Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Economists normally assume that the goal of a firm is to
(i)sell as much of its product as possible.
(ii)set the price of the product as high as possible.
(iii)maximize profit.

Accepted Answer

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

Question 3

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. What is the total opportunity cost of the day that Farmer Ziva spent in the field planting lettuce?

Accepted Answer

A) $130 
B) $250 
C) $300 
D) $380 
A) $130 
B) $250 
C) $300 
D) $380

Question 4

Profit equals total revenue minus total cost.

Accepted Answer

A) True 
 B)False

Question 5

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Accepted Answer

A) True 
 B)False

Question 6

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. In producing the 7,000 pounds of cheese, the firm's average total cost was

Accepted Answer

A) $1.71. 
B) $4.00. 
C) $5.71. 
D) $6.00. 
A) $1.71. 
B) $4.00. 
C) $5.71. 
D) $6.00.

Question 7

Marginal cost increases as the quantity of output increases. This reflects the property of

Accepted Answer

A) increasing total cost. 
B) diminishing total cost. 
C) increasing marginal product. 
D) diminishing marginal product. 
A) increasing total cost. 
B) diminishing total cost. 
C) increasing marginal product. 
D) diminishing marginal product.

Question 8

DIFFICULTY:
Figure 13-8  
-Refer to Figure 13-8. Quantity C represents the output level where the firm

Accepted Answer

A) maximizes profits. 
B) minimizes total costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs. 
A) maximizes profits. 
B) minimizes total costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs.

Question 9

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Accepted Answer

A) are long-run decisions. 
B) are short-run decisions. 
C) involve only maintenance of the factory. 
D) are zero because the cost decisions were made at the beginning of the business. 
A) are long-run decisions. 
B) are short-run decisions. 
C) involve only maintenance of the factory. 
D) are zero because the cost decisions were made at the beginning of the business.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The market value of the inputs a firm uses is called

Accepted Answer

A) total cost. 
B) variable cost. 
C) marginal cost. 
D) fixed cost. 
A) total cost. 
B) variable cost. 
C) marginal cost. 
D) fixed cost.

Question 12

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

Accepted Answer

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

Question 13

DIFFICULTY:
Figure 13-8  
-Refer to Figure 13-8. Which of the following statements is correct?

Accepted Answer

A) Average total cost is rising for quantities higher than D because marginal cost is higher than average total cost. 
B) Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost. 
C) Average variable cost is minimized at B because at that quantity, marginal cost equals average variable cost. 
D) All of the above are correct. 
A) Average total cost is rising for quantities higher than D because marginal cost is higher than average total cost. 
B) Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost. 
C) Average variable cost is minimized at B because at that quantity, marginal cost equals average variable cost. 
D) All of the above are correct.

Question 14

Table 13-13
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.  
-Refer to Table 13-13. What is the average variable cost for the month if 6 instructional modules are produced?

Accepted Answer

A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33 
A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33

Question 15

Chloe's Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Café exhibits constant returns to scale between 1,000 and 1,500 cinnamon rolls, the long-run average total cost for 1,250 cinnamon rolls is

Accepted Answer

A) ​higher than $0.50. 
B) ​lower than $0.50. 
C) ​equal to $0.50. 
D) ​equal to $500. 
A) ​higher than $0.50. 
B) ​lower than $0.50. 
C) ​equal to $0.50. 
D) ​equal to $500.

Question 16

Table 13-6
Wooden Chair Factory  
-Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. Assume the number of machines does not change. If the factory produces at a rate of 78 chairs per hour, what is the total machine cost per day?

Accepted Answer

A) $20 
B) $40 
C) $240 
D) We are unable to determine total machine costs from the information given. 
A) $20 
B) $40 
C) $240 
D) We are unable to determine total machine costs from the information given.

Question 17

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. An economist would calculate Ziva's total cost for the day of farming to equal

Accepted Answer

A) $130. 
B) $250. 
C) $300. 
D) $380. 
A) $130. 
B) $250. 
C) $300. 
D) $380.

Question 18

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes. 
A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes.

Question 19

Figure 13-5  
-Refer to Figure 13-5. Which curve is most likely to represent average total cost?

Accepted Answer

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

Question 20

DIFFICULTY:
Figure 13-8  
-Refer to Figure 13-8. Quantity B represents the output level where the firm

Accepted Answer

A) maximizes profits. 
B) minimizes average variable costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs. 
A) maximizes profits. 
B) minimizes average variable costs. 
C) produces at the efficient scale. 
D) minimizes marginal costs.

Exam 13: The Costs of Production

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

Economists normally assume that the goal of a firm is to (i)sell as much of its product as possible. (ii)set the price of the product as high as possible. (iii)maximize profit.

Profit equals total revenue minus total cost.

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Marginal cost increases as the quantity of output increases. This reflects the property of

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. Quantity C represents the output level where the firm

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

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

The market value of the inputs a firm uses is called

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

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. Which of the following statements is correct?

Chloe's Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Café exhibits constant returns to scale between 1,000 and 1,500 cinnamon rolls, the long-run average total cost for 1,250 cinnamon rolls is

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent average total cost?

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. Quantity B represents the output level where the firm

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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