Question 1

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Accepted Answer

A) accounting profit was $20 million. 
B) economic profit was $20 million. 
C) total revenue was $20 million. 
D) explicit costs was $20 million. 
A) accounting profit was $20 million. 
B) economic profit was $20 million. 
C) total revenue was $20 million. 
D) explicit costs was $20 million.

Question 2

If the marginal cost of producing the tenth unit of output is $3, and if the average total cost of producing the tenth unit of output is $2, then at ten units of output, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 3

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Accepted Answer

A) True 
 B)False

Question 4

Economists include both explicit and implicit costs while accountants include only implicit costs.
​

Accepted Answer

A) True 
 B)False

Question 5

Table 13-16
Listed in the table are the long-run total costs for three different firms.  
-Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

Accepted Answer

A) Firm A only 
B) Firm B only 
C) Firm C only 
D) Firm A and Firm B only 
A) Firm A only 
B) Firm B only 
C) Firm C only 
D) Firm A and Firm B only

Question 6

Table 13-6
Wooden Chair Factory  
-Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Accepted Answer

A) 5 chairs per hour 
B) 10 chairs per hour 
C) 20 chairs per hour 
D) 25 chairs per hour 
A) 5 chairs per hour 
B) 10 chairs per hour 
C) 20 chairs per hour 
D) 25 chairs per hour

Question 7

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 8

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that

Accepted Answer

A) consumers do not react to changing prices. 
B) there are diseconomies of scale in retail sales. 
C) there are economies of scale in retail sales. 
D) there are diminishing returns to producing and selling retail goods. 
A) consumers do not react to changing prices. 
B) there are diseconomies of scale in retail sales. 
C) there are economies of scale in retail sales. 
D) there are diminishing returns to producing and selling retail goods.

Question 9

Suppose that a firm's long-run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) specialization. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) specialization.

Question 10

Table 13-19  
-Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Accepted Answer

AVC = VC/Q, where VC is graphed on the v

Question 11

Scenario 13-3
Kachina is a senior majoring in graphic design at Awesome University (AU). While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour.
-Refer to Scenario 13-3. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?

Accepted Answer

A) $20 
B) $25 
C) $100 
D) $125 
A) $20 
B) $25 
C) $100 
D) $125

Question 12

Total cost can be divided into two types of costs:

Accepted Answer

A) fixed costs and variable costs. 
B) fixed costs and marginal costs. 
C) variable costs and marginal costs. 
D) average costs and marginal costs. 
A) fixed costs and variable costs. 
B) fixed costs and marginal costs. 
C) variable costs and marginal costs. 
D) average costs and marginal costs.

Question 13

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

Accepted Answer

A) $16.67 
B) $50 
C) $136.67 
D) $360 
A) $16.67 
B) $50 
C) $136.67 
D) $360

Question 14

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

Accepted Answer

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

Question 15

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

Accepted Answer

A) $25 
B) $50 
C) $100 
D) $200 
A) $25 
B) $50 
C) $100 
D) $200

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Table 13-14  
-Refer to Table 13-14. What is the average fixed cost of producing 3 units of output?

Accepted Answer

A) $1.67 
B) $3.33 
C) $10 
D) $20 
A) $1.67 
B) $3.33 
C) $10 
D) $20

Question 18

Constant returns to scale occur when the firm's long-run

Accepted Answer

A) total costs are constant as output increases. 
B) average total costs are constant as output increases. 
C) average cost curve is falling as output increases. 
D) average cost curve is rising as output increases. 
A) total costs are constant as output increases. 
B) average total costs are constant as output increases. 
C) average cost curve is falling as output increases. 
D) average cost curve is rising as output increases.

Question 19

Consider a small family wheat farm. List some examples of implicit costs of farming.

Accepted Answer

the lost earnings of any famil

Question 20

Which of the following statements is not correct?

Accepted Answer

A) The marginal cost of the fifth unit of output equals the total cost of five units minus the total cost of four units. 
B) The total variable cost of seven units equals the average variable cost of seven units times seven. 
C) If marginal cost is rising, then average variable cost must be rising. 
D) The marginal cost of the fifth unit of output equals the total variable cost of five units minus the total variable cost of four units. 
A) The marginal cost of the fifth unit of output equals the total cost of five units minus the total cost of four units. 
B) The total variable cost of seven units equals the average variable cost of seven units times seven. 
C) If marginal cost is rising, then average variable cost must be rising. 
D) The marginal cost of the fifth unit of output equals the total variable cost of five units minus the total variable cost of four units.

Exam 13: The Costs of Production

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

If the marginal cost of producing the tenth unit of output is $3, and if the average total cost of producing the tenth unit of output is $2, then at ten units of output, average total cost is rising.

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Economists include both explicit and implicit costs while accountants include only implicit costs. ​

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Suppose that a firm's long-run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Total cost can be divided into two types of costs:

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

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

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

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

Table 13-14 -Refer to Table 13-14. What is the average fixed cost of producing 3 units of output?

Constant returns to scale occur when the firm's long-run

Consider a small family wheat farm. List some examples of implicit costs of farming.

Which of the following statements is not correct?

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

Economists include both explicit and implicit costs while accountants include only implicit costs.