Question 1

Table 13-11  
-Refer to Table 13-11. What is the variable cost of producing 0 posters?

Accepted Answer

A) $0 
B) $1 
C) $10 
D) $100 
A) $0 
B) $1 
C) $10 
D) $100

Question 2

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

Accepted Answer

A) True 
 B)False

Question 3

Table 13-18  
-Refer to Table 13-18. What is the shape of the firm's total-cost curve?

Accepted Answer

The firm's total-cost curve wo

Question 4

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A) wages Patrice could earn giving tennis lessons 
B) dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency 
C) the cost of utilities for operating the storefront 
D) Both b and c are correct. 
A) wages Patrice could earn giving tennis lessons 
B) dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency 
C) the cost of utilities for operating the storefront 
D) Both b and c are correct.

Question 5

The fundamental reason that marginal cost eventually rises as output increases is because of

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) rising average fixed cost. 
A) economies of scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) rising average fixed cost.

Question 6

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Accepted Answer

A) $7,500. 
B) $25,000. 
C) $32,500. 
D) $67,500. 
A) $7,500. 
B) $25,000. 
C) $32,500. 
D) $67,500.

Question 7

Figure 13-6  
-Refer to Figure 13-6. Which of the following can be inferred from the figure above?
(i)Marginal cost is increasing at all levels of output.
(ii)Marginal product is increasing at low levels of output.
(iii)Marginal product is decreasing at high levels of output.

Accepted Answer

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

Question 8

Foregone investment opportunities are an example of

Accepted Answer

A) an explicit cost. 
B) an implicit cost. 
C) revenues. 
D) profits. 
A) an explicit cost. 
B) an implicit cost. 
C) revenues. 
D) profits.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) $1.67 
B) $18 
C) $19.67 
D) $21.33 
A) $1.67 
B) $18 
C) $19.67 
D) $21.33

Question 11

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal

Accepted Answer

A) $10 
B) $15 
C) $100 
D) $150 
A) $10 
B) $15 
C) $100 
D) $150

Question 12

Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The firm's economic profit for the year was

Accepted Answer

A) -$26,000. 
B) -$23,000. 
C) $2,000. 
D) $14,000. 
A) -$26,000. 
B) -$23,000. 
C) $2,000. 
D) $14,000.

Question 13

The difference between accounting profit and economic profit relates to

Accepted Answer

A) the manner in which revenues are defined. 
B) how marginal revenue is calculated. 
C) the manner in which costs are defined. 
D) the price of the good in the market. 
A) the manner in which revenues are defined. 
B) how marginal revenue is calculated. 
C) the manner in which costs are defined. 
D) the price of the good in the market.

Question 14

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 15

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost

Accepted Answer

A) rises. 
B) remains unaffected. 
C) falls. 
D) All of the above are possible depending on the shape of the marginal cost curve. 
A) rises. 
B) remains unaffected. 
C) falls. 
D) All of the above are possible depending on the shape of the marginal cost curve.

Question 16

Table 13-3  
-Refer to Table 13-3. The marginal product of the third worker is

Accepted Answer

A) 230 units. 
B) 100 units. 
C) 77 units. 
D) 60 units. 
A) 230 units. 
B) 100 units. 
C) 77 units. 
D) 60 units.

Question 17

The length of the short run

Accepted Answer

A) is different for different types of firms. 
B) can never exceed 3 years. 
C) can never exceed 1 year. 
D) is always less than 6 months. 
A) is different for different types of firms. 
B) can never exceed 3 years. 
C) can never exceed 1 year. 
D) is always less than 6 months.

Question 18

Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is

Accepted Answer

A) $1.10. 
B) $6.50. 
C) $15.00. 
D) $16.50. 
A) $1.10. 
B) $6.50. 
C) $15.00. 
D) $16.50.

Question 19

When marginal cost is greater than average cost, average cost is

Accepted Answer

A) rising. 
B) falling. 
C) constant. 
D) The direction of change in average cost cannot be determined from this information. 
A) rising. 
B) falling. 
C) constant. 
D) The direction of change in average cost cannot be determined from this information.

Question 20

Table 13-2  
-Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Exam 13: The Costs of Production

Table 13-11 -Refer to Table 13-11. What is the variable cost of producing 0 posters?

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

Table 13-18 -Refer to Table 13-18. What is the shape of the firm's total-cost curve?

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

The fundamental reason that marginal cost eventually rises as output increases is because of

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Figure 13-6 -Refer to Figure 13-6. Which of the following can be inferred from the figure above? (i)Marginal cost is increasing at all levels of output. (ii)Marginal product is increasing at low levels of output. (iii)Marginal product is decreasing at high levels of output.

Foregone investment opportunities are an example of

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

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

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal

The difference between accounting profit and economic profit relates to

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost

Table 13-3 -Refer to Table 13-3. The marginal product of the third worker is

The length of the short run

Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is

When marginal cost is greater than average cost, average cost is

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

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

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