Question 1

When a firm is operating at an efficient scale,

Accepted Answer

A) average variable cost is minimized. 
B) average fixed cost is minimized. 
C) average total cost is minimized. 
D) marginal cost is minimized. 
A) average variable cost is minimized. 
B) average fixed cost is minimized. 
C) average total cost is minimized. 
D) marginal cost is minimized.

Question 2

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) coordination problems arising from the large size of the firm. 
D) fixed costs greatly exceeding variable costs. 
A) economies of scale. 
B) diseconomies of scale. 
C) coordination problems arising from the large size of the firm. 
D) fixed costs greatly exceeding variable costs.

Question 3

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Accepted Answer

A) $0 
B) $20,000 
C) $65,000 
D) $85,000 
A) $0 
B) $20,000 
C) $65,000 
D) $85,000

Question 4

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 5

Figure 13-6  
-Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0)?

Accepted Answer

A) because variable costs are positive when output is zero 
B) because fixed costs are positive when output is zero 
C) because the firm is producing at the efficient scale 
D) because the firm is maximizing profits 
A) because variable costs are positive when output is zero 
B) because fixed costs are positive when output is zero 
C) because the firm is producing at the efficient scale 
D) because the firm is maximizing profits

Question 6

Figure 13-3  
-Refer to Figure 13-3. The changing slope of the total cost curve reflects

Accepted Answer

A) decreasing average variable cost. 
B) decreasing average total cost. 
C) decreasing marginal product. 
D) increasing fixed cost. 
A) decreasing average variable cost. 
B) decreasing average total cost. 
C) decreasing marginal product. 
D) increasing fixed cost.

Question 7

Table 13-14  
-Refer to Table 13-14. What is the average total cost of producing 6 units of output?

Accepted Answer

A) $19.67 
B) $20.00 
C) $21.33 
D) $21.86 
A) $19.67 
B) $20.00 
C) $21.33 
D) $21.86

Question 8

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production function
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
178.13.3 - MC - MANK08
Figure 13-8  
-Refer to Figure 13-8. Quantity C represents the output level where the firm

Accepted Answer

A) maximizes profits. 
B) minimizes total costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs. 
A) maximizes profits. 
B) minimizes total costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs.

Question 9

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. Which curve represents the long-run average total cost?

Accepted Answer

A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD 
A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD

Question 10

​Table 13-16  
-Refer to Table 13-16. What is the fixed cost of producing 0 units of output?​

Accepted Answer

A) ​$0 
B) ​$12 
C) ​$24 
D) ​$16 
A) ​$0 
B) ​$12 
C) ​$24 
D) ​$16

Question 11

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 the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced?

Accepted Answer

A) $10 
B) $25 
C) $30 
D) $35 
A) $10 
B) $25 
C) $30 
D) $35

Question 12

The average fixed cost curve

Accepted Answer

A) always declines with increased levels of output. 
B) always rises with increased levels of output. 
C) declines as long as it is above marginal cost. 
D) declines as long as it is below marginal cost. 
A) always declines with increased levels of output. 
B) always rises with increased levels of output. 
C) declines as long as it is above marginal cost. 
D) declines as long as it is below marginal cost.

Question 13

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) specialization. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) specialization.

Question 14

Table 13-20
Listed in the table are the long-run total costs for three different firms.  
-Refer to Table 13-20. Firm C is experiencing diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 15

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Accepted Answer

A) competition. 
B) opportunity costs. 
C) specialization. 
D) incentives. 
A) competition. 
B) opportunity costs. 
C) specialization. 
D) incentives.

Question 16

Economic profit is equal to total revenue minus the

Accepted Answer

A) explicit cost of producing goods and services. 
B) opportunity cost of producing goods and services. 
C) accounting cost of producing goods and services. 
D) implicit cost of producing goods and services. 
A) explicit cost of producing goods and services. 
B) opportunity cost of producing goods and services. 
C) accounting cost of producing goods and services. 
D) implicit cost of producing goods and services.

Question 17

Table 13-1  
-Refer to Table 13-1. What is total output when 3 workers are hired?

Accepted Answer

A) 15 
B) 60 
C) 105 
D) 135 
A) 15 
B) 60 
C) 105 
D) 135

Question 18

Figure 13-5  
-Refer to Figure 13-5. Curve C represents which type of cost curve?

Accepted Answer

A) marginal cost 
B) average total cost 
C) average variable cost 
D) average fixed cost 
A) marginal cost 
B) average total cost 
C) average variable cost 
D) average fixed cost

Question 19

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Accepted Answer

A) increasing marginal product. 
B) diminishing marginal product. 
C) diminishing total product. 
D) Both b and c are correct. 
A) increasing marginal product. 
B) diminishing marginal product. 
C) diminishing total product. 
D) Both b and c are correct.

Question 20

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Accepted Answer

A) $1,000 if she sells 100 candles. 
B) $500 if she sells 25 candles. 
C) $20 regardless of how many candles she sells. 
D) $200 if she sells 5 candles. 
A) $1,000 if she sells 100 candles. 
B) $500 if she sells 25 candles. 
C) $20 regardless of how many candles she sells. 
D) $200 if she sells 5 candles.

When a firm is operating at an efficient scale,

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Variable costs usually change as the firm alters the quantity of output produced.

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0)?

Figure 13-3 -Refer to Figure 13-3. The changing slope of the total cost curve reflects

Table 13-14 -Refer to Table 13-14. What is the average total cost of producing 6 units of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which curve represents the long-run average total cost?

Table 13-16 -Refer to Table 13-16. What is the fixed cost of producing 0 units of output?

The average fixed cost curve

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm C is experiencing diseconomies of scale.

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Economic profit is equal to total revenue minus the

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

Figure 13-5 -Refer to Figure 13-5. Curve C represents which type of cost curve?

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

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

When a firm is operating at an efficient scale,

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Variable costs usually change as the firm alters the quantity of output produced.

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0)?

Figure 13-3 -Refer to Figure 13-3. The changing slope of the total cost curve reflects

Table 13-14 -Refer to Table 13-14. What is the average total cost of producing 6 units of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which curve represents the long-run average total cost?

​Table 13-16 -Refer to Table 13-16. What is the fixed cost of producing 0 units of output?​

The average fixed cost curve

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm C is experiencing diseconomies of scale.

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Economic profit is equal to total revenue minus the

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

Figure 13-5 -Refer to Figure 13-5. Curve C represents which type of cost curve?

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

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

Table 13-16 -Refer to Table 13-16. What is the fixed cost of producing 0 units of output?