Question 1

During the short run, a firm has enough time to adjust:

Accepted Answer

A)  its technology. 
B)  its fixed inputs. 
C)  its variable inputs. 
D)  all of its inputs-both fixed and variable. 
A)  its technology. 
B)  its fixed inputs. 
C)  its variable inputs. 
D)  all of its inputs-both fixed and variable.

Question 2

Which of the following is an explicit cost?

Accepted Answer

A)  The opportunity cost of an owner/entrepreneur's time invested in the firm. 
B)  The opportunity cost of the money the business owner/entrepreneur has invested in the firm. 
C)  The wages paid to workers. 
D)  None of the above. 
A)  The opportunity cost of an owner/entrepreneur's time invested in the firm. 
B)  The opportunity cost of the money the business owner/entrepreneur has invested in the firm. 
C)  The wages paid to workers. 
D)  None of the above.

Question 3

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 4

The change in total cost that results from the production of one additional unit is called:

Accepted Answer

A)  marginal revenue. 
B)  average variable cost. 
C)  marginal cost. 
D)  average total cost. 
A)  marginal revenue. 
B)  average variable cost. 
C)  marginal cost. 
D)  average total cost.

Question 5

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 6

What are the seven short run cost calculations? How are they related?

Accepted Answer

The seven short run cost calculations ar

Question 7

A firm's opportunity cost of using resources provided by the firm's owners is called:

Accepted Answer

A)  sunk costs. 
B)  fixed costs. 
C)  explicit costs. 
D)  implicit costs. 
E)  entrepreneurial costs. 
A)  sunk costs. 
B)  fixed costs. 
C)  explicit costs. 
D)  implicit costs. 
E)  entrepreneurial costs.

Question 8

Which of the following is true at the point where diminishing returns set in?

Accepted Answer

A)  Both marginal product and marginal cost are at a maximum. 
B)  Both marginal product and marginal cost are at a minimum. 
C)  Marginal product is at a maximum and marginal cost is at a minimum. 
D)  Marginal product is at a minimum and marginal cost is at a maximum. 
A)  Both marginal product and marginal cost are at a maximum. 
B)  Both marginal product and marginal cost are at a minimum. 
C)  Marginal product is at a maximum and marginal cost is at a minimum. 
D)  Marginal product is at a minimum and marginal cost is at a maximum.

Question 9

Exhibit 7-8 Costs schedules for producing pizza $\begin{array}{|c|c|c|c|c|}
\hline\text { Pizzas } & \begin{array}{c}
\text { Fixed } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Variable } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & \$ & \$ & \$ & \$ \
1 & & 5 & & \
2 & & 13 & & \
3 & & && 10 \
4 & 100 & &140 & \
5 & & &&20 \
6 & &85 & & \
7 & & & 215 \
\hline
\end{array}$
-By filling in the blanks in Exhibit 7-8, the total cost of producing 3 pizzas is shown to be equal to:

Accepted Answer

A)  $100. 
B)  $105. 
C)  $113. 
D)  $123. 
E)  $23. 
A)  $100. 
B)  $105. 
C)  $113. 
D)  $123. 
E)  $23.

Question 10

A car leasing company that expands its size by buying its competitors may run the risk of increasing production cost per unit due to:

Accepted Answer

A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing returns. 
D)  greater use of large-volume purchases. 
A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing returns. 
D)  greater use of large-volume purchases.

Question 11

Exhibit 7-12 Cost schedule for producing pizza $$\begin{array} { | c | c | c | c | } 
\hline \text { Pizzas } & \begin{array} { c } 
\text { Fixed } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost }
\end{array} \
\hline 0 & \$ & \$ & \$ \
1 &&&48 \
2 &&17  \
3 &&27 \
4 &&&78  \
5 &40 \
6 &&64 \
7 &&80\
\hline
\end{array}$$
-By filling in the blanks in Exhibit 7-12, the AVC of 3 pizzas is shown to be equal to:

Accepted Answer

A)  $10. 
B)  $13.33. 
C)  $9. 
D)  $22.33. 
E)  $40. 
A)  $10. 
B)  $13.33. 
C)  $9. 
D)  $22.33. 
E)  $40.

Question 12

The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired.

Accepted Answer

A)  law of demand 
B)  law of diminishing supply 
C)  law of diminishing returns 
D)  law of returns to scale 
A)  law of demand 
B)  law of diminishing supply 
C)  law of diminishing returns 
D)  law of returns to scale

Question 13

Unlike implicit costs, explicit costs:

Accepted Answer

A)  reflect opportunity costs. 
B)  include the value of the owner's time. 
C)  are not included in the accounting statement of the firm. 
D)  are actual cash payments. 
E)  do not change with the output rate of the firm. 
A)  reflect opportunity costs. 
B)  include the value of the owner's time. 
C)  are not included in the accounting statement of the firm. 
D)  are actual cash payments. 
E)  do not change with the output rate of the firm.

Question 14

Exhibit 7-8 Costs schedules for producing pizza $\begin{array}{|c|c|c|c|c|}
\hline\text { Pizzas } & \begin{array}{c}
\text { Fixed } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Variable } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & \$ & \$ & \$ & \$ \
1 & & 5 & & \
2 & & 13 & & \
3 & & && 10 \
4 & 100 & &140 & \
5 & & &&20 \
6 & &85 & & \
7 & & & 215 \
\hline
\end{array}$
-By filling in the blanks in Exhibit 7-8, the variable cost of producing 4 pizzas is shown to be equal to:

Accepted Answer

A)  $100. 
B)  $40. 
C)  $60. 
D)  $85. 
E)  $185. 
A)  $100. 
B)  $40. 
C)  $60. 
D)  $85. 
E)  $185.

Question 15

Exhibit 7-11 Short-run cost curves schedule for pizzeria's hourly production $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Variable Cost }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost }
\end{array} \
\hline 0 \text { pizzas } & \$ 0 & \$ 20 \
10 & 50 & 70 \
20 & 80 & 100 \
30 & 130 & 150 \
40 & 230 & 250 \
\hline
\end{array}$$
-In Exhibit 7-11, the average total cost or producing 40 pizzas per hour is equal to:

Accepted Answer

A)  $5 per pizza. 
B)  $5.75 per pizza. 
C)  $6.25 per pizza. 
D)  $10 per pizza. 
A)  $5 per pizza. 
B)  $5.75 per pizza. 
C)  $6.25 per pizza. 
D)  $10 per pizza.

Question 16

Exhibit 7-10 Short-run cost schedule for book publisher's hourly production $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Total } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Variable Cost }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost }
\end{array} \
\hline 0 \text { cases of books } & \$ 0 & \$ 200 \
1 & 100 & 300 \
2 & 150 & 350 \
3 & 250 & 450 \
4 & 450 & 650 \
\hline
\end{array}$$
-In Exhibit 7-10, the marginal cost of increasing production from 2 to 3 cases of books is:

Accepted Answer

A)  $100. 
B)  $150. 
C)  $450. 
D)  $800. 
A)  $100. 
B)  $150. 
C)  $450. 
D)  $800.

Question 17

The total cost curve is the sum of the:

Accepted Answer

A)  total fixed and total variable cost curves. 
B)  total fixed and marginal cost curves. 
C)  marginal cost and total variable cost curves. 
D)  none of these. 
A)  total fixed and total variable cost curves. 
B)  total fixed and marginal cost curves. 
C)  marginal cost and total variable cost curves. 
D)  none of these.

Question 18

Exhibit 7-7 Cost schedule for a firm $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Total Cost } & \text { Marginal Cost } \
\hline 0 & \$ 200 & \
1 & 900 & \
2 & & \$ 900 \
3 & 3,000 & \
\hline
\end{array}$$
-In Exhibit 7-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:

Accepted Answer

A)  0. 
B)  700. 
C)  1,000. 
D)  1,200. 
E)  1,800. 
A)  0. 
B)  700. 
C)  1,000. 
D)  1,200. 
E)  1,800.

Question 19

Exhibit 7-13 Cost curves  
-In Exhibit 7-13, AFC is shown by the graph labeled:

Accepted Answer

A)  I. 
B)  II. 
C)  III. 
D)  IV. 
E)  V. 
A)  I. 
B)  II. 
C)  III. 
D)  IV. 
E)  V.

Question 20

For most firms, the costs of energy and raw materials will be total fixed costs.

Accepted Answer

A) True 
 B)False

During the short run, a firm has enough time to adjust:

Which of the following is an explicit cost?

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:

The change in total cost that results from the production of one additional unit is called:

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

What are the seven short run cost calculations? How are they related?

A firm's opportunity cost of using resources provided by the firm's owners is called:

Which of the following is true at the point where diminishing returns set in?

Exhibit 7-8 Costs schedules for producing pizza Pizzas Fixed Cost Variable Cost Total Cost Marginal Cost 0 \ \ \ \ 1 5 2 13 3 10 4 100 140 5 20 6 85 7 215 -By filling in the blanks in Exhibit 7-8, the total cost of producing 3 pizzas is shown to be equal to:

A car leasing company that expands its size by buying its competitors may run the risk of increasing production cost per unit due to:

Exhibit 7-12 Cost schedule for producing pizza Pizzas Fixed Cost Variable Cost Total Cost 0 \ \ \ 1 48 2 17 3 27 4 78 5 40 6 64 7 80 -By filling in the blanks in Exhibit 7-12, the AVC of 3 pizzas is shown to be equal to:

The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired.

Unlike implicit costs, explicit costs:

Exhibit 7-8 Costs schedules for producing pizza Pizzas Fixed Cost Variable Cost Total Cost Marginal Cost 0 \ \ \ \ 1 5 2 13 3 10 4 100 140 5 20 6 85 7 215 -By filling in the blanks in Exhibit 7-8, the variable cost of producing 4 pizzas is shown to be equal to:

Exhibit 7-11 Short-run cost curves schedule for pizzeria's hourly production Total Product Total Variable Cost Total Cost 0 pizzas \ 0 \ 20 10 50 70 20 80 100 30 130 150 40 230 250 -In Exhibit 7-11, the average total cost or producing 40 pizzas per hour is equal to:

Exhibit 7-10 Short-run cost schedule for book publisher's hourly production Total Output Total Variable Cost Total Cost 0 cases of books \ 0 \ 200 1 100 300 2 150 350 3 250 450 4 450 650 -In Exhibit 7-10, the marginal cost of increasing production from 2 to 3 cases of books is:

The total cost curve is the sum of the:

Exhibit 7-7 Cost schedule for a firm Quantity Total Cost Marginal Cost 0 \ 200 1 900 2 \ 900 3 3,000 -In Exhibit 7-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:

Exhibit 7-13 Cost curves -In Exhibit 7-13, AFC is shown by the graph labeled:

For most firms, the costs of energy and raw materials will be total fixed costs.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

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Exam 7: Production Costs

During the short run, a firm has enough time to adjust:

Which of the following is an explicit cost?

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:

The change in total cost that results from the production of one additional unit is called:

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

What are the seven short run cost calculations? How are they related?

A firm's opportunity cost of using resources provided by the firm's owners is called:

Which of the following is true at the point where diminishing returns set in?

Exhibit 7-8 Costs schedules for producing pizza Pizzas Fixed Cost Variable Cost Total Cost Marginal Cost 0 \ \ \ \ 1 5 2 13 3 10 4 100 140 5 20 6 85 7 215 -By filling in the blanks in Exhibit 7-8, the total cost of producing 3 pizzas is shown to be equal to:

A car leasing company that expands its size by buying its competitors may run the risk of increasing production cost per unit due to:

Exhibit 7-12 Cost schedule for producing pizza Pizzas Fixed Cost Variable Cost Total Cost 0 \ \ \ 1 48 2 17 3 27 4 78 5 40 6 64 7 80 -By filling in the blanks in Exhibit 7-12, the AVC of 3 pizzas is shown to be equal to:

The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired.

Unlike implicit costs, explicit costs:

Exhibit 7-8 Costs schedules for producing pizza Pizzas Fixed Cost Variable Cost Total Cost Marginal Cost 0 \ \ \ \ 1 5 2 13 3 10 4 100 140 5 20 6 85 7 215 -By filling in the blanks in Exhibit 7-8, the variable cost of producing 4 pizzas is shown to be equal to:

Exhibit 7-11 Short-run cost curves schedule for pizzeria's hourly production Total Product Total Variable Cost Total Cost 0 pizzas \ 0 \ 20 10 50 70 20 80 100 30 130 150 40 230 250 -In Exhibit 7-11, the average total cost or producing 40 pizzas per hour is equal to:

Exhibit 7-10 Short-run cost schedule for book publisher's hourly production Total Output Total Variable Cost Total Cost 0 cases of books \ 0 \ 200 1 100 300 2 150 350 3 250 450 4 450 650 -In Exhibit 7-10, the marginal cost of increasing production from 2 to 3 cases of books is:

The total cost curve is the sum of the:

Exhibit 7-7 Cost schedule for a firm Quantity Total Cost Marginal Cost 0 \ 200 1 900 2 \ 900 3 3,000 -In Exhibit 7-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:

Exhibit 7-13 Cost curves -In Exhibit 7-13, AFC is shown by the graph labeled:

For most firms, the costs of energy and raw materials will be total fixed costs.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

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