Question 1

Which of these assumptions is often realistic for a firm in the short run?

Accepted Answer

A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory but not the number of workers it employs. 
C) The firm can vary the number of workers it employs but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs. 
A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory but not the number of workers it employs. 
C) The firm can vary the number of workers it employs but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs.

Question 2

When a firm experiences constant returns to scale,

Accepted Answer

A) long-run average total cost is unchanged, even when output increases. 
B) long-run marginal cost is greater than long-run average total cost. 
C) long-run marginal cost is less than long-run average total cost. 
D) the firm is likely to experience coordination problems. 
A) long-run average total cost is unchanged, even when output increases. 
B) long-run marginal cost is greater than long-run average total cost. 
C) long-run marginal cost is less than long-run average total cost. 
D) the firm is likely to experience coordination problems.

Question 3

Scenario 13-3
Kachina is a senior majoring in graphic design at Awesome University (AU). While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour.
-Refer to Scenario 13-3. Which of the following statements is correct?

Accepted Answer

A) Kachina should increase the number of hours she works for the Economics Department to make her income comparable to her consulting business income. 
B) Kachina cannot be maximizing her well-being if she continues to work for the Economics Department. 
C) If Kachina chooses one hour at the beach with her friends rather than spend one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beach. 
D) Both b) and c) are correct 
A) Kachina should increase the number of hours she works for the Economics Department to make her income comparable to her consulting business income. 
B) Kachina cannot be maximizing her well-being if she continues to work for the Economics Department. 
C) If Kachina chooses one hour at the beach with her friends rather than spend one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beach. 
D) Both b) and c) are correct

Question 4

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. An economist would calculate the total profit for one birdhouse to be

Accepted Answer

A) $7. 
B) $11. 
C) $12. 
D) $15. 
A) $7. 
B) $11. 
C) $12. 
D) $15.

Question 5

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A) The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D) Any of the above could be correct. 
A) The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D) Any of the above could be correct.

Question 6

A firm that produces and sells furniture gets to choose

Accepted Answer

A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short tun and the long run. 
D) All of the above are correct. 
A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short tun and the long run. 
D) All of the above are correct.

Question 7

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. Ziva's economic profit from farming equals

Accepted Answer

A) $-130. 
B) $-80. 
C) $130. 
D) $170. 
A) $-130. 
B) $-80. 
C) $130. 
D) $170.

Question 8

Table 13-1  
-Refer to Table 13-1. What is total output when 1 worker is hired?

Accepted Answer

A) 10 
B) 30 
C) 45 
D) 75 
A) 10 
B) 30 
C) 45 
D) 75

Question 9

Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.
-Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual economic profit of her cookie jar business?

Accepted Answer

A) $36,000 
B) $35,950 
C) $30,000 
D) $29,950 
A) $36,000 
B) $35,950 
C) $30,000 
D) $29,950

Question 10

Tony's Taco Truck has average variable costs of $1 and average fixed costs of $2 when it produces 50 units of output (tacos). The truck's total cost at 50 units of output is

Accepted Answer

A) ​$3. 
B) ​$50. 
C) ​$100. 
D) ​$150. 
A) ​$3. 
B) ​$50. 
C) ​$100. 
D) ​$150.

Question 11

Table 13-5  
-Refer to Table 13-5. The marginal product of the third worker is

Accepted Answer

A) 9,000 units. 
B) 8,000 units. 
C) 7,000 units. 
D) 5,000 units. 
A) 9,000 units. 
B) 8,000 units. 
C) 7,000 units. 
D) 5,000 units.

Question 12

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Accepted Answer

A) 2 houses 
B) 3 houses 
C) 5 houses 
D) 8 houses 
A) 2 houses 
B) 3 houses 
C) 5 houses 
D) 8 houses

Question 13

Economies of scale often arise because higher production levels allow specialization among workers.

Accepted Answer

A) True 
 B)False

Question 14

Whenever marginal cost is greater than average total cost,

Accepted Answer

A) average total cost is rising. 
B) marginal cost is falling. 
C) average total cost is falling. 
D) Both b and c are correct. 
A) average total cost is rising. 
B) marginal cost is falling. 
C) average total cost is falling. 
D) Both b and c are correct.

Question 15

Diminishing marginal product suggests that the marginal

Accepted Answer

A) cost of an extra worker is unchanged. 
B) cost of an extra worker is less than the previous worker's marginal cost. 
C) product of an extra worker is less than the previous worker's marginal product. 
D) product of an extra worker is greater than the previous worker's marginal product. 
A) cost of an extra worker is unchanged. 
B) cost of an extra worker is less than the previous worker's marginal cost. 
C) product of an extra worker is less than the previous worker's marginal product. 
D) product of an extra worker is greater than the previous worker's marginal product.

Question 16

In setting the production level, a firm's cost curves

Accepted Answer

A) by themselves do not tell us what decisions the firm will make. 
B) dictate what decisions the firm will make. 
C) have no bearing on what decisions the firm will make. 
D) None of the above is correct. 
A) by themselves do not tell us what decisions the firm will make. 
B) dictate what decisions the firm will make. 
C) have no bearing on what decisions the firm will make. 
D) None of the above is correct.

Question 17

When calculating a firm's profit, an economist will subtract only

Accepted Answer

A) explicit costs from total revenue because these are the only costs that can be measured explicitly. 
B) implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured. 
C) the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm. 
D) the marginal cost because the cost of the next unit is the only relevant cost. 
A) explicit costs from total revenue because these are the only costs that can be measured explicitly. 
B) implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured. 
C) the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm. 
D) the marginal cost because the cost of the next unit is the only relevant cost.

Question 18

Table 13-11  
-Refer to Table 13-11. The average fixed cost of producing 5 posters is

Accepted Answer

A) $1. 
B) $2. 
C) $3. 
D) $5. 
A) $1. 
B) $2. 
C) $3. 
D) $5.

Question 19

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. At levels of output less than M, the firm experiences

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) both diminishing marginal productivity and coordination problems. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) both diminishing marginal productivity and coordination problems.

Question 20

Scenario 13-15
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost.
-Refer to Scenario 13-15. Joan's total-cost curve is

Accepted Answer

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

Which of these assumptions is often realistic for a firm in the short run?

When a firm experiences constant returns to scale,

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

A firm that produces and sells furniture gets to choose

Table 13-1 -Refer to Table 13-1. What is total output when 1 worker is hired?

Tony's Taco Truck has average variable costs of $1 and average fixed costs of $2 when it produces 50 units of output (tacos). The truck's total cost at 50 units of output is

Table 13-5 -Refer to Table 13-5. The marginal product of the third worker is

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Economies of scale often arise because higher production levels allow specialization among workers.

Whenever marginal cost is greater than average total cost,

Diminishing marginal product suggests that the marginal

In setting the production level, a firm's cost curves

When calculating a firm's profit, an economist will subtract only

Table 13-11 -Refer to Table 13-11. The average fixed cost of producing 5 posters is

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

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

Which of these assumptions is often realistic for a firm in the short run?

When a firm experiences constant returns to scale,

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

A firm that produces and sells furniture gets to choose

Table 13-1 -Refer to Table 13-1. What is total output when 1 worker is hired?

Tony's Taco Truck has average variable costs of $1 and average fixed costs of $2 when it produces 50 units of output (tacos). The truck's total cost at 50 units of output is

Table 13-5 -Refer to Table 13-5. The marginal product of the third worker is

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Economies of scale often arise because higher production levels allow specialization among workers.

Whenever marginal cost is greater than average total cost,

Diminishing marginal product suggests that the marginal

In setting the production level, a firm's cost curves

When calculating a firm's profit, an economist will subtract only

Table 13-11 -Refer to Table 13-11. The average fixed cost of producing 5 posters is

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

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