Question 1

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 2

The long-run average total cost curve is always

Accepted Answer

A) flatter than the short-run average total cost curve, but not necessarily horizontal. 
B) horizontal. 
C) falling as output increases. 
D) rising as output increases. 
A) flatter than the short-run average total cost curve, but not necessarily horizontal. 
B) horizontal. 
C) falling as output increases. 
D) rising as output increases.

Question 3

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

Accepted Answer

A) 18 bouquets 
B) 19 bouquets 
C) 20 bouquets 
D) 38 bouquets 
A) 18 bouquets 
B) 19 bouquets 
C) 20 bouquets 
D) 38 bouquets

Question 4

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than
(i)his cumulative GPA.
(ii)he ever performed before.
(iii)he did last semester.

Accepted Answer

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

Question 5

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

Accepted Answer

A) 10 units of output. 
B) 11 units of output. 
C) 16 units of output. 
D) 181 units of output. 
A) 10 units of output. 
B) 11 units of output. 
C) 16 units of output. 
D) 181 units of output.

Question 6

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900.
​

Accepted Answer

A) True 
 B)False

Question 7

Table 13-9  
-Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its total-cost curve is

Accepted Answer

A) constant. 
B) increasing at a decreasing rate. 
C) increasing at an increasing rate. 
D) unknown because there is no relationship between a firm's production function and its total-cost curve. 
A) constant. 
B) increasing at a decreasing rate. 
C) increasing at an increasing rate. 
D) unknown because there is no relationship between a firm's production function and its total-cost curve.

Question 8

In the long run,

Accepted Answer

A) inputs that were fixed in the short run remain fixed. 
B) inputs that were fixed in the short run become variable. 
C) inputs that were variable in the short run become fixed. 
D) variable inputs are rarely used. 
A) inputs that were fixed in the short run remain fixed. 
B) inputs that were fixed in the short run become variable. 
C) inputs that were variable in the short run become fixed. 
D) variable inputs are rarely used.

Question 9

A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing the 101st unit of output?

Accepted Answer

A) $250 
B) $275 
C) $340.91 
D) $350 
A) $250 
B) $275 
C) $340.91 
D) $350

Question 10

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average fixed cost will be

Accepted Answer

A) rising at all points. 
B) falling at all points. 
C) U-shaped. 
D) constant. 
A) rising at all points. 
B) falling at all points. 
C) U-shaped. 
D) constant.

Question 11

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average total cost will be

Accepted Answer

A) rising at all points. 
B) falling at all points. 
C) constant. 
D) U-shaped. 
A) rising at all points. 
B) falling at all points. 
C) constant. 
D) U-shaped.

Question 12

Table 13-18  
-Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Accepted Answer

AVC = VC/Q

Question 13

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 5, Q = 125) and (L = 6, Q = 152). Then the marginal product of the 6th worker is

Accepted Answer

A) 25 units of output. 
B) 27 units of output. 
C) 37 units of output. 
D) 162 units of output. 
A) 25 units of output. 
B) 27 units of output. 
C) 37 units of output. 
D) 162 units of output.

Question 14

Table 13-9  
-Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is

Accepted Answer

A) constant. 
B) decreasing. 
C) increasing. 
D) U-shaped. 
A) constant. 
B) decreasing. 
C) increasing. 
D) U-shaped.

Question 15

A total-cost curve shows the relationship between the

Accepted Answer

A) quantity of an input used and the total cost of production. 
B) quantity of output produced and the total cost of production. 
C) total cost of production and profit. 
D) total cost of production and total revenue. 
A) quantity of an input used and the total cost of production. 
B) quantity of output produced and the total cost of production. 
C) total cost of production and profit. 
D) total cost of production and total revenue.

Question 16

Scenario 13-10
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each.
-Refer to Scenario 13-10. An economist would calculate the total cost for one photo frame to be

Accepted Answer

A) $5. 
B) $10. 
C) $15. 
D) $25. 
A) $5. 
B) $10. 
C) $15. 
D) $25.

Question 17

Accountants keep track of the money that flows into and out of firms.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's total economic profits?

Accepted Answer

A) $150 
B) $126 
C) $96 
D) $54 
A) $150 
B) $126 
C) $96 
D) $54

Question 20

The things that must be forgone to acquire a good are called

Accepted Answer

A) implicit costs. 
B) opportunity costs. 
C) explicit costs. 
D) accounting costs. 
A) implicit costs. 
B) opportunity costs. 
C) explicit costs. 
D) accounting costs.

Exam 13: The Costs of Production

Average total cost and marginal cost express information that is already contained in a firm's total cost.

The long-run average total cost curve is always

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than (i)his cumulative GPA. (ii)he ever performed before. (iii)he did last semester.

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900. ​

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its total-cost curve is

In the long run,

A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing the 101st unit of output?

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average fixed cost will be

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average total cost will be

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 5, Q = 125) and (L = 6, Q = 152). Then the marginal product of the 6th worker is

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is

A total-cost curve shows the relationship between the

Accountants keep track of the money that flows into and out of firms.

The things that must be forgone to acquire a good are called

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900.