Question 1

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Accepted Answer

A) True 
 B)False  True

Question 2

Table 13-13
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.  
-Refer to Table 13-13. What is the average variable cost for the month if 6 instructional modules are produced?

Accepted Answer

A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33 
A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33 B

Question 3

To an economist, the field of industrial organization answers which of the following questions?

Accepted Answer

A) Why are consumers subject to the law of demand? 
B) Why do firms experience diminishing marginal productivities of their inputs? 
C) How does the number of firms affect prices and the efficiency of market outcomes? 
D) How can government intervention improve industrial production when externalities are present? 
A) Why are consumers subject to the law of demand? 
B) Why do firms experience diminishing marginal productivities of their inputs? 
C) How does the number of firms affect prices and the efficiency of market outcomes? 
D) How can government intervention improve industrial production when externalities are present? C

Question 4

Table 13-4
Charles's Math Tutoring  
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Accepted Answer

A) increases but gets flatter. 
B) increases and gets steeper. 
C) decreases and gets flatter. 
D) decreases but gets steeper. 
A) increases but gets flatter. 
B) increases and gets steeper. 
C) decreases and gets flatter. 
D) decreases but gets steeper.

Question 5

Table 13-13
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.  
-Refer to Table 13-13. What is the marginal cost of creating the tenth instructional module in a given month?

Accepted Answer

A) $900 
B) $1,250 
C) $2,500 
D) $3,060 
A) $900 
B) $1,250 
C) $2,500 
D) $3,060

Question 6

Table 13-18  
-Refer to Table 13-18. What is the total output of four workers?

Accepted Answer

450 + 50 =

Question 7

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when the firm hires 4 workers, the firm produces 50 units of output. If the fixed cost of production is $4, the variable cost per unit of labor is $20, and the marginal product of labor for the fifth unit of labor is 2, what is the average total cost of production when the firm hires 5 workers?

Accepted Answer

A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80 
A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80

Question 8

Which of the following would be an example of an implicit cost? (i)
Forgone investment opportunities
(ii)
Wages of workers
(iii)
Raw materials costs

Accepted Answer

A) (i) only 
B) (ii) only 
C) (ii) and (iii) only 
D) (i) and (iii) only 
A) (i) only 
B) (ii) only 
C) (ii) and (iii) only 
D) (i) and (iii) only

Question 9

Table 13-9  
-Refer to Table 13-9. The marginal products of hiring additional workers are

Accepted Answer

A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) decreasing. 
D) constant. 
A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) decreasing. 
D) constant.

Question 10

Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-2. Suppose Chelsea purchases the factory using $50,000 of her own money and $50,000 borrowed from a bank at an interest rate of 6 percent. What is Chelsea's annual opportunity cost of purchasing the factory?

Accepted Answer

A) $2,000 
B) $3,000 
C) $4,500 
D) $5,000 
A) $2,000 
B) $3,000 
C) $4,500 
D) $5,000

Question 11

An example of an opportunity cost that is also an implicit cost is

Accepted Answer

A) a lease payment. 
B) the cost of raw materials. 
C) the value of the business owner's time. 
D) All of the above are correct. 
A) a lease payment. 
B) the cost of raw materials. 
C) the value of the business owner's time. 
D) All of the above are correct.

Question 12

Figure 13-5  
-Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 13

Scenario 13-22
Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $50,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $50,000 working at another salon.
-Refer to Scenario 13-22. What is the economic profit for the hair styling salon?

Accepted Answer

Economic profit = Total revenu

Question 14

Constant returns to scale occur when the firm's long-run

Accepted Answer

A) total costs are constant as output increases. 
B) average total costs are constant as output increases. 
C) average cost curve is falling as output increases. 
D) average cost curve is rising as output increases. 
A) total costs are constant as output increases. 
B) average total costs are constant as output increases. 
C) average cost curve is falling as output increases. 
D) average cost curve is rising as output increases.

Question 15

Consider the following information about bread production at Beth's Bakery:   Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

Accepted Answer

A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant. 
A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant.

Question 16

The shape of the total-cost curve is inversely related to the shape of the production function.

Accepted Answer

A) True 
 B)False

Question 17

Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explains that ATC is U-shaped for two reasons. The first is the existence of diminishing marginal product, which causes it to rise. What would be the second reason? Assume that the marginal cost curve is linear. (Hint: The second reason relates to average fixed cost)

Accepted Answer

Average fixed cost always decl

Question 18

Scenario 13-7
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business.
-Refer to Scenario 13-7. Julia's implicit costs are

Accepted Answer

A) 0. 
B) $10,000. 
C) $15,000. 
D) $25,000. 
A) 0. 
B) $10,000. 
C) $15,000. 
D) $25,000.

Question 19

Which of the following statements is not correct?

Accepted Answer

A) Fixed costs are constant. 
B) Variable costs change as output changes. 
C) Average fixed costs are constant. 
D) Average total costs are typically U-shaped. 
A) Fixed costs are constant. 
B) Variable costs change as output changes. 
C) Average fixed costs are constant. 
D) Average total costs are typically U-shaped.

Question 20

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Accepted Answer

A) True 
 B)False

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

To an economist, the field of industrial organization answers which of the following questions?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Table 13-18 -Refer to Table 13-18. What is the total output of four workers?

Which of the following would be an example of an implicit cost? (i) Forgone investment opportunities (ii) Wages of workers (iii) Raw materials costs

Table 13-9 -Refer to Table 13-9. The marginal products of hiring additional workers are

An example of an opportunity cost that is also an implicit cost is

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Constant returns to scale occur when the firm's long-run

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

The shape of the total-cost curve is inversely related to the shape of the production function.

Which of the following statements is not correct?

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 13: The Costs of Production

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

To an economist, the field of industrial organization answers which of the following questions?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Table 13-18 -Refer to Table 13-18. What is the total output of four workers?

Which of the following would be an example of an implicit cost? (i) Forgone investment opportunities (ii) Wages of workers (iii) Raw materials costs

Table 13-9 -Refer to Table 13-9. The marginal products of hiring additional workers are

An example of an opportunity cost that is also an implicit cost is

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Constant returns to scale occur when the firm's long-run

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

The shape of the total-cost curve is inversely related to the shape of the production function.

Which of the following statements is not correct?

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters