Question 1

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

Accepted Answer

A) total revenue was $3.5 million. 
B) economic profit was $3.5 million. 
C) accounting profit was $3.5 million. 
D) explicit costs were $3.5 million. 
A) total revenue was $3.5 million. 
B) economic profit was $3.5 million. 
C) accounting profit was $3.5 million. 
D) explicit costs were $3.5 million.

Question 2

Table 13-10  
-Refer to Table 13-10. What is the marginal product of the fourth worker?

Accepted Answer

A) 80 units 
B) 60 units 
C) 40 units 
D) 20 units 
A) 80 units 
B) 60 units 
C) 40 units 
D) 20 units

Question 3

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Accepted Answer

A) $0 
B) $20,000 
C) $65,000 
D) $85,000 
A) $0 
B) $20,000 
C) $65,000 
D) $85,000

Question 4

Scenario 13-17
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 13-17. Farmer Brown's marginal-cost curve is

Accepted Answer

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

Question 5

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Accepted Answer

A) $1,000 if she sells 100 candles. 
B) $500 if she sells 25 candles. 
C) $20 regardless of how many candles she sells. 
D) $200 if she sells 5 candles. 
A) $1,000 if she sells 100 candles. 
B) $500 if she sells 25 candles. 
C) $20 regardless of how many candles she sells. 
D) $200 if she sells 5 candles.

Question 6

Table 13-12
Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs.  
-Refer to Table 13-12. During the week of July 4th, Eileen doesn't produce any earrings. What are her costs during the week?

Accepted Answer

A) $0 
B) $150 
C) $275 
D) $425 
A) $0 
B) $150 
C) $275 
D) $425

Question 7

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,

Accepted Answer

A) average fixed cost is $10. 
B) average variable cost is $3. 
C) average total cost is $4. 
D) average total cost is $5. 
A) average fixed cost is $10. 
B) average variable cost is $3. 
C) average total cost is $4. 
D) average total cost is $5.

Question 8

Figure 13-10  
-Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Accepted Answer

A) time horizons. 
B) products. 
C) firms. 
D) factory sizes. 
A) time horizons. 
B) products. 
C) firms. 
D) factory sizes.

Question 9

To an economist, the field of industrial organization answers which of the following questions?

Accepted Answer

A) Why are consumers subject to the law of demand? 
B) Why do firms experience diminishing marginal productivities of their inputs? 
C) How does the number of firms affect prices and the efficiency of market outcomes? 
D) How can government intervention improve industrial production when externalities are present? 
A) Why are consumers subject to the law of demand? 
B) Why do firms experience diminishing marginal productivities of their inputs? 
C) How does the number of firms affect prices and the efficiency of market outcomes? 
D) How can government intervention improve industrial production when externalities are present?

Question 10

Total revenue equals

Accepted Answer

A) marginal revenue - marginal cost. 
B) price/quantity. 
C) price x quantity. 
D) output - input. 
A) marginal revenue - marginal cost. 
B) price/quantity. 
C) price x quantity. 
D) output - input.

Question 11

Marginal cost tells us the

Accepted Answer

A) value of all resources used in a production process. 
B) marginal increment to profitability when price is constant. 
C) amount by which total cost rises when output is increased by one unit. 
D) amount by which output rises when labor is increased by one unit. 
A) value of all resources used in a production process. 
B) marginal increment to profitability when price is constant. 
C) amount by which total cost rises when output is increased by one unit. 
D) amount by which output rises when labor is increased by one unit.

Question 12

​Table 13-16  
-Refer to Table 13-16. What is the total cost of producing 2 units of output?

Accepted Answer

A) $​50 
B) ​$74 
C) ​$76 
D) ​$58 
A) $​50 
B) ​$74 
C) ​$76 
D) ​$58

Question 13

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

Accepted Answer

A) $50 
B) $100 
C) $150 
D) $200 
A) $50 
B) $100 
C) $150 
D) $200

Question 14

An example of an explicit cost of production would be the

Accepted Answer

A) cost of forgone labor earnings for an entrepreneur. 
B) lost opportunity to invest in capital markets when the money is invested in one's business. 
C) lease payments for the land on which a firm's factory stands. 
D) Both a and c are correct. 
A) cost of forgone labor earnings for an entrepreneur. 
B) lost opportunity to invest in capital markets when the money is invested in one's business. 
C) lease payments for the land on which a firm's factory stands. 
D) Both a and c are correct.

Question 15

Briefly describe why measuring a firm's costs is more complicated than measuring its revenues.

Accepted Answer

A firm's revenues can be calculated by m

Question 16

When marginal cost exceeds average total cost,

Accepted Answer

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

Question 17

Table 13-5  
-Refer to Table 13-5. Diminishing marginal product begins with the addition of the

Accepted Answer

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

Question 18

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 19

In the short run, a firm that produces and sells house paint can adjust

Accepted Answer

A) where to produce along its long-run average-total-cost curve. 
B) the size of its factories. 
C) how many workers to hire. 
D) All of the above are correct. 
A) where to produce along its long-run average-total-cost curve. 
B) the size of its factories. 
C) how many workers to hire. 
D) All of the above are correct.

Question 20

Which of these assumptions is often realistic for a firm in the short run?

Accepted Answer

A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory but not the number of workers it employs. 
C) The firm can vary the number of workers it employs but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs. 
A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory but not the number of workers it employs. 
C) The firm can vary the number of workers it employs but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs.

Exam 13: The Costs of Production

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

Table 13-10 -Refer to Table 13-10. What is the marginal product of the fourth worker?

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

To an economist, the field of industrial organization answers which of the following questions?

Total revenue equals

Marginal cost tells us the

​Table 13-16 -Refer to Table 13-16. What is the total cost of producing 2 units of output?

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

An example of an explicit cost of production would be the

Briefly describe why measuring a firm's costs is more complicated than measuring its revenues.

When marginal cost exceeds average total cost,

Table 13-5 -Refer to Table 13-5. Diminishing marginal product begins with the addition of the

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

In the short run, a firm that produces and sells house paint can adjust

Which of these assumptions is often realistic for a firm in the short run?

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

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC₁, ATC₂, and ATC₃ most likely correspond to three different

Table 13-16 -Refer to Table 13-16. What is the total cost of producing 2 units of output?