Question 1

Use the figure to answer the following question(s).
Figure 8-9  
-In Figure 8-9, which output would minimize the firm's average total cost of production?

Accepted Answer

A)  30 
B)  40 
C)  50 
D)  60 
A)  30 
B)  40 
C)  50 
D)  60

Question 2

Long-run economies of scale exist when the long-run average cost curve

Accepted Answer

A)  rises. 
B)  remains constant. 
C)  falls. 
D)  does not exist. 
A)  rises. 
B)  remains constant. 
C)  falls. 
D)  does not exist.

Question 3

Use the figure to answer the following question(s).
Figure 8-10  
-Using Figure 8-10, calculate the firm's approximate total cost when average total cost is at a minimum.

Accepted Answer

A)  $60 
B)  $80 
C)  $100 
D)  $120 
A)  $60 
B)  $80 
C)  $100 
D)  $120

Question 4

Figure 8-7  
-Which of the following is true for Figure 8-7?

Accepted Answer

A)  Firms in this industry begin to experience diminishing returns to their variable factors at output q1. 
B)  Between q1 and q2, firms in this industry experience economies of scale. 
C)  Firms producing output rates less than q1 or more than q2 will find it difficult to survive. 
D)  The largest firms in this industry have the lowest per-unit cost. 
A)  Firms in this industry begin to experience diminishing returns to their variable factors at output q1. 
B)  Between q1 and q2, firms in this industry experience economies of scale. 
C)  Firms producing output rates less than q1 or more than q2 will find it difficult to survive. 
D)  The largest firms in this industry have the lowest per-unit cost.

Question 5

Costs that a firm remaining in business will still incur even if it halts current production are called

Accepted Answer

A)  fixed costs. 
B)  variable costs. 
C)  implicit costs. 
D)  explicit costs. 
A)  fixed costs. 
B)  variable costs. 
C)  implicit costs. 
D)  explicit costs.

Question 6

Use the figure to answer the following question(s).
Figure 8-2  
-According to Figure 8-2, at what output would a properly constructed marginal cost curve cross the ATC curve?

Accepted Answer

A)  15 
B)  20 
C)  25 
D)  30 
A)  15 
B)  20 
C)  25 
D)  30

Question 7

If the government levies a $1 excise tax on each unit of a good sold, what will happen to the producer's cost curve?

Accepted Answer

A)  The average total cost and marginal cost curves will shift downward by the amount of the tax. 
B)  The average total cost and marginal cost curves will shift upward by the amount of the tax. 
C)  The marginal cost curve will shift upward by the amount of the tax; the average total cost curve will remain unchanged. 
D)  Both the marginal cost and average total costs will remain the same since taxes are not a cost of production. 
A)  The average total cost and marginal cost curves will shift downward by the amount of the tax. 
B)  The average total cost and marginal cost curves will shift upward by the amount of the tax. 
C)  The marginal cost curve will shift upward by the amount of the tax; the average total cost curve will remain unchanged. 
D)  Both the marginal cost and average total costs will remain the same since taxes are not a cost of production.

Question 8

Larger firms will often have lower minimum per-unit costs than smaller firms because

Accepted Answer

A)  employee shirking is less of a problem. 
B)  large-scale output allows greater specialization for both labor and machines in the production process. 
C)  mass production techniques, with high setup and development costs, are appropriate only when a small output is planned. 
D)  all of the above are correct. 
A)  employee shirking is less of a problem. 
B)  large-scale output allows greater specialization for both labor and machines in the production process. 
C)  mass production techniques, with high setup and development costs, are appropriate only when a small output is planned. 
D)  all of the above are correct.

Question 9

Which of the following is not an advantage of the corporate structure over proprietorship and partnership forms of business organization?

Accepted Answer

A)  Stockholders in the corporation have limited liability, whereas proprietors or partners have unlimited liability. 
B)  Ownership rights of a corporation may be transferred more easily. 
C)  Large investment funds are more easily attracted by the corporation. 
D)  Corporations are less likely to suffer from the principal-agent problem. 
A)  Stockholders in the corporation have limited liability, whereas proprietors or partners have unlimited liability. 
B)  Ownership rights of a corporation may be transferred more easily. 
C)  Large investment funds are more easily attracted by the corporation. 
D)  Corporations are less likely to suffer from the principal-agent problem.

Question 10

Which of the following factors are likely to lead to an increase in the female/male earnings ratio in the future?

Accepted Answer

A)  As the labor force participation of women increases, their years of work experience will become more similar to men. 
B)  In recent years, a higher proportion of women have been preparing for careers in the professions. 
C)  As the proportion of families headed by a female parent increases, the average hours worked per week of female employees will decline. 
D)  Both a and b are correct. 
A)  As the labor force participation of women increases, their years of work experience will become more similar to men. 
B)  In recent years, a higher proportion of women have been preparing for careers in the professions. 
C)  As the proportion of families headed by a female parent increases, the average hours worked per week of female employees will decline. 
D)  Both a and b are correct.

Question 11

An airline can increase its profit by offering standby customers an unsold seat at a substantial discount just before takeoff because

Accepted Answer

A)  additional passengers are needed to balance the load. 
B)  the marginal cost of additional passengers is very small. 
C)  additional passengers add little to fixed costs. 
D)  such passengers add more to profits than do those with reserved seats. 
A)  additional passengers are needed to balance the load. 
B)  the marginal cost of additional passengers is very small. 
C)  additional passengers add little to fixed costs. 
D)  such passengers add more to profits than do those with reserved seats.

Question 12

The earnings difference between men who have never been married and women is

Accepted Answer

A)  significantly less than the earnings difference between married men and women. 
B)  about the same as the earnings difference between married men and women. 
C)  significantly more than the earnings difference between married men and women. 
D)  modestly more than the earnings difference between married men and women. 
A)  significantly less than the earnings difference between married men and women. 
B)  about the same as the earnings difference between married men and women. 
C)  significantly more than the earnings difference between married men and women. 
D)  modestly more than the earnings difference between married men and women.

Question 13

"A good business decision maker will never sell a product for less than it costs to produce." This statement is

Accepted Answer

A)  true because diminishing returns always cause marginal costs to rise in the short run. 
B)  false because diminishing returns always cause fixed costs to rise in the short run. 
C)  true because it clearly differentiates between accounting profit and economic profit. 
D)  false because a business decision maker may be covering his current variable costs even though he has failed to cover all previous production costs. 
A)  true because diminishing returns always cause marginal costs to rise in the short run. 
B)  false because diminishing returns always cause fixed costs to rise in the short run. 
C)  true because it clearly differentiates between accounting profit and economic profit. 
D)  false because a business decision maker may be covering his current variable costs even though he has failed to cover all previous production costs.

Question 14

The sum of the explicit and implicit costs incurred in the production process is called

Accepted Answer

A)  fixed cost. 
B)  sunk cost. 
C)  marginal cost. 
D)  total cost. 
A)  fixed cost. 
B)  sunk cost. 
C)  marginal cost. 
D)  total cost.

Question 15

Use the figure to answer the following question(s).
Figure 8-2  
-The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-2. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

Accepted Answer

A)  10 
B)  15 
C)  20 
D)  25 
A)  10 
B)  15 
C)  20 
D)  25

Question 16

The three basic legal forms of business enterprise are

Accepted Answer

A)  monopolists, competitors, and enterprises. 
B)  vertical, horizontal, and conglomerate corporations. 
C)  conglomerates, multinationals, and partnerships. 
D)  proprietorships, partnerships, and corporations. 
A)  monopolists, competitors, and enterprises. 
B)  vertical, horizontal, and conglomerate corporations. 
C)  conglomerates, multinationals, and partnerships. 
D)  proprietorships, partnerships, and corporations.

Question 17

In 1964 civil rights legislation was passed

Accepted Answer

A)  that made it illegal for women to make less than the minimum wage. 
B)  that created the No Woman Left Behind Commission. 
C)  prohibiting employers from discriminating based on race and gender. 
D)  requiring fields traditionally dominated by male workers to hire more female candidates. 
A)  that made it illegal for women to make less than the minimum wage. 
B)  that created the No Woman Left Behind Commission. 
C)  prohibiting employers from discriminating based on race and gender. 
D)  requiring fields traditionally dominated by male workers to hire more female candidates.

Question 18

The implicit rate of return that must be paid to induce investors to continue to supply the funds necessary to maintain a firm's capital assets is called

Accepted Answer

A)  the investors' rate of return. 
B)  the opportunity cost of labor. 
C)  the opportunity cost of capital. 
D)  equity capital. 
A)  the investors' rate of return. 
B)  the opportunity cost of labor. 
C)  the opportunity cost of capital. 
D)  equity capital.

Question 19

The average fixed costs of a firm equal

Accepted Answer

A)  implicit costs divided by output. 
B)  explicit costs divided by output. 
C)  total cost minus variable cost. 
D)  (total cost minus variable cost) divided by output. 
A)  implicit costs divided by output. 
B)  explicit costs divided by output. 
C)  total cost minus variable cost. 
D)  (total cost minus variable cost) divided by output.

Question 20

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

Accepted Answer

A)  it is costless for employers to discriminate against groups they do not like. 
B)  the wages of employees who are discriminated against will rise. 
C)  an employer who discriminates will experience higher costs. 
D)  discrimination by an employer will reduce production costs since the employer can pay lower wages. 
A)  it is costless for employers to discriminate against groups they do not like. 
B)  the wages of employees who are discriminated against will rise. 
C)  an employer who discriminates will experience higher costs. 
D)  discrimination by an employer will reduce production costs since the employer can pay lower wages.

Use the figure to answer the following question(s). Figure 8-9 -In Figure 8-9, which output would minimize the firm's average total cost of production?

Long-run economies of scale exist when the long-run average cost curve

Use the figure to answer the following question(s). Figure 8-10 -Using Figure 8-10, calculate the firm's approximate total cost when average total cost is at a minimum.

Figure 8-7 -Which of the following is true for Figure 8-7?

Costs that a firm remaining in business will still incur even if it halts current production are called

Use the figure to answer the following question(s). Figure 8-2 -According to Figure 8-2, at what output would a properly constructed marginal cost curve cross the ATC curve?

If the government levies a $1 excise tax on each unit of a good sold, what will happen to the producer's cost curve?

Larger firms will often have lower minimum per-unit costs than smaller firms because

Which of the following is not an advantage of the corporate structure over proprietorship and partnership forms of business organization?

Which of the following factors are likely to lead to an increase in the female/male earnings ratio in the future?

An airline can increase its profit by offering standby customers an unsold seat at a substantial discount just before takeoff because

The earnings difference between men who have never been married and women is

"A good business decision maker will never sell a product for less than it costs to produce." This statement is

The sum of the explicit and implicit costs incurred in the production process is called

Use the figure to answer the following question(s). Figure 8-2 -The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-2. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

The three basic legal forms of business enterprise are

In 1964 civil rights legislation was passed

The implicit rate of return that must be paid to induce investors to continue to supply the funds necessary to maintain a firm's capital assets is called

The average fixed costs of a firm equal

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

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

Use the figure to answer the following question(s). Figure 8-9 -In Figure 8-9, which output would minimize the firm's average total cost of production?

Long-run economies of scale exist when the long-run average cost curve

Use the figure to answer the following question(s). Figure 8-10 -Using Figure 8-10, calculate the firm's approximate total cost when average total cost is at a minimum.

Figure 8-7 -Which of the following is true for Figure 8-7?

Costs that a firm remaining in business will still incur even if it halts current production are called

Use the figure to answer the following question(s). Figure 8-2 -According to Figure 8-2, at what output would a properly constructed marginal cost curve cross the ATC curve?

If the government levies a $1 excise tax on each unit of a good sold, what will happen to the producer's cost curve?

Larger firms will often have lower minimum per-unit costs than smaller firms because

Which of the following is not an advantage of the corporate structure over proprietorship and partnership forms of business organization?

Which of the following factors are likely to lead to an increase in the female/male earnings ratio in the future?

An airline can increase its profit by offering standby customers an unsold seat at a substantial discount just before takeoff because

The earnings difference between men who have never been married and women is

"A good business decision maker will never sell a product for less than it costs to produce." This statement is

The sum of the explicit and implicit costs incurred in the production process is called

Use the figure to answer the following question(s). Figure 8-2 -The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-2. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

The three basic legal forms of business enterprise are

In 1964 civil rights legislation was passed

The implicit rate of return that must be paid to induce investors to continue to supply the funds necessary to maintain a firm's capital assets is called

The average fixed costs of a firm equal

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

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