Question 1

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

Accepted Answer

A) $50 
B) $140 
C) $360 
D) $410 
A) $50 
B) $140 
C) $360 
D) $410

Question 2

Scenario 13-1
Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-1. If Korie purchases the factory with her own money, what is the annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A) $0 
B) $3,000 
C) $12,000 
D) $15,000 
A) $0 
B) $3,000 
C) $12,000 
D) $15,000

Question 3

Figure 13-2  
-Refer to Figure 13-2. The graph illustrates a typical production function. Based on its shape, what does the corresponding total cost curve look like?

Accepted Answer

A) an upward-sloping curve that increases at an increasing rate 
B) an upward-sloping curve that increases at a decreasing rate 
C) a downward-sloping curve 
D) a horizontal straight line 
A) an upward-sloping curve that increases at an increasing rate 
B) an upward-sloping curve that increases at a decreasing rate 
C) a downward-sloping curve 
D) a horizontal straight line

Question 4

Table 13-18  
-Refer to Table 13-18. What is the average total cost of producing 525 units of output?

Accepted Answer

ATC = TC/Q

Question 5

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

Accepted Answer

A) 55 bouquets 
B) 35 bouquets 
C) 22.5 bouquets 
D) 15 bouquets 
A) 55 bouquets 
B) 35 bouquets 
C) 22.5 bouquets 
D) 15 bouquets

Question 6

Marginal cost equals

Accepted Answer

A) total cost divided by quantity of output produced. 
B) total output divided by the change in total cost. 
C) the slope of the total cost curve. 
D) the slope of the line drawn from the origin to the total cost curve. 
A) total cost divided by quantity of output produced. 
B) total output divided by the change in total cost. 
C) the slope of the total cost curve. 
D) the slope of the line drawn from the origin to the total cost curve.

Question 7

Frank owns a dog-grooming business. Which of the following costs would be implicit costs?
(i)dog shampoo
(ii)rent on the storefront
(iii)wages Frank could earn as a substitute elementary-school teacher
(iv)interest that Frank's money was earning before he spent his savings to set up the dog-grooming business

Accepted Answer

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

Question 8

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements?
(i)workbooks containing practice problems
(ii)rent for the storefront
(iii)wages Katya could earn as a bookkeeper
(iv)interest that Katya's money was earning before she spent her savings to set up the tutoring business

Accepted Answer

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

Question 9

Consider a small hair styling salon. List some examples of implicit costs of this business.

Accepted Answer

the lost earnings of the owner

Question 10

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's profit.

Accepted Answer

A) Tyler says his profit is $25,900, and Greg says his profit is $66,500. 
B) Tyler says his profit is $35,000, and Greg says he lost $5,900. 
C) Tyler says his profit is $34,100, and Greg says he lost $6,500. 
D) Tyler says his profit is $34,100, and Greg says his profit is $34,100. 
A) Tyler says his profit is $25,900, and Greg says his profit is $66,500. 
B) Tyler says his profit is $35,000, and Greg says he lost $5,900. 
C) Tyler says his profit is $34,100, and Greg says he lost $6,500. 
D) Tyler says his profit is $34,100, and Greg says his profit is $34,100.

Question 11

Whenever marginal cost is greater than average total cost,

Accepted Answer

A) average total cost is rising. 
B) marginal cost is falling. 
C) average total cost is falling. 
D) Both b and c are correct. 
A) average total cost is rising. 
B) marginal cost is falling. 
C) average total cost is falling. 
D) Both b and c are correct.

Question 12

Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. The firm's fixed cost was

Accepted Answer

A) $2,000. 
B) $12,000. 
C) $28,000. 
D) $42,000. 
A) $2,000. 
B) $12,000. 
C) $28,000. 
D) $42,000.

Question 13

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

Accepted Answer

A) the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses 
B) the cost of the steel that is used in producing automobiles 
C) the cost of the electricity of running the machines on the factory floor 
D) All of the above are correct. 
A) the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses 
B) the cost of the steel that is used in producing automobiles 
C) the cost of the electricity of running the machines on the factory floor 
D) All of the above are correct.

Question 14

​Economies of scale commonly arise because of coordination problems.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when the firm hires 4 workers, the firm produces 50 units of output. If the fixed cost of production is $4, the variable cost per unit of labor is $20, and the marginal product of labor for the fifth unit of labor is 2, what is the average total cost of production when the firm hires 5 workers?

Accepted Answer

A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80 
A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80

Question 16

Consider the following information about bread production at Beth's Bakery:   Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

Accepted Answer

A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant. 
A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant.

Question 17

Total revenue minus both explicit and implicit costs is called

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) average total cost. 
D) total cost. 
A) accounting profit. 
B) economic profit. 
C) average total cost. 
D) total cost.

Question 18

Table 13-3  
-Refer to Table 13-3. The marginal product of the second worker is

Accepted Answer

A) 90 units. 
B) 85 units. 
C) 80 units. 
D) 20 units. 
A) 90 units. 
B) 85 units. 
C) 80 units. 
D) 20 units.

Question 19

The most likely explanation for economies of scale is

Accepted Answer

A) coordination problems. 
B) specialization of labor. 
C) increasing marginal cost. 
D) decreasing marginal cost. 
A) coordination problems. 
B) specialization of labor. 
C) increasing marginal cost. 
D) decreasing marginal cost.

Question 20

Average total cost is very high when a small amount of output is produced because

Accepted Answer

A) average variable cost is high. 
B) average fixed cost is high. 
C) marginal cost is high. 
D) marginal product is high. 
A) average variable cost is high. 
B) average fixed cost is high. 
C) marginal cost is high. 
D) marginal product is high.

Exam 13: The Costs of Production

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

Figure 13-2 -Refer to Figure 13-2. The graph illustrates a typical production function. Based on its shape, what does the corresponding total cost curve look like?

Table 13-18 -Refer to Table 13-18. What is the average total cost of producing 525 units of output?

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

Marginal cost equals

Consider a small hair styling salon. List some examples of implicit costs of this business.

Whenever marginal cost is greater than average total cost,

Scenario 13-19 Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. -Refer to Scenario 13-19. The firm's fixed cost was

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

​Economies of scale commonly arise because of coordination problems.

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost

Total revenue minus both explicit and implicit costs is called

Table 13-3 -Refer to Table 13-3. The marginal product of the second worker is

The most likely explanation for economies of scale is

Average total cost is very high when a small amount of output is produced because

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

Economies of scale commonly arise because of coordination problems.