Question 1

Marginal cost is defined as the increase in total cost resulting from an increase in

Accepted Answer

A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labor. 
A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labor.

Question 2

Figure 8-13  
-Movement from point b to point c in Figure 8-13 indicates that the firm is experiencing

Accepted Answer

A)  economies of scale. 
B)  increasing average cost. 
C)  economies of cost. 
D)  a decrease in average plant size. 
E)  diseconomies of scale. 
A)  economies of scale. 
B)  increasing average cost. 
C)  economies of cost. 
D)  a decrease in average plant size. 
E)  diseconomies of scale.

Question 3

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

Accepted Answer

A)  $10 
B)  $15 
C)  $60 
D)  $75 
A)  $10 
B)  $15 
C)  $60 
D)  $75

Question 4

Economies of scale imply that within some range a firm can increase the size of operation and

Accepted Answer

A)  total cost will decrease. 
B)  fixed cost will decrease. 
C)  average total cost will decrease. 
D)  average total cost will increase. 
E)  average variable cost will decrease. 
A)  total cost will decrease. 
B)  fixed cost will decrease. 
C)  average total cost will decrease. 
D)  average total cost will increase. 
E)  average variable cost will decrease.

Question 5

The most important implicit cost generally omitted from the accounting statement of a firm is the

Accepted Answer

A)  rental cost of machinery. 
B)  cost of compliance with government regulations. 
C)  opportunity cost of the equity capital invested by the owners. 
D)  accounting cost incurred as the result of tax compliance. 
A)  rental cost of machinery. 
B)  cost of compliance with government regulations. 
C)  opportunity cost of the equity capital invested by the owners. 
D)  accounting cost incurred as the result of tax compliance.

Question 6

During the last two decades, the number of women preparing for careers as professionals has ____, and the proportion of those completing college degrees has ____.

Accepted Answer

A)  increased; decreased 
B)  increased; increased 
C)  decreased; decreased 
D)  decreased; increased 
A)  increased; decreased 
B)  increased; increased 
C)  decreased; decreased 
D)  decreased; increased

Question 7

The costs of a firm indicate the desire of consumers for

Accepted Answer

A)  the product produced by the firm. 
B)  other goods that might have been produced with the same resources. 
C)  goods that can be easily substituted for the good produced by the firm. 
D)  goods that are complementary with the good produced by the firm. 
A)  the product produced by the firm. 
B)  other goods that might have been produced with the same resources. 
C)  goods that can be easily substituted for the good produced by the firm. 
D)  goods that are complementary with the good produced by the firm.

Question 8

Which of the following is characteristic of the corporate form of ownership?

Accepted Answer

A)  unlimited liability 
B)  easy transferability of ownership rights 
C)  no divisible ownership rights 
D)  absence of the principal-agent problem 
A)  unlimited liability 
B)  easy transferability of ownership rights 
C)  no divisible ownership rights 
D)  absence of the principal-agent problem

Question 9

Which of the following items is most likely to be an implicit cost of production?

Accepted Answer

A)  the "competitive rate" salary the owner of the business pays herself for services provided 
B)  property taxes on a building owned by the firm 
C)  rental payments for a building utilized by the company and rented from another party 
D)  the interest income foregone on the equity capital invested by owners 
A)  the "competitive rate" salary the owner of the business pays herself for services provided 
B)  property taxes on a building owned by the firm 
C)  rental payments for a building utilized by the company and rented from another party 
D)  the interest income foregone on the equity capital invested by owners

Question 10

Evaluate the following: "Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity)."

Accepted Answer

Economic theory suggests that this view

Question 11

In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be

Accepted Answer

A)  $25. 
B)  $2,500. 
C)  $5,000. 
D)  $7,500. 
A)  $25. 
B)  $2,500. 
C)  $5,000. 
D)  $7,500.

Question 12

Economic profit is

Accepted Answer

A)  total revenues minus variable costs. 
B)  total revenues minus private costs. 
C)  total revenues minus explicit costs. 
D)  total revenues minus total costs. 
A)  total revenues minus variable costs. 
B)  total revenues minus private costs. 
C)  total revenues minus explicit costs. 
D)  total revenues minus total costs.

Question 13

Use the figure to answer the following question(s).
Figure 8-4  
-Using Figure 8-4, calculate the firm's total cost of producing four units of output.

Accepted Answer

A)  $4 
B)  $8 
C)  $12 
D)  $16 
A)  $4 
B)  $8 
C)  $12 
D)  $16

Question 14

As output rises, marginal product eventually diminishes and

Accepted Answer

A)  marginal cost increases. 
B)  total cost falls. 
C)  fixed cost increases. 
D)  average product becomes negative. 
A)  marginal cost increases. 
B)  total cost falls. 
C)  fixed cost increases. 
D)  average product becomes negative.

Question 15

Which of the following is true about the changing career objectives of women?

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 has been virtually constant since 1980. 
C)  The number of women preparing for careers as professionals has increased substantially since the 1980s. 
D)  In recent years only about 40 percent 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 has been virtually constant since 1980. 
C)  The number of women preparing for careers as professionals has increased substantially since the 1980s. 
D)  In recent years only about 40 percent of those completing college degrees were women.

Question 16

Use the figure to answer the following question(s).
Figure 8-4  
-The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-4. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 17

Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors rise,

Accepted Answer

A)  her accounting profit will rise. 
B)  her accounting profit will fall. 
C)  her explicit costs will rise. 
D)  her economic profit from textbooks will fall. 
E)  her economic profit from textbooks will rise. 
A)  her accounting profit will rise. 
B)  her accounting profit will fall. 
C)  her explicit costs will rise. 
D)  her economic profit from textbooks will fall. 
E)  her economic profit from textbooks will rise.

Question 18

The optimal plant size depends on

Accepted Answer

A)  whether the firm confronts diminishing returns on its fixed factors of production. 
B)  the output the firm expects to produce. 
C)  whether the plant uses capital-intensive or labor-intensive production techniques. 
D)  the preferences of the individual firm owners. 
A)  whether the firm confronts diminishing returns on its fixed factors of production. 
B)  the output the firm expects to produce. 
C)  whether the plant uses capital-intensive or labor-intensive production techniques. 
D)  the preferences of the individual firm owners.

Question 19

Use the figure to answer the following question(s).
Figure 8-9  
-Using Figure 8-9, calculate the firm's approximate total cost when average total cost is at a minimum.

Accepted Answer

A)  $100 
B)  $160 
C)  $480 
D)  $600 
A)  $100 
B)  $160 
C)  $480 
D)  $600

Question 20

Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of

Accepted Answer

A)  an external benefit. 
B)  economies of scale. 
C)  the principal-agent problem. 
D)  sunk costs. 
A)  an external benefit. 
B)  economies of scale. 
C)  the principal-agent problem. 
D)  sunk costs.

Marginal cost is defined as the increase in total cost resulting from an increase in

Figure 8-13 -Movement from point b to point c in Figure 8-13 indicates that the firm is experiencing

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

Economies of scale imply that within some range a firm can increase the size of operation and

The most important implicit cost generally omitted from the accounting statement of a firm is the

During the last two decades, the number of women preparing for careers as professionals has , and the proportion of those completing college degrees has .

The costs of a firm indicate the desire of consumers for

Which of the following is characteristic of the corporate form of ownership?

Which of the following items is most likely to be an implicit cost of production?

Evaluate the following: "Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity)."

In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be

Economic profit is

Use the figure to answer the following question(s). Figure 8-4 -Using Figure 8-4, calculate the firm's total cost of producing four units of output.

As output rises, marginal product eventually diminishes and

Which of the following is true about the changing career objectives of women?

Use the figure to answer the following question(s). Figure 8-4 -The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-4. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors rise,

The optimal plant size depends on

Use the figure to answer the following question(s). Figure 8-9 -Using Figure 8-9, calculate the firm's approximate total cost when average total cost is at a minimum.

Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of

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

Marginal cost is defined as the increase in total cost resulting from an increase in

Figure 8-13 -Movement from point b to point c in Figure 8-13 indicates that the firm is experiencing

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

Economies of scale imply that within some range a firm can increase the size of operation and

The most important implicit cost generally omitted from the accounting statement of a firm is the

During the last two decades, the number of women preparing for careers as professionals has ____, and the proportion of those completing college degrees has ____.

The costs of a firm indicate the desire of consumers for

Which of the following is characteristic of the corporate form of ownership?

Which of the following items is most likely to be an implicit cost of production?

Evaluate the following: "Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity)."

In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be

Economic profit is

Use the figure to answer the following question(s). Figure 8-4 -Using Figure 8-4, calculate the firm's total cost of producing four units of output.

As output rises, marginal product eventually diminishes and

Which of the following is true about the changing career objectives of women?

Use the figure to answer the following question(s). Figure 8-4 -The average variable cost (AVC) and average total cost (ATC) for a firm are indicated in Figure 8-4. If the marginal cost curve were constructed, at what output would it cross the AVC curve?

Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors rise,

The optimal plant size depends on

Use the figure to answer the following question(s). Figure 8-9 -Using Figure 8-9, calculate the firm's approximate total cost when average total cost is at a minimum.

Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of

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

During the last two decades, the number of women preparing for careers as professionals has , and the proportion of those completing college degrees has .