Question 1

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

Accepted Answer

seeds, fertilizer, pesticide,

Question 2

When average cost is greater than marginal cost, marginal cost must be

Accepted Answer

A) rising. 
B) falling. 
C) constant. 
D) The direction of change in marginal cost cannot be determined from this information. 
A) rising. 
B) falling. 
C) constant. 
D) The direction of change in marginal cost cannot be determined from this information.

Question 3

Table 13-1  
-Refer to Table 13-1. What is total output when 3 workers are hired?

Accepted Answer

A) 15 
B) 60 
C) 105 
D) 135 
A) 15 
B) 60 
C) 105 
D) 135

Question 4

If marginal cost is greater than average total cost, then

Accepted Answer

A) profits are increasing. 
B) economies of scale are becoming greater. 
C) average total cost remains constant. 
D) average total cost is increasing. 
A) profits are increasing. 
B) economies of scale are becoming greater. 
C) average total cost remains constant. 
D) average total cost is increasing.

Question 5

Table 13-1  
-Refer to Table 13-1. What is total output when 5 workers are hired?

Accepted Answer

A) -10 
B) 90 
C) 185 
D) 225 
A) -10 
B) 90 
C) 185 
D) 225

Question 6

Figure 13-2  
-Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Accepted Answer

A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) decreasing output of cookies. 
A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) decreasing output of cookies.

Question 7

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-18  
-Refer to Table 13-18. What is the shape of the average-fixed-cost curve?

Accepted Answer

AFC is always declining as out

Question 9

Fixed costs can be defined as costs that

Accepted Answer

A) vary inversely with production. 
B) vary in proportion with production. 
C) are incurred only when production is large enough. 
D) are incurred even if nothing is produced. 
A) vary inversely with production. 
B) vary in proportion with production. 
C) are incurred only when production is large enough. 
D) are incurred even if nothing is produced.

Question 10

Which of the following statements is not correct?

Accepted Answer

A) Fixed costs are constant. 
B) Variable costs change as output changes. 
C) Average fixed costs are constant. 
D) Average total costs are typically U-shaped. 
A) Fixed costs are constant. 
B) Variable costs change as output changes. 
C) Average fixed costs are constant. 
D) Average total costs are typically U-shaped.

Question 11

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Accepted Answer

A) diseconomies of scale because total cost is rising as output rises. 
B) diseconomies of scale because average total cost is rising as output rises. 
C) economies of scale because total cost is rising as output rises. 
D) economies of scale because average total cost is falling as output rises. 
A) diseconomies of scale because total cost is rising as output rises. 
B) diseconomies of scale because average total cost is rising as output rises. 
C) economies of scale because total cost is rising as output rises. 
D) economies of scale because average total cost is falling as output rises.

Question 12

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

Accepted Answer

A) True 
 B)False

Question 13

If the production function exhibits diminishing marginal product, the total cost function gets steeper as the quantity of output increases.
​

Accepted Answer

A) True 
 B)False

Question 14

Table 13-17
Consider the following table of long-run total cost for four different firms:  
-Refer to Table 13-17. Which firm has economies of scale over the entire range of output?

Accepted Answer

A) Firm 1 only 
B) Firms 1 and 2 only 
C) Firm 2 only 
D) Firm 3 only 
A) Firm 1 only 
B) Firms 1 and 2 only 
C) Firm 2 only 
D) Firm 3 only

Question 15

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

Accepted Answer

A) output levels less than M 
B) output levels between M and N 
C) output levels greater than N 
D) All of the above are correct as long as the firm is operating in the long run. 
A) output levels less than M 
B) output levels between M and N 
C) output levels greater than N 
D) All of the above are correct as long as the firm is operating in the long run.

Question 16

Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-2. Suppose Chelsea purchases the factory using her own money. What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A) $2,000 
B) $3,000 
C) $4,500 
D) $5,000 
A) $2,000 
B) $3,000 
C) $4,500 
D) $5,000

Question 17

Average total cost equals

Accepted Answer

A) change in total costs divided by quantity produced. 
B) change in total costs divided by change in quantity produced. 
C) (fixed costs + variable costs) divided by quantity produced. 
D) (fixed costs + variable costs) divided by change in quantity produced. 
A) change in total costs divided by quantity produced. 
B) change in total costs divided by change in quantity produced. 
C) (fixed costs + variable costs) divided by quantity produced. 
D) (fixed costs + variable costs) divided by change in quantity produced.

Question 18

Diminishing marginal product suggests that the marginal

Accepted Answer

A) cost of an extra worker is unchanged. 
B) cost of an extra worker is less than the previous worker's marginal cost. 
C) product of an extra worker is less than the previous worker's marginal product. 
D) product of an extra worker is greater than the previous worker's marginal product. 
A) cost of an extra worker is unchanged. 
B) cost of an extra worker is less than the previous worker's marginal cost. 
C) product of an extra worker is less than the previous worker's marginal product. 
D) product of an extra worker is greater than the previous worker's marginal product.

Question 19

The difference between accounting profit and economic profit is

Accepted Answer

A) explicit costs. 
B) implicit costs. 
C) total revenue. 
D) marginal product. 
A) explicit costs. 
B) implicit costs. 
C) total revenue. 
D) marginal product.

Question 20

The cost of producing the typical unit of output is the firm's

Accepted Answer

A) average total cost. 
B) opportunity cost. 
C) variable cost. 
D) marginal cost. 
A) average total cost. 
B) opportunity cost. 
C) variable cost. 
D) marginal cost.

Exam 13: The Costs of Production

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

When average cost is greater than marginal cost, marginal cost must be

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

If marginal cost is greater than average total cost, then

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.

Table 13-18 -Refer to Table 13-18. What is the shape of the average-fixed-cost curve?

Fixed costs can be defined as costs that

Which of the following statements is not correct?

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

If the production function exhibits diminishing marginal product, the total cost function gets steeper as the quantity of output increases. ​

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale over the entire range of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

Average total cost equals

Diminishing marginal product suggests that the marginal

The difference between accounting profit and economic profit is

The cost of producing the typical unit of output is the firm's

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

If the production function exhibits diminishing marginal product, the total cost function gets steeper as the quantity of output increases.