Question 1

Table 13-18  
-Refer to Table 13-18. What is the total output of five workers?

Accepted Answer

Total output of four workers =

Question 2

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 is considering hiring his best friend Fred to work for him. Fred can build 125 birdhouses per month. If Barney hires Fred, what will be the monthly marginal product?

Accepted Answer

A) 25 birdhouses 
B) 125 birdhouses 
C) 150 birdhouses 
D) 275 birdhouses 
A) 25 birdhouses 
B) 125 birdhouses 
C) 150 birdhouses 
D) 275 birdhouses

Question 3

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop. The interest rate is 5 percent for both the bank loan and her personal savings. Her opportunity cost of capital is $250.

Accepted Answer

A) True 
 B)False

Question 4

What effect, if any, does diminishing marginal product have on the shape of the marginal cost curve?

Accepted Answer

Diminishing marginal

Question 5

Figure 13-5  
-Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 6

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

Accepted Answer

AFC is always declining as out

Question 7

A firm's total profit equals its marginal revenue minus its marginal cost.

Accepted Answer

A) True 
 B)False

Question 8

Describe how an accounting firm could experience economies of scale.

Accepted Answer

Specialization of labor can produce econ

Question 9

An example of an explicit cost would be the wages that a business owner pays her employees.

Accepted Answer

A) True 
 B)False

Question 10

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

Accepted Answer

A) 8 units of output. 
B) 10 units of output. 
C) 122 units of output. 
D) 132 units of output. 
A) 8 units of output. 
B) 10 units of output. 
C) 122 units of output. 
D) 132 units of output.

Question 11

Table 13-2  
-Refer to Table 13-2. What is the marginal product of the second worker?

Accepted Answer

A) 300 units 
B) 200 units 
C) 100 units 
D) 50 units 
A) 300 units 
B) 200 units 
C) 100 units 
D) 50 units

Question 12

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Accepted Answer

The total cost curve will incr

Question 13

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Accepted Answer

A) True 
 B)False

Question 14

Constant returns to scale occur when a firm's

Accepted Answer

A) marginal costs are constant as output increases. 
B) long-run average total costs are decreasing as output increases. 
C) long-run average total costs are increasing as output increases. 
D) long-run average total costs do not vary as output increases. 
A) marginal costs are constant as output increases. 
B) long-run average total costs are decreasing as output increases. 
C) long-run average total costs are increasing as output increases. 
D) long-run average total costs do not vary as output increases.

Question 15

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. According to Ellie's accountant, which of the following revenue totals will yield her business $50,000 in profits?

Accepted Answer

A) $55,200 
B) $105,200 
C) $132,500 
D) $185,700 
A) $55,200 
B) $105,200 
C) $132,500 
D) $185,700

Question 16

Figure 13-10  
-Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Accepted Answer

A) Q1 to Q2. 
B) Q2 to Q3. 
C) Q3 to Q4. 
D) Q4 to Q5. 
A) Q1 to Q2. 
B) Q2 to Q3. 
C) Q3 to Q4. 
D) Q4 to Q5.

Question 17

An entrepreneur's motivation to start a business arises from

Accepted Answer

A) an innate love for the type of business that he or she starts. 
B) a desire to earn a profit. 
C) an altruistic desire to provide the world with a good product. 
D) All of the above could be correct. 
A) an innate love for the type of business that he or she starts. 
B) a desire to earn a profit. 
C) an altruistic desire to provide the world with a good product. 
D) All of the above could be correct.

Question 18

Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements?
(i)shoe polish
(ii)rent on the shoe stand
(iii)wages Pete could earn delivering newspapers
(iv)interest that Pete's money was earning before he spent his savings to set up the shoe-shine 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 19

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. The explicit cost for one birdhouse is

Accepted Answer

A) $4. 
B) $5. 
C) $8. 
D) $9. 
A) $4. 
B) $5. 
C) $8. 
D) $9.

Question 20

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

Accepted Answer

A) an explicit cost. 
B) an accounting cost 
C) an implicit cost. 
D) forgone accounting profit. 
A) an explicit cost. 
B) an accounting cost 
C) an implicit cost. 
D) forgone accounting profit.

Exam 13: The Costs of Production

Table 13-18 -Refer to Table 13-18. What is the total output of five workers?

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop. The interest rate is 5 percent for both the bank loan and her personal savings. Her opportunity cost of capital is $250.

What effect, if any, does diminishing marginal product have on the shape of the marginal cost curve?

Figure 13-5 -Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?

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

A firm's total profit equals its marginal revenue minus its marginal cost.

Describe how an accounting firm could experience economies of scale.

An example of an explicit cost would be the wages that a business owner pays her employees.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

Table 13-2 -Refer to Table 13-2. What is the marginal product of the second worker?

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Constant returns to scale occur when a firm's

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

An entrepreneur's motivation to start a business arises from

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. The explicit cost for one birdhouse is

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

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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