Question 1

When average total cost is above marginal cost, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 2

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. An economist would calculate the total profit for one birdhouse to be

Accepted Answer

A) $7. 
B) $11. 
C) $12. 
D) $15. 
A) $7. 
B) $11. 
C) $12. 
D) $15.

Question 3

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Accepted Answer

A) average fixed cost is 50 cents. 
B) average variable cost is $2. 
C) average total cost is $2.50. 
D) average total cost is 50 cents. 
A) average fixed cost is 50 cents. 
B) average variable cost is $2. 
C) average total cost is $2.50. 
D) average total cost is 50 cents.

Question 4

When marginal cost is less than average total cost,

Accepted Answer

A) marginal cost must be falling. 
B) average variable cost must be falling. 
C) average total cost is falling. 
D) average total cost is rising. 
A) marginal cost must be falling. 
B) average variable cost must be falling. 
C) average total cost is falling. 
D) average total cost is rising.

Question 5

-Refer to Table 13-4. What is the marginal product of the third worker?

Accepted Answer

A) 15 students 
B) 20 students 
C) 35 students 
D) 60 students 
A) 15 students 
B) 20 students 
C) 35 students 
D) 60 students

Question 6

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

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Accepted Answer

An accountant would not include the forg

Question 9

A firm that produces and sells furniture gets to choose

Accepted Answer

A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short tun and the long run. 
D) All of the above are correct. 
A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short tun and the long run. 
D) All of the above are correct.

Question 10

Table 13-17
Consider the following table of long-run total cost for four different firms:  
-Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 11

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 implicit costs will equal

Accepted Answer

A) $55,200. 
B) $75,200. 
C) $80,500. 
D) $165,700. 
A) $55,200. 
B) $75,200. 
C) $80,500. 
D) $165,700.

Question 12

Scenario 13-14
If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.
-Refer to Scenario 13-14. Farmer Brown's total-cost curve is

Accepted Answer

A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) increasing at a constant rate. 
D) decreasing. 
A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) increasing at a constant rate. 
D) decreasing.

Question 13

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 13-16
Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse.
-Refer to Scenario 13-16. Barney's monthly total revenue is

Accepted Answer

A) $12,000. 
B) $7,500. 
C) $4,500. 
D) $1,500. 
A) $12,000. 
B) $7,500. 
C) $4,500. 
D) $1,500.

Question 15

Table 13-5  
-Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Accepted Answer

A) Both the production function and total-cost curve are increasing at an increasing rate. 
B) Both the production function and total-cost curve are increasing at a decreasing rate. 
C) The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate. 
D) The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate. 
A) Both the production function and total-cost curve are increasing at an increasing rate. 
B) Both the production function and total-cost curve are increasing at a decreasing rate. 
C) The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate. 
D) The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate.

Question 16

Which of the following statements is correct?

Accepted Answer

A) If marginal cost is rising, then average total cost is rising. 
B) If marginal cost is rising, then average variable cost is rising. 
C) If average variable cost is rising, then marginal cost is minimized. 
D) If average total cost is rising, then marginal cost is greater than average total cost. 
A) If marginal cost is rising, then average total cost is rising. 
B) If marginal cost is rising, then average variable cost is rising. 
C) If average variable cost is rising, then marginal cost is minimized. 
D) If average total cost is rising, then marginal cost is greater than average total cost.

Question 17

What might cause economies of scale?

Accepted Answer

specializa

Question 18

At low levels of production, the firm

Accepted Answer

A) benefits from increased size because it can take advantage of greater specialization. 
B) has the potential for economies of scale. 
C) is unlikely to experiences acute problems with coordination. 
D) All of the above are correct. 
A) benefits from increased size because it can take advantage of greater specialization. 
B) has the potential for economies of scale. 
C) is unlikely to experiences acute problems with coordination. 
D) All of the above are correct.

Question 19

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Accepted Answer

A) lemons and sugar. 
B) paper cups. 
C) the wages paid to her hourly workers. 
D) All of the above are correct. 
A) lemons and sugar. 
B) paper cups. 
C) the wages paid to her hourly workers. 
D) All of the above are correct.

Question 20

Figure 13-2  
-Refer to Figure 13-2. As the number of workers increases,

Accepted Answer

A) total output increases but at a decreasing rate. 
B) marginal product increases but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases. 
A) total output increases but at a decreasing rate. 
B) marginal product increases but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases.

Exam 13: The Costs of Production

When average total cost is above marginal cost, average total cost is rising.

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

When marginal cost is less than average total cost,

-Refer to Table 13-4. What is the marginal product of the third worker?

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

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

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

A firm that produces and sells furniture gets to choose

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Scenario 13-16 Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. -Refer to Scenario 13-16. Barney's monthly total revenue is

Table 13-5 -Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Which of the following statements is correct?

What might cause economies of scale?

At low levels of production, the firm

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

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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