Question 1

When an economist says a firm is earning zero economic profit, this implies that the firm

Accepted Answer

A)  will be forced out of business in the near future unless market conditions change. 
B)  is earning a zero rate of return on its assets. 
C)  is earning as high a rate of return now as could be earned in other industries. 
D)  has an accounting profit of zero. 
A)  will be forced out of business in the near future unless market conditions change. 
B)  is earning a zero rate of return on its assets. 
C)  is earning as high a rate of return now as could be earned in other industries. 
D)  has an accounting profit of zero.

Question 2

The upward-sloping portion of a long-run average total cost curve is the result of

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing returns. 
D)  the existence of fixed resources. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing returns. 
D)  the existence of fixed resources.

Question 3

Figure 8-5  
-Refer to Figure 8-5. Which of the following would most likely cause the average total cost curve of a firm producing steel bolts to shift from ATC1 to ATC2?

Accepted Answer

A)  an increase in demand for steel bolts 
B)  an increase in the market price of steel bolts 
C)  diminishing returns for the variable factors used to produce steel bolts 
D)  an increase in the price of steel 
A)  an increase in demand for steel bolts 
B)  an increase in the market price of steel bolts 
C)  diminishing returns for the variable factors used to produce steel bolts 
D)  an increase in the price of steel

Question 4

Concerning the earnings difference between men and women, which of the following is true?

Accepted Answer

A)  Due to anti-employment discrimination legislation that was passed in the early 1960s, there was a large increase in the earnings of women relative to men in the 1960s and 1970s. 
B)  The female/male earnings ratio for full-time workers rose substantially between 1980 and 2010. 
C)  The number of women preparing for careers as professionals has declined during the last two decades. 
D)  In recent years, less than half of those completing college degrees were women. 
A)  Due to anti-employment discrimination legislation that was passed in the early 1960s, there was a large increase in the earnings of women relative to men in the 1960s and 1970s. 
B)  The female/male earnings ratio for full-time workers rose substantially between 1980 and 2010. 
C)  The number of women preparing for careers as professionals has declined during the last two decades. 
D)  In recent years, less than half of those completing college degrees were women.

Question 5

Which of the following is true about those graduating with college degrees?

Accepted Answer

A)  The proportion of college degrees earned by women has been declining in recent decades. 
B)  The proportion of college degrees earned by women has been virtually constant during the last four decades. 
C)  In recent years, less than 45 percent of those graduating from college were women. 
D)  In recent years, less than 45 percent of those graduating from college were men. 
A)  The proportion of college degrees earned by women has been declining in recent decades. 
B)  The proportion of college degrees earned by women has been virtually constant during the last four decades. 
C)  In recent years, less than 45 percent of those graduating from college were women. 
D)  In recent years, less than 45 percent of those graduating from college were men.

Question 6

A business owned by a single individual who is fully liable for its debts is called

Accepted Answer

A)  a corporation. 
B)  a proprietorship. 
C)  a partnership. 
D)  an agency. 
A)  a corporation. 
B)  a proprietorship. 
C)  a partnership. 
D)  an agency.

Question 7

Accounting costs are often unsatisfactory from the economist's point of view because

Accepted Answer

A)  they fail to allow for depreciation, the wearing out of capital assets during a period. 
B)  they often exclude the opportunity costs of the firm's equity capital. 
C)  accountants attempt to minimize costs in order to make profits look good. 
D)  accounting procedures are designed to overstate costs in order to minimize business tax liability. 
A)  they fail to allow for depreciation, the wearing out of capital assets during a period. 
B)  they often exclude the opportunity costs of the firm's equity capital. 
C)  accountants attempt to minimize costs in order to make profits look good. 
D)  accounting procedures are designed to overstate costs in order to minimize business tax liability.

Question 8

As a firm expands output, in the short run marginal costs will

Accepted Answer

A)  always decline as output expands. 
B)  increase at first but eventually level off and decline. 
C)  eventually increase as the firm experiences diminishing returns to the fixed factors of production. 
D)  initially increase at a decreasing rate but eventually increase at an increasing rate. 
A)  always decline as output expands. 
B)  increase at first but eventually level off and decline. 
C)  eventually increase as the firm experiences diminishing returns to the fixed factors of production. 
D)  initially increase at a decreasing rate but eventually increase at an increasing rate.

Question 9

A homeowner will be away from her house for six months. The monthly mortgage payment on the house is $1,000. The owner's cost of utilities is $100 if the house is unoccupied but $300 if the owner rents it out. If the owner wishes to minimize her losses from the house while away, she should rent the house for as much as the market will bear, as long as monthly rent is greater than which of the following? (Assume wear and tear to be zero regardless of whether the house is occupied.)

Accepted Answer

A)  $200 
B)  $300 
C)  $1,100 
D)  $1,300 
A)  $200 
B)  $300 
C)  $1,100 
D)  $1,300

Question 10

If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ, what does this tell us about the view ABC holds of XYZ?

Accepted Answer

ABC must believe that the XYZ stock unde

Question 11

Use the figure to answer the following question(s).
Figure 8-3  
-Using Figure 8-3, calculate the total variable cost of producing three units.

Accepted Answer

A)  $10 
B)  $15 
C)  $30 
D)  $45 
A)  $10 
B)  $15 
C)  $30 
D)  $45

Question 12

If the firm's fixed costs double while variable costs are unchanged, then

Accepted Answer

A)  marginal cost more than doubles. 
B)  marginal cost doubles. 
C)  marginal cost remains unchanged. 
D)  average total cost remains unchanged. 
E)  average variable cost doubles. 
A)  marginal cost more than doubles. 
B)  marginal cost doubles. 
C)  marginal cost remains unchanged. 
D)  average total cost remains unchanged. 
E)  average variable cost doubles.

Question 13

The law of diminishing returns

Accepted Answer

A)  explains why marginal cost eventually increases as output expands. 
B)  implies that average fixed cost will remain unchanged as output expands. 
C)  is true for physical production activities but not for activities such as studying. 
D)  applies to a capitalist economy but would be irrelevant if the means of production were owned by the state. 
A)  explains why marginal cost eventually increases as output expands. 
B)  implies that average fixed cost will remain unchanged as output expands. 
C)  is true for physical production activities but not for activities such as studying. 
D)  applies to a capitalist economy but would be irrelevant if the means of production were owned by the state.

Question 14

Which of the following must be true if average variable costs are decreasing?

Accepted Answer

A)  Average fixed cost exceeds average total cost. 
B)  Marginal cost exceeds average variable cost. 
C)  Marginal cost is less than average variable cost. 
D)  Marginal cost is less than average total cost. 
A)  Average fixed cost exceeds average total cost. 
B)  Marginal cost exceeds average variable cost. 
C)  Marginal cost is less than average variable cost. 
D)  Marginal cost is less than average total cost.

Question 15

A profit-maximizing firm would

Accepted Answer

A)  consider opportunity costs rather than accounting costs when making decisions about output. 
B)  expand current output if the revenues expected from doing so were less than the expected costs. 
C)  enlarge its current plant size if present depreciation costs were less than average variable costs. 
D)  increase output in the next period if accounting profits during the previous period were positive. 
A)  consider opportunity costs rather than accounting costs when making decisions about output. 
B)  expand current output if the revenues expected from doing so were less than the expected costs. 
C)  enlarge its current plant size if present depreciation costs were less than average variable costs. 
D)  increase output in the next period if accounting profits during the previous period were positive.

Question 16

Since the 1970s, the percentage of women preparing for careers in professions has been ____, while the female/male earnings ratio has been ____ during this same period.

Accepted Answer

A)  rising; declining 
B)  rising; increasing 
C)  falling; increasing 
D)  falling; declining 
A)  rising; declining 
B)  rising; increasing 
C)  falling; increasing 
D)  falling; declining

Question 17

Use the figure to answer the following question(s).
Figure 8-6  
-At what output does the firm depicted in Figure 8-6 minimize its per-unit cost of production?

Accepted Answer

A)  q1 
B)  q2 
C)  q3 
D)  an output beyond q3 
A)  q1 
B)  q2 
C)  q3 
D)  an output beyond q3

Question 18

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers ____. Since 1980, the female/male annual earnings ratio of full-time workers ____.

Accepted Answer

A)  changed very little; fell 
B)  changed very little; rose 
C)  fell; changed very little 
D)  rose; changed very little 
A)  changed very little; fell 
B)  changed very little; rose 
C)  fell; changed very little 
D)  rose; changed very little

Question 19

When making choices, suppliers should not allow sunk costs to directly affect their current decisions because

Accepted Answer

A)  sunk costs do not reflect foregone opportunities accompanying current choices. 
B)  sunk costs will not influence the accounting costs of a firm. 
C)  sunk costs influence the demand for products, not the supply. 
D)  past choices fail to provide any information relevant to current decision making. 
A)  sunk costs do not reflect foregone opportunities accompanying current choices. 
B)  sunk costs will not influence the accounting costs of a firm. 
C)  sunk costs influence the demand for products, not the supply. 
D)  past choices fail to provide any information relevant to current decision making.

Question 20

Which of the following reflects diseconomies of scale?

Accepted Answer

A)  Marginal product decreases as output increases. 
B)  Short-run marginal cost increases as output increases. 
C)  Long-run marginal cost increases as output increases. 
D)  Short-run average cost increases as output increases. 
E)  As output doubles, long-run total cost more than doubles. 
A)  Marginal product decreases as output increases. 
B)  Short-run marginal cost increases as output increases. 
C)  Long-run marginal cost increases as output increases. 
D)  Short-run average cost increases as output increases. 
E)  As output doubles, long-run total cost more than doubles.

When an economist says a firm is earning zero economic profit, this implies that the firm

The upward-sloping portion of a long-run average total cost curve is the result of

Figure 8-5 -Refer to Figure 8-5. Which of the following would most likely cause the average total cost curve of a firm producing steel bolts to shift from ATC₁ to ATC₂?

Concerning the earnings difference between men and women, which of the following is true?

Which of the following is true about those graduating with college degrees?

A business owned by a single individual who is fully liable for its debts is called

Accounting costs are often unsatisfactory from the economist's point of view because

As a firm expands output, in the short run marginal costs will

If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ, what does this tell us about the view ABC holds of XYZ?

Use the figure to answer the following question(s). Figure 8-3 -Using Figure 8-3, calculate the total variable cost of producing three units.

If the firm's fixed costs double while variable costs are unchanged, then

The law of diminishing returns

Which of the following must be true if average variable costs are decreasing?

A profit-maximizing firm would

Since the 1970s, the percentage of women preparing for careers in professions has been , while the female/male earnings ratio has been during this same period.

Use the figure to answer the following question(s). Figure 8-6 -At what output does the firm depicted in Figure 8-6 minimize its per-unit cost of production?

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers . Since 1980, the female/male annual earnings ratio of full-time workers .

When making choices, suppliers should not allow sunk costs to directly affect their current decisions because

Which of the following reflects diseconomies of scale?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 8: Costs and the Supply of Goods

When an economist says a firm is earning zero economic profit, this implies that the firm

The upward-sloping portion of a long-run average total cost curve is the result of

Figure 8-5 -Refer to Figure 8-5. Which of the following would most likely cause the average total cost curve of a firm producing steel bolts to shift from ATC1 to ATC2?

Concerning the earnings difference between men and women, which of the following is true?

Which of the following is true about those graduating with college degrees?

A business owned by a single individual who is fully liable for its debts is called

Accounting costs are often unsatisfactory from the economist's point of view because

As a firm expands output, in the short run marginal costs will

If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ, what does this tell us about the view ABC holds of XYZ?

Use the figure to answer the following question(s). Figure 8-3 -Using Figure 8-3, calculate the total variable cost of producing three units.

If the firm's fixed costs double while variable costs are unchanged, then

The law of diminishing returns

Which of the following must be true if average variable costs are decreasing?

A profit-maximizing firm would

Since the 1970s, the percentage of women preparing for careers in professions has been ____, while the female/male earnings ratio has been ____ during this same period.

Use the figure to answer the following question(s). Figure 8-6 -At what output does the firm depicted in Figure 8-6 minimize its per-unit cost of production?

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers ____. Since 1980, the female/male annual earnings ratio of full-time workers ____.

When making choices, suppliers should not allow sunk costs to directly affect their current decisions because

Which of the following reflects diseconomies of scale?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Figure 8-5 -Refer to Figure 8-5. Which of the following would most likely cause the average total cost curve of a firm producing steel bolts to shift from ATC₁ to ATC₂?

Since the 1970s, the percentage of women preparing for careers in professions has been , while the female/male earnings ratio has been during this same period.

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers . Since 1980, the female/male annual earnings ratio of full-time workers .