Question 1

Working alone,a person who shirks receives __________ the benefits of shirking and pays __________ the costs of shirking.

Accepted Answer

A)  all; only some of 
B)  only part of; all 
C)  all; all 
D)  only part of; only part of 
E)  none of the above 
A)  all; only some of 
B)  only part of; all 
C)  all; all 
D)  only part of; only part of 
E)  none of the above

Question 2

Which of the following statements is false?

Accepted Answer

A)  Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run. 
B)  Marginal cost is the cost of producing an additional unit of output. 
C)  Changes in variable costs are reflected dollar-for-dollar in changes in total cost. 
D)  Fixed costs exist in the short run, but not in the long run. 
A)  Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run. 
B)  Marginal cost is the cost of producing an additional unit of output. 
C)  Changes in variable costs are reflected dollar-for-dollar in changes in total cost. 
D)  Fixed costs exist in the short run, but not in the long run.

Question 3

Exhibit 22-3
  
-Refer to Exhibit 22-3.The average variable cost of producing 45 units of output is

Accepted Answer

A)  $1.33. 
B)  $1.60. 
C)  $2.00. 
D)  $2.44. 
E)  $13.33. 
A)  $1.33. 
B)  $1.60. 
C)  $2.00. 
D)  $2.44. 
E)  $13.33.

Question 4

Suppose that one fixed and one variable input are used to produce good X.As the marginal physical product of the variable input increases,the marginal cost

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  There is not enough information to answer the question. 
A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  There is not enough information to answer the question.

Question 5

Which of the following curves should one look at to observe the law of diminishing marginal returns?

Accepted Answer

A)  the average fixed cost curve 
B)  the total fixed cost curve 
C)  the marginal physical product curve 
D)  the long run average total cost curve 
A)  the average fixed cost curve 
B)  the total fixed cost curve 
C)  the marginal physical product curve 
D)  the long run average total cost curve

Question 6

When a firm earns zero economic profit,it has

Accepted Answer

A)  not covered all its explicit costs. 
B)  not covered all its implicit costs. 
C)  not earned enough to stay in business. 
D)  definitely earned an accounting profit if implicit costs are positive. 
E)  none of the above 
A)  not covered all its explicit costs. 
B)  not covered all its implicit costs. 
C)  not earned enough to stay in business. 
D)  definitely earned an accounting profit if implicit costs are positive. 
E)  none of the above

Question 7

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

Accepted Answer

A)  $30.00 and $40.00. 
B)  $3.33 and $2.50. 
C)  $1.00 and $0.75. 
D)  $10.00 and $10.00. 
E)  $6.67 and $5.00. 
A)  $30.00 and $40.00. 
B)  $3.33 and $2.50. 
C)  $1.00 and $0.75. 
D)  $10.00 and $10.00. 
E)  $6.67 and $5.00.

Question 8

Economic profit is the difference between total revenue and

Accepted Answer

A)  explicit costs. 
B)  implicit costs. 
C)  sunk costs. 
D)  the sum of explicit and implicit costs. 
A)  explicit costs. 
B)  implicit costs. 
C)  sunk costs. 
D)  the sum of explicit and implicit costs.

Question 9

Carol works for Firm X.She takes long breaks and often daydreams when she is being paid to work.Carol is

Accepted Answer

A)  satisfying. 
B)  shirking. 
C)  monitoring. 
D)  separating ownership from control. 
A)  satisfying. 
B)  shirking. 
C)  monitoring. 
D)  separating ownership from control.

Question 10

If the "minimum efficient scale" in an industry is at 25 percent of market sales,what is the maximum number of efficient firms the economy can support in this industry?

Accepted Answer

A)  75 
B)  25 
C)  10 
D)  4 
A)  75 
B)  25 
C)  10 
D)  4

Question 11

Which of the following statements is true?

Accepted Answer

A)  Explicit costs always equal implicit costs. 
B)  Zero economic profit is a smaller dollar figure than normal profit. 
C)  Zero economic profit is a larger dollar figure than normal profit. 
D)  Saying that a firm earned zero economic profit is the same as saying it earned normal profit. 
E)  none of the above 
A)  Explicit costs always equal implicit costs. 
B)  Zero economic profit is a smaller dollar figure than normal profit. 
C)  Zero economic profit is a larger dollar figure than normal profit. 
D)  Saying that a firm earned zero economic profit is the same as saying it earned normal profit. 
E)  none of the above

Question 12

Which of the following cost curves is never U-shaped?

Accepted Answer

A)  the average total cost curve 
B)  the average fixed cost curve 
C)  the marginal cost curve 
D)  the average variable cost curve 
A)  the average total cost curve 
B)  the average fixed cost curve 
C)  the marginal cost curve 
D)  the average variable cost curve

Question 13

Which of the following statements is false?

Accepted Answer

A)  If the MC curve is rising, the AVC curve must be rising. 
B)  If MC is below ATC, ATC must be falling. 
C)  If MC is above AVC, then AVC must be rising. 
D)  If MC is above ATC, then ATC must be rising. 
A)  If the MC curve is rising, the AVC curve must be rising. 
B)  If MC is below ATC, ATC must be falling. 
C)  If MC is above AVC, then AVC must be rising. 
D)  If MC is above ATC, then ATC must be rising.

Question 14

Exhibit 22-3
  
-Refer to Exhibit 22-3.The marginal physical product figures in blanks (D)and (E)are,respectively,

Accepted Answer

A)  10 and 10. 
B)  10 and 15. 
C)  15 and 20. 
D)  20 and 15. 
E)  15 and 10. 
A)  10 and 10. 
B)  10 and 15. 
C)  15 and 20. 
D)  20 and 15. 
E)  15 and 10.

Question 15

As marginal cost rises,average variable cost necessarily rises.

Accepted Answer

A) True 
 B)False

Question 16

The marginal physical product (MPP)of a variable input is

Accepted Answer

A)  total output divided by the quantity of the input used. 
B)  the change in total output that results from changing the variable input by one unit. 
C)  the change in total revenue that results from changing the variable input by one unit. 
D)  the change in total output that results from changing the fixed input by one unit. 
E)  the change in total costs that results from a change in output. 
A)  total output divided by the quantity of the input used. 
B)  the change in total output that results from changing the variable input by one unit. 
C)  the change in total revenue that results from changing the variable input by one unit. 
D)  the change in total output that results from changing the fixed input by one unit. 
E)  the change in total costs that results from a change in output.

Question 17

The main difference between the short run and the long run is that

Accepted Answer

A)  firms earn losses in the long run, but not in the short run. 
B)  the long run always refers to a time period of one year or longer. 
C)  in the long run, only one input can be fixed. 
D)  in the short run, one or more inputs are fixed. 
E)  none of the above 
A)  firms earn losses in the long run, but not in the short run. 
B)  the long run always refers to a time period of one year or longer. 
C)  in the long run, only one input can be fixed. 
D)  in the short run, one or more inputs are fixed. 
E)  none of the above

Question 18

As long as there are __________ costs,__________ profit will be greater than __________ profit.

Accepted Answer

A)  implicit; accounting; economic 
B)  explicit; accounting; economic 
C)  implicit; economic; accounting 
D)  explicit; economic; accounting 
A)  implicit; accounting; economic 
B)  explicit; accounting; economic 
C)  implicit; economic; accounting 
D)  explicit; economic; accounting

Question 19

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

Accepted Answer

A)  $200; $125 
B)  $120; $150 
C)  $230; $125 
D)  $150; $300 
E)  There is not enough information to answer this question. 
A)  $200; $125 
B)  $120; $150 
C)  $230; $125 
D)  $150; $300 
E)  There is not enough information to answer this question.

Question 20

Consider the following information about a business Diane opened last year: price = $10,quantity sold = 25,000; implicit cost = $55,000; explicit cost = $160,000.What was Diane's accounting profit?

Accepted Answer

A)  $35,000 
B)  $195,000 
C)  -$35,000 
D)  $90,000 
E)  There is not enough information provided to answer this question. 
A)  $35,000 
B)  $195,000 
C)  -$35,000 
D)  $90,000 
E)  There is not enough information provided to answer this question.

Exam 22: Production and Costs

Working alone,a person who shirks receives __________ the benefits of shirking and pays __________ the costs of shirking.

Which of the following statements is false?

Exhibit 22-3 -Refer to Exhibit 22-3.The average variable cost of producing 45 units of output is

Suppose that one fixed and one variable input are used to produce good X.As the marginal physical product of the variable input increases,the marginal cost

Which of the following curves should one look at to observe the law of diminishing marginal returns?

When a firm earns zero economic profit,it has

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

Economic profit is the difference between total revenue and

Carol works for Firm X.She takes long breaks and often daydreams when she is being paid to work.Carol is

If the "minimum efficient scale" in an industry is at 25 percent of market sales,what is the maximum number of efficient firms the economy can support in this industry?

Which of the following statements is true?

Which of the following cost curves is never U-shaped?

Which of the following statements is false?

Exhibit 22-3 -Refer to Exhibit 22-3.The marginal physical product figures in blanks (D)and (E)are,respectively,

As marginal cost rises,average variable cost necessarily rises.

The marginal physical product (MPP)of a variable input is

The main difference between the short run and the long run is that

As long as there are __________ costs,__________ profit will be greater than __________ profit.

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

Consider the following information about a business Diane opened last year: price = $10,quantity sold = 25,000; implicit cost = $55,000; explicit cost = $160,000.What was Diane's accounting profit?

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

Working alone,a person who shirks receives the benefits of shirking and pays the costs of shirking.

As long as there are costs, profit will be greater than __ profit.