves of a peanut butter producer.In which of the following cases is it most likely that the firm's curves will shift leftward to MC2 and ATC2?

The marginal cost curve cuts through the AVC,ATC,and AFC curves at their lowest points.

Which of the following situations would prompt individuals to try to form a team (firm),according to Alchian and Demsetz.

Exhibit 22-4 -Refer to Exhibit 22-4.Curve A is a(n)__________ cost curve.

Situation 22-2 -Refer to Situation 22-2.How many widgets is Alejandro producing?

Making a manager a residual claimant is often a way of

Marginal cost is the change in

Exhibit 22-14 Assume that labor is the only variable input. -Refer to Exhibit 22-14.What is the marginal cost of producing this good with 1 and 2 laborers working [blanks (E)and (F)],respectively?

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

Exhibit 22-4 -Refer to Exhibit 22-4.Curve D is a(n)__________ cost curve.

Exhibit 22-6 -Refer to Exhibit 22-6.The curve labeled "J" represents the firm's __________ cost curve.

Exhibit 22-3 -Refer to Exhibit 22-3.The average fixed cost of producing 10 units of output is

Exhibit 22-7 -Refer to Exhibit 22-7.The marginal cost of producing the seventh unit of output is

An unrecoverable cost that should be disregarded in any current or future decision is also called a(n)__________ cost.

Exhibit 22-13 -Refer to Exhibit 22-13. What dollar amounts go in blanks (K)and (L)?

Minimum efficient scale refers to the

You paid $25 for your ticket to the football game,only to see your favorite team losing 28-0 at the end of the first quarter.That $25 should now be regarded as a(n)__________ cost that economists say should be __________ in your decision on whether or not to stay at the game or leave.

Exhibit 22-2 -Refer to Exhibit 22-2.The dollar amounts that go in blanks (C)and (D)are,respectively,

At 500 units of output,total cost is $35,000 and total variable cost is $22,000.What does total fixed cost equal at 500 units?

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

Exhibit 22-9 -Refer to Exhibit 22-9.Let MC₁ and ATC₁ represent the initial cost curves of a peanut butter producer.In which of the following cases is it most likely that the firm's curves will shift leftward to MC₂ and ATC₂?

You paid $25 for your ticket to the football game,only to see your favorite team losing 28-0 at the end of the first quarter.That $25 should now be regarded as a(n) cost that economists say should be in your decision on whether or not to stay at the game or leave.