Question 1

At what level of output will average variable cost equal average total cost?

Accepted Answer

A) when marginal cost equals average total cost 
B) for all levels of output in which average variable cost is falling 
C) when marginal cost equals average variable cost 
D) There is no level of output where this occurs, as long as fixed costs are positive. 
A) when marginal cost equals average total cost 
B) for all levels of output in which average variable cost is falling 
C) when marginal cost equals average variable cost 
D) There is no level of output where this occurs, as long as fixed costs are positive.

Question 2

When a firm is experiencing diseconomies of scale, long-run

Accepted Answer

A) average total cost is minimized. 
B) average total cost is greater than long-run marginal cost. 
C) average total cost is less than long-run marginal cost. 
D) marginal cost is minimized. 
A) average total cost is minimized. 
B) average total cost is greater than long-run marginal cost. 
C) average total cost is less than long-run marginal cost. 
D) marginal cost is minimized.

Question 3

Economists assume that the typical person who starts her own business does so with the intention of

Accepted Answer

A) donating the profits from her business to charity. 
B) capturing the highest number of sales in her industry. 
C) maximizing profits. 
D) minimizing costs. 
A) donating the profits from her business to charity. 
B) capturing the highest number of sales in her industry. 
C) maximizing profits. 
D) minimizing costs.

Question 4

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 5

The marginal product of any input is the

Accepted Answer

A) increase in total cost associated with a one-unit increase in production. 
B) change in total output associated with a $1.00 increase in total cost. 
C) increase in total cost resulting from the hiring of an additional worker. 
D) increase in total output obtained from one additional unit of that input. 
A) increase in total cost associated with a one-unit increase in production. 
B) change in total output associated with a $1.00 increase in total cost. 
C) increase in total cost resulting from the hiring of an additional worker. 
D) increase in total output obtained from one additional unit of that input.

Question 6

Table 13-14  
-Refer to Table 13-14. What is the marginal cost of the 2nd unit of output?

Accepted Answer

A) $10 
B) $15 
C) $24 
D) $38 
A) $10 
B) $15 
C) $24 
D) $38

Question 7

If marginal cost is below average total cost, then average total cost

Accepted Answer

A) is constant. 
B) is falling. 
C) is rising. 
D) may rise or fall depending on the size of fixed costs. 
A) is constant. 
B) is falling. 
C) is rising. 
D) may rise or fall depending on the size of fixed costs.

Question 8

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes). The firm's total variable cost is

Accepted Answer

A) $100. 
B) $200. 
C) $300. 
D) $500. 
A) $100. 
B) $200. 
C) $300. 
D) $500.

Question 9

DIFFICULTY:
Figure 13-8  
-Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Accepted Answer

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

Question 10

Suppose that for a particular business there are no implicit costs. Then

Accepted Answer

A) accounting profit will be greater than economic profit. 
B) accounting profit will be the same as economic profit. 
C) accounting profit will be less than economic profit. 
D) the relationship between accounting profit and economic profit cannot be determined without more information. 
A) accounting profit will be greater than economic profit. 
B) accounting profit will be the same as economic profit. 
C) accounting profit will be less than economic profit. 
D) the relationship between accounting profit and economic profit cannot be determined without more information.

Question 11

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. 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) coordination problems. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) coordination problems.

Question 12

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

Accepted Answer

A) True 
 B)False

Question 13

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Accepted Answer

A) increasing marginal product. 
B) diminishing marginal product. 
C) diminishing total product. 
D) Both b and c are correct. 
A) increasing marginal product. 
B) diminishing marginal product. 
C) diminishing total product. 
D) Both b and c are correct.

Question 14

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

Accepted Answer

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

Question 15

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Accepted Answer

The two curves will

Question 16

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

Accepted Answer

A) $0 
B) $50 
C) $220 
D) $270 
A) $0 
B) $50 
C) $220 
D) $270

Question 17

Table 13-14  
-Refer to Table 13-14. What is the average total cost of producing 2 units of output?

Accepted Answer

A) $15 
B) $19 
C) $24 
D) $48 
A) $15 
B) $19 
C) $24 
D) $48

Question 18

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's total opportunity cost of capital is

Accepted Answer

A) $2,000. 
B) $4,000. 
C) $12,000. 
D) $14,000. 
A) $2,000. 
B) $4,000. 
C) $12,000. 
D) $14,000.

Question 19

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. At output levels greater than N, the firm experiences

Accepted Answer

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

Question 20

Which of the following must always be true as the quantity of output increases?

Accepted Answer

A) Marginal cost must rise. 
B) Average total cost must rise. 
C) Average variable cost must rise. 
D) Average fixed cost must fall. 
A) Marginal cost must rise. 
B) Average total cost must rise. 
C) Average variable cost must rise. 
D) Average fixed cost must fall.

Exam 13: The Costs of Production

At what level of output will average variable cost equal average total cost?

When a firm is experiencing diseconomies of scale, long-run

Economists assume that the typical person who starts her own business does so with the intention of

Variable costs usually change as the firm alters the quantity of output produced.

The marginal product of any input is the

Table 13-14 -Refer to Table 13-14. What is the marginal cost of the 2nd unit of output?

If marginal cost is below average total cost, then average total cost

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes). The firm's total variable cost is

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Suppose that for a particular business there are no implicit costs. Then

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

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

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

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

Table 13-14 -Refer to Table 13-14. What is the average total cost of producing 2 units of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Which of the following must always be true as the quantity of output increases?

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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