Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following can be added to profit to obtain total revenue?

Accepted Answer

A) net profit 
B) capital profit 
C) operational profit 
D) total cost 
A) net profit 
B) capital profit 
C) operational profit 
D) total cost

Question 3

Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul's marginal product?

Accepted Answer

A) 2 cases 
B) 3 cases 
C) 5 cases 
D) 7 cases 
A) 2 cases 
B) 3 cases 
C) 5 cases 
D) 7 cases

Question 4

Figure 13-3  
-Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

Accepted Answer

A) Output increases at a decreasing rate with additional units of input. 
B) Output increases at an increasing rate with additional units of input. 
C) Output decreases at a decreasing rate with additional units of input. 
D) Output decreases at an increasing rate with additional units of input. 
A) Output increases at a decreasing rate with additional units of input. 
B) Output increases at an increasing rate with additional units of input. 
C) Output decreases at a decreasing rate with additional units of input. 
D) Output decreases at an increasing rate with additional units of input.

Question 5

​Table 13-16  
-Refer to Table 13-16. What is the marginal cost of the 4th unit of output?

Accepted Answer

A) $​40 
B) ​$52 
C) ​$68 
D) ​$136 
A) $​40 
B) ​$52 
C) ​$68 
D) ​$136

Question 6

-Refer to Table 13-4. Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

Accepted Answer

A) first worker. 
B) second worker. 
C) third worker. 
D) fourth worker. 
A) first worker. 
B) second worker. 
C) third worker. 
D) fourth worker.

Question 7

The shape of the total-cost curve is inversely related to the shape of the production function.

Accepted Answer

A) True 
 B)False

Question 8

When a firm's only variable input is labor, then the slope of the production function measures the

Accepted Answer

A) quantity of labor. 
B) quantity of output. 
C) total cost. 
D) marginal product of labor. 
A) quantity of labor. 
B) quantity of output. 
C) total cost. 
D) marginal product of labor.

Question 9

The amount of money that a firm receives from the sale of its output is called

Accepted Answer

A) total gross profit. 
B) total net profit. 
C) total revenue. 
D) net revenue. 
A) total gross profit. 
B) total net profit. 
C) total revenue. 
D) net revenue.

Question 10

Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are

Accepted Answer

A) $25. 
B) $124.50. 
C) $125. 
D) $150. 
A) $25. 
B) $124.50. 
C) $125. 
D) $150.

Question 11

Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers

Accepted Answer

A) both labor and capital to be fixed. 
B) both labor and capital to be variable. 
C) capital to be variable and labor to be fixed. 
D) labor to be variable and capital to be fixed. 
A) both labor and capital to be fixed. 
B) both labor and capital to be variable. 
C) capital to be variable and labor to be fixed. 
D) labor to be variable and capital to be fixed.

Question 12

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's annual explicit cost of capital is

Accepted Answer

A) $2,000. 
B) $4,000. 
C) $12,000. 
D) $14,000. 
A) $2,000. 
B) $4,000. 
C) $12,000. 
D) $14,000.

Question 13

Scenario 13-7
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business.
-Refer to Scenario 13-7. Julia's implicit costs are

Accepted Answer

A) 0. 
B) $10,000. 
C) $15,000. 
D) $25,000. 
A) 0. 
B) $10,000. 
C) $15,000. 
D) $25,000.

Question 14

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Accepted Answer

A) diminishing profitability. 
B) increasing returns to scale. 
C) increasing marginal product. 
D) diminishing marginal product. 
A) diminishing profitability. 
B) increasing returns to scale. 
C) increasing marginal product. 
D) diminishing marginal product.

Question 15

Table 13-19  
-Refer to Table 13-19. What is the average fixed cost of producing 430 units of output?

Accepted Answer

AFC = FC/Q

Question 16

Accountants often ignore implicit costs.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. Ellie's annual economic costs will equal

Accepted Answer

A) $55,200. 
B) $75,200. 
C) $80,500. 
D) $135,700. 
A) $55,200. 
B) $75,200. 
C) $80,500. 
D) $135,700.

Question 18

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 19

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 profit for one photo frame to be

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $25. 
A) $10. 
B) $15. 
C) $20. 
D) $25.

Question 20

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 accounting profits?

Accepted Answer

A) $150 
B) $126 
C) $96 
D) $24 
A) $150 
B) $126 
C) $96 
D) $24

Exam 13: The Costs of Production

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

Which of the following can be added to profit to obtain total revenue?

Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul's marginal product?

Figure 13-3 -Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

​Table 13-16 -Refer to Table 13-16. What is the marginal cost of the 4th unit of output?

-Refer to Table 13-4. Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

The shape of the total-cost curve is inversely related to the shape of the production function.

When a firm's only variable input is labor, then the slope of the production function measures the

The amount of money that a firm receives from the sale of its output is called

Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are

Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Table 13-19 -Refer to Table 13-19. What is the average fixed cost of producing 430 units of output?

Accountants often ignore implicit costs.

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

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

Table 13-16 -Refer to Table 13-16. What is the marginal cost of the 4th unit of output?