Question 1

Implicit costs are costs that do not require an outlay of money by the firm.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

Accepted Answer

A) accounting profit was $9 million. 
B) economic profit was $9 million. 
C) total revenue was $9 million. 
D) explicit costs were $9 million. 
A) accounting profit was $9 million. 
B) economic profit was $9 million. 
C) total revenue was $9 million. 
D) explicit costs were $9 million.

Question 6

Table 13-7
The Flying Elvis Copter Rides  
-Refer to Table 13-7. What is the value of K?

Accepted Answer

A) $25 
B) $50 
C) $110 
D) $220 
A) $25 
B) $50 
C) $110 
D) $220

Question 7

Which of the following is an example of an implicit cost?
(i)the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
(ii)interest paid on the firm's debt
(iii)rent paid by the firm to lease office space

Accepted Answer

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

Question 8

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 5,400 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 5,200 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 5,400 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers. 
D) Any of the above could be correct.

Question 9

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

Accepted Answer

ATC = TC/Q, where TC is graphed on the v

Question 10

The average-total-cost curve intersects

Accepted Answer

A) average fixed cost at the minimum of average total cost. 
B) average variable cost at the minimum of average total cost. 
C) marginal cost at the minimum of average total cost. 
D) marginal cost at the minimum of marginal cost. 
A) average fixed cost at the minimum of average total cost. 
B) average variable cost at the minimum of average total cost. 
C) marginal cost at the minimum of average total cost. 
D) marginal cost at the minimum of marginal cost.

Question 11

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

Accepted Answer

A) $2. 
B) $4. 
C) $1,000. 
D) $2,000. 
A) $2. 
B) $4. 
C) $1,000. 
D) $2,000.

Question 12

If the average-total-cost of producing five units is $10, and the marginal-cost of producing the fifth unit is $10, then the average-total-cost curve is at its minimum at five units.​

Accepted Answer

A) True 
 B)False

Question 13

Figure 13-10  
-Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Accepted Answer

A) Q1 to Q2. 
B) Q2 to Q4. 
C) Q1 to Q3. 
D) Q4 to Q5. 
A) Q1 to Q2. 
B) Q2 to Q4. 
C) Q1 to Q3. 
D) Q4 to Q5.

Question 14

Which of the following expressions is correct?

Accepted Answer

A) marginal cost = (change in quantity of output)/(change in total cost) 
B) average total cost = (total cost)/(quantity of output) 
C) total cost = variable cost + marginal cost 
D) average variable cost = (quantity of output)/(total variable cost) 
A) marginal cost = (change in quantity of output)/(change in total cost) 
B) average total cost = (total cost)/(quantity of output) 
C) total cost = variable cost + marginal cost 
D) average variable cost = (quantity of output)/(total variable cost)

Question 15

Scenario 13-12
Ariana withdrew $400,000 out of her personal savings account and used it to start her new Internet cafe. The savings account pays 3 percent interest per year. During the first year of her business, Ariana sold 2,000 cups of coffee for $2.50 per cup and 4,000 hours of Internet time, also at $2.50 per hour. During the first year, the business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Ariana's time.
-Refer to Scenario 13-12. Ariana's economic profit for the year was

Accepted Answer

A) $-394,000. 
B) $-6,000. 
C) $3,000. 
D) $6,000. 
A) $-394,000. 
B) $-6,000. 
C) $3,000. 
D) $6,000.

Question 16

Table 13-1  
-Refer to Table 13-1. What is total output when 2 workers are hired?

Accepted Answer

A) 15 
B) 45 
C) 75 
D) 120 
A) 15 
B) 45 
C) 75 
D) 120

Question 17

Industrial organization is the study of

Accepted Answer

A) how labor unions organize workers in industries. 
B) which managers are the most successful. 
C) how industries organize for political advantage. 
D) how firms' decisions regarding prices and quantities depend on the market conditions they face. 
A) how labor unions organize workers in industries. 
B) which managers are the most successful. 
C) how industries organize for political advantage. 
D) how firms' decisions regarding prices and quantities depend on the market conditions they face.

Question 18

A firm's opportunity costs of production are equal to its

Accepted Answer

A) explicit costs only. 
B) implicit costs only. 
C) explicit costs + implicit costs. 
D) explicit costs + implicit costs + total revenue. 
A) explicit costs only. 
B) implicit costs only. 
C) explicit costs + implicit costs. 
D) explicit costs + implicit costs + total revenue.

Question 19

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 20

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Implicit costs are costs that do not require an outlay of money by the firm.

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

Several related measures of cost can be derived from a firm's total cost.

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of K?

Which of the following is an example of an implicit cost? (i)the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii)interest paid on the firm's debt (iii)rent paid by the firm to lease office space

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?

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

The average-total-cost curve intersects

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

If the average-total-cost of producing five units is $10, and the marginal-cost of producing the fifth unit is $10, then the average-total-cost curve is at its minimum at five units.​

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Which of the following expressions is correct?

Table 13-1 -Refer to Table 13-1. What is total output when 2 workers are hired?

Industrial organization is the study of

A firm's opportunity costs of production are equal to its

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

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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If the average-total-cost of producing five units is $10, and the marginal-cost of producing the fifth unit is $10, then the average-total-cost curve is at its minimum at five units.