Question 1

Total cost is the

Accepted Answer

A) amount a firm receives for the sale of its output. 
B) fixed cost less variable cost. 
C) market value of the inputs a firm uses in production. 
D) quantity of output minus the quantity of inputs used to make a good. 
A) amount a firm receives for the sale of its output. 
B) fixed cost less variable cost. 
C) market value of the inputs a firm uses in production. 
D) quantity of output minus the quantity of inputs used to make a good.

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

The average fixed cost curve

Accepted Answer

A) always declines with increased levels of output. 
B) always rises with increased levels of output. 
C) declines as long as it is above marginal cost. 
D) declines as long as it is below marginal cost. 
A) always declines with increased levels of output. 
B) always rises with increased levels of output. 
C) declines as long as it is above marginal cost. 
D) declines as long as it is below marginal cost.

Question 5

A firm that wants to achieve economies of scale could do so by

Accepted Answer

A) assigning limited tasks to its employees, so they can master those tasks. 
B) employing a smaller number of workers. 
C) producing a smaller quantity of output. 
D) producing an output level higher than the efficient scale. 
A) assigning limited tasks to its employees, so they can master those tasks. 
B) employing a smaller number of workers. 
C) producing a smaller quantity of output. 
D) producing an output level higher than the efficient scale.

Question 6

Table 13-2
​
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Marginal Product } \
\text { (Units) }
\end{array} \
\hline 0 & 0 & - \
\hline 1 & 300 & \
\hline 2 & 500 & \
\hline 3 & 600 & \
\hline 4 & 650 & \
\hline
\end{array}$$ ​
​
-Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 7

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Accepted Answer

A) True 
 B)False

Question 8

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Accepted Answer

A) average fixed cost is 50 cents. 
B) average variable cost is $2. 
C) average total cost is $2.50. 
D) average total cost is 50 cents. 
A) average fixed cost is 50 cents. 
B) average variable cost is $2. 
C) average total cost is $2.50. 
D) average total cost is 50 cents.

Question 9

Which is greater -- economic profit or accounting profit?

Accepted Answer

Economic profit = Accounting profit - Im

Question 10

Table 13-10
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.
​
​
 \[\begin{array} { | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Instructional } \
\text { modules per } \
\text { month) }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixed Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost } \
\text { (Dollars per } \
\text { unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} \
\hline 0 & 1,080 & & & & & & \
\hline 1 & 1,080 & 400 & 1480 & 400 & & & \
\hline 2 & & & & 450 & & & 965\
\hline 3 & & 1,350 & 2,430 & & & & \
\hline 4 & & 1,900 & & & & 475& \
\hline 5 & & 2,500 & & & 216 & & \
\hline 6 & & & 4,280 & 700 & & & \
\hline 7 & & 4,100 & & & & & \
\hline 8 & & 5,400 & & &135 & & \
\hline 9 & & 7,300 & & & & & \
\hline 10 & & & 10,880 & & & 980 & \
\hline
\end{array}\] ​
​
​
-Refer to Table 13-10. What is the marginal cost of creating the tenth instructional module in a given month?

Accepted Answer

A) $900 
B) $1,250 
C) $2,500 
D) $3,060 
A) $900 
B) $1,250 
C) $2,500 
D) $3,060

Question 11

Table 13-15
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Labor } & \text { Output } & \begin{array} { l } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { l } 
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Fixed } \
\text { Cost }
\end{array} \
\hline 0 & 0 & - & \$ 0 & \$ 5 \
\hline 1 & 100 & 100 & \$ 5 & \$ 5 \
\hline 2 & 250 & & \$ 10 & \$ 5 \
\hline 3 & 350 & & \$ 15 & \$ 5 \
\hline 4 & & 50 & \$ 20 & \$ 5 \
\hline 5 & & 25 & \$ 25 & \$ 5 \
\hline 6 & 430 & & \$ 30 & \$ 5 \
\hline
\end{array}$$
-Refer to Table 13-15. What is the average fixed cost of producing 430 units of output?

Accepted Answer

AFC = FC/Q

Question 12

Scenario 13-3
Diamond is an organic brocolli farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Diamond helps people organize their houses. Due to the popularity of her home-organization services, Farmer Diamond has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Diamond charges $45 an hour for her home-organization services. One spring day, Diamond spends 8 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of brocolli.
-Refer to Scenario 13-3. An economist would calculate Diamond's total cost for the day of farming to equal

Accepted Answer

A) $130. 
B) $360. 
C) $300. 
D) $490. 
A) $130. 
B) $360. 
C) $300. 
D) $490.

Question 13

-Refer to Table 13-12. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Accepted Answer

A) Firm 1 
B) Firm 2 
C) Firm 3 
D) Firm 4 
A) Firm 1 
B) Firm 2 
C) Firm 3 
D) Firm 4

Question 14

Table 13-3
​
​
 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 50 & 0 & 50 \
\hline 1 & 90 & 50 & 20 & 70 \
\hline 2 & 170 & 50 & 40 & 90 \
\hline 3 & 230 & 50 & 60 & 110 \
\hline 4 & 240 & 50 & 80 & 130 \
\hline
\end{array}$$ ​
​
​
-On a 200-acre farm, a farmer is able to produce 2,000 bushels of wheat when he hires 2 workers. He is able to produce 2,800 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A) The farmer is able to produce 3,360 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 3,600 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 3,800 bushels of wheat when he hires 4 workers. 
D) The farmer is able to produce 4,000 bushels of wheat when he hires 4 workers. 
A) The farmer is able to produce 3,360 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 3,600 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 3,800 bushels of wheat when he hires 4 workers. 
D) The farmer is able to produce 4,000 bushels of wheat when he hires 4 workers.

Question 15

A firm produces 60 units of output with 5 workers, 65 units with 6 workers, and 68 units with 7 workers. The firm's production function exhibits diminishing marginal productivity between 5 and 7 workers.
​

Accepted Answer

A) True 
 B)False

Question 16

Scenario 13-4
If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.
-Refer to Scenario 13-4. Farmer Brown's production function exhibits

Accepted Answer

A) increasing marginal product. 
B) constant marginal product. 
C) diminishing marginal product. 
D) The production function is unrelated to the marginal product. 
A) increasing marginal product. 
B) constant marginal product. 
C) diminishing marginal product. 
D) The production function is unrelated to the marginal product.

Question 17

Table 13-3
​
​
 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 50 & 0 & 50 \
\hline 1 & 90 & 50 & 20 & 70 \
\hline 2 & 170 & 50 & 40 & 90 \
\hline 3 & 230 & 50 & 60 & 110 \
\hline 4 & 240 & 50 & 80 & 130 \
\hline
\end{array}$$ ​
​
​
-As Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some workers may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) increasing marginal product. 
D) diminishing marginal product. 
A) economies of scale. 
B) diseconomies of scale. 
C) increasing marginal product. 
D) diminishing marginal product.

Question 18

Table 13-15
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Labor } & \text { Output } & \begin{array} { l } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { l } 
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Fixed } \
\text { Cost }
\end{array} \
\hline 0 & 0 & - & \$ 0 & \$ 5 \
\hline 1 & 100 & 100 & \$ 5 & \$ 5 \
\hline 2 & 250 & & \$ 10 & \$ 5 \
\hline 3 & 350 & & \$ 15 & \$ 5 \
\hline 4 & & 50 & \$ 20 & \$ 5 \
\hline 5 & & 25 & \$ 25 & \$ 5 \
\hline 6 & 430 & & \$ 30 & \$ 5 \
\hline
\end{array}$$
-Refer to Table 13-15. What is the average total cost of producing 425 units of output?

Accepted Answer

ATC = TC/Q

Question 19

A firm's opportunity costs of production are equal to its

Accepted Answer

A) explicit costs only. 
B) implicit costs only. 
C) explicit costs + implicit costs. 
D) explicit costs + implicit costs + total revenue. 
A) explicit costs only. 
B) implicit costs only. 
C) explicit costs + implicit costs. 
D) explicit costs + implicit costs + total revenue.

Question 20

Table 13-14
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Labor } & \text { Output } & \begin{array} { l } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { l } 
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Fixed } \
\text { Cost }
\end{array} \
\hline 0 & 0 & - & \$ 0 & \$ 10 \
\hline 1 & 200 & 200 & \$ 20 & \$ 10 \
\hline 2 & 350 & & \$ 40 & \$ 10 \
\hline 3 & 450 & & \$ 60 & \$ 10 \
\hline 4 & & 50 & \$ 80 & \$ 10 \
\hline 5 & & 25 & \$ 100 & \$ 10 \
\hline 6 & 530 & & \$ 120 & \$ 10 \
\hline
\end{array}$$
-Refer to Table 13-14. What is the marginal product of the sixth worker?

Accepted Answer

Total output of four workers =

Exam 13: The Costs of Production

Total cost is the

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

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

The average fixed cost curve

A firm that wants to achieve economies of scale could do so by

Table 13-2 ​ ​ Labor (Number of workers) Output (Units) Marginal Product (Units) 0 0 - 1 300 2 500 3 600 4 650 ​ ​ -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Diseconomies of scale often arise because higher production levels allow specialization among workers.

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Which is greater -- economic profit or accounting profit?

Table 13-15 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 - \ 0 \ 5 1 100 100 \ 5 \ 5 2 250 \ 10 \ 5 3 350 \ 15 \ 5 4 50 \ 20 \ 5 5 25 \ 25 \ 5 6 430 \ 30 \ 5 -Refer to Table 13-15. What is the average fixed cost of producing 430 units of output?

-Refer to Table 13-12. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

A firm produces 60 units of output with 5 workers, 65 units with 6 workers, and 68 units with 7 workers. The firm's production function exhibits diminishing marginal productivity between 5 and 7 workers. ​

Table 13-15 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 - \ 0 \ 5 1 100 100 \ 5 \ 5 2 250 \ 10 \ 5 3 350 \ 15 \ 5 4 50 \ 20 \ 5 5 25 \ 25 \ 5 6 430 \ 30 \ 5 -Refer to Table 13-15. What is the average total cost of producing 425 units of output?

A firm's opportunity costs of production are equal to its

Table 13-14 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 - \ 0 \ 10 1 200 200 \ 20 \ 10 2 350 \ 40 \ 10 3 450 \ 60 \ 10 4 50 \ 80 \ 10 5 25 \ 100 \ 10 6 530 \ 120 \ 10 -Refer to Table 13-14. What is the marginal product of the sixth worker?

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 Nations 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

Table 13-2 Labor (Number of workers) Output (Units) Marginal Product (Units) 0 0 - 1 300 2 500 3 600 4 650 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

A firm produces 60 units of output with 5 workers, 65 units with 6 workers, and 68 units with 7 workers. The firm's production function exhibits diminishing marginal productivity between 5 and 7 workers.