Question 1

Average variable cost will decrease if __________.

Accepted Answer

marginal c

Question 2

Which of the following statements is correct?

Accepted Answer

A) Assuming that explicit costs are positive, economic profit is greater than accounting profit. 
B) Assuming that implicit costs are positive, accounting profit is greater than economic profit. 
C) Assuming that explicit costs are positive, accounting profit is equal to economic profit. 
D) Assuming that implicit costs are positive, economic profit is positive. 
A) Assuming that explicit costs are positive, economic profit is greater than accounting profit. 
B) Assuming that implicit costs are positive, accounting profit is greater than economic profit. 
C) Assuming that explicit costs are positive, accounting profit is equal to economic profit. 
D) Assuming that implicit costs are positive, economic profit is positive.

Question 3

Marginal cost is equal to average total cost when

Accepted Answer

A) average variable cost is falling. 
B) average fixed cost is rising. 
C) marginal cost is at its minimum. 
D) average total cost is at its minimum. 
A) average variable cost is falling. 
B) average fixed cost is rising. 
C) marginal cost is at its minimum. 
D) average total cost is at its minimum.

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

​Economies of scale commonly arise because of coordination problems.

Accepted Answer

A) True 
 B)False

Question 6

Figure 13-2   ​
-Refer to Figure 13-2. Which of the curves is most likely to represent marginal cost?

Accepted Answer

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

Question 7

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 8

Figure 13-5  
-Refer to Figure 13-5. 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 9

Table 13-9
​
​
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of w orkers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 30 & 0 \
\hline 1 & 100 & 30 & 15 \
\hline 2 & 180 & 30 & 30 \
\hline 3 & 240 & 30 & 45 \
\hline 4 & 280 & 30 & 60 \
\hline 5 & 300 & 30 & 75 \
\hline
\end{array}$$
-Refer to Table 13-9. The average total cost of producing 240 units is

Accepted Answer

A) $0.13. 
B) $0.19. 
C) $0.32. 
D) $0.80. 
A) $0.13. 
B) $0.19. 
C) $0.32. 
D) $0.80.

Question 10

Table 13-4
The following table shows the production possibilities for Charles' math tutoring company.
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of tutors) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Number of students } \
\text { tutored per week) }
\end{array} \
\hline 0 & 0 \
\hline 1 & 20 \
\hline 2 & 45 \
\hline 3 & 60 \
\hline 4 & 70 \
\hline
\end{array}$$ ​
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Accepted Answer

A) increases but gets flatter. 
B) increases and gets steeper. 
C) decreases and gets flatter. 
D) decreases but gets steeper. 
A) increases but gets flatter. 
B) increases and gets steeper. 
C) decreases and gets flatter. 
D) decreases but gets steeper.

Question 11

An example of an explicit cost of production would be the

Accepted Answer

A) cost of forgone labor earnings for an entrepreneur. 
B) lost opportunity to invest in capital markets when the money is invested in one's business. 
C) lease payments for the land on which a firm's factory stands. 
D) value of the time the business could've spent producing something else. 
A) cost of forgone labor earnings for an entrepreneur. 
B) lost opportunity to invest in capital markets when the money is invested in one's business. 
C) lease payments for the land on which a firm's factory stands. 
D) value of the time the business could've spent producing something else.

Question 12

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 13

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?

Accepted Answer

A) Bev's total explicit costs are $26,300. 
B) Bev's total implicit costs are $300. 
C) Bev's accounting profits exceed her economic profits by $300. 
D) Bev's economic profit is $3,700. 
A) Bev's total explicit costs are $26,300. 
B) Bev's total implicit costs are $300. 
C) Bev's accounting profits exceed her economic profits by $300. 
D) Bev's economic profit is $3,700.

Question 14

Which of the following expressions is correct?

Accepted Answer

A) accounting profit = economic profit + implicit costs 
B) accounting profit = total revenue − implicit costs 
C) economic profit = accounting profit + explicit costs 
D) economic profit = total revenue − implicit costs 
A) accounting profit = economic profit + implicit costs 
B) accounting profit = total revenue − implicit costs 
C) economic profit = accounting profit + explicit costs 
D) economic profit = total revenue − implicit costs

Question 15

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 16

Implicit costs are costs that do not require an outlay of money by the firm.

Accepted Answer

A) True 
 B)False

Question 17

Table 13-7
The following table shows the production costs for The Flying Elvis Copter Rides.
​
​
 \[\begin{array} { | c | c | c | c | c | c | c | c } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Helicopter } \
\text { rides) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixed Cost } \
\text { (Dollars per } \
\text { ride) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost } \
\text { (Dollars per } \
\text { ride) }
\end{array} & \begin{array} { c } 
\text { Avera } \
\text { Total Cost } \
\text { (Dollars } \
\text { ride) }
\end{array} \
\hline 0 & 50 & 50 & 0 & - - & - & - & - \
\hline 1 & 150 & \mathrm {~A} & \mathrm {~B} & \mathrm { C } & \mathrm { D } & \mathrm { E } & \mathrm { F } \
\hline 2 & \mathrm { G } & \mathrm { H } & \mathrm { I } & 120 & \mathrm {~J} & \mathrm {~K} & \mathrm {~L} \
\hline 3 & \mathrm { M } & \mathrm { N } & \mathrm { O } & \mathrm { P } & \mathrm { Q } & 120 & \mathrm { R } \
\hline
\end{array}\] ​
​
​
​
-Refer to Table 13-7. What is the value of F?

Accepted Answer

A) $50 
B) $100 
C) $150 
D) $200 
A) $50 
B) $100 
C) $150 
D) $200

Question 18

For a typical firm, fixed costs increase in direct proportion to the increases in output.

Accepted Answer

A) True 
 B)False

Question 19

Table 13-7
The following table shows the production costs for The Flying Elvis Copter Rides.
​
​
 \[\begin{array} { | c | c | c | c | c | c | c | c } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Helicopter } \
\text { rides) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixed Cost } \
\text { (Dollars per } \
\text { ride) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost } \
\text { (Dollars per } \
\text { ride) }
\end{array} & \begin{array} { c } 
\text { Avera } \
\text { Total Cost } \
\text { (Dollars } \
\text { ride) }
\end{array} \
\hline 0 & 50 & 50 & 0 & - - & - & - & - \
\hline 1 & 150 & \mathrm {~A} & \mathrm {~B} & \mathrm { C } & \mathrm { D } & \mathrm { E } & \mathrm { F } \
\hline 2 & \mathrm { G } & \mathrm { H } & \mathrm { I } & 120 & \mathrm {~J} & \mathrm {~K} & \mathrm {~L} \
\hline 3 & \mathrm { M } & \mathrm { N } & \mathrm { O } & \mathrm { P } & \mathrm { Q } & 120 & \mathrm { R } \
\hline
\end{array}\] ​
​
​
​
-Refer to Table 13-7. What is the value of C?

Accepted Answer

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

Question 20

Although economists and accountants treat many costs differently, they both treat the cost of capital the same.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Average variable cost will decrease if __________.

Which of the following statements is correct?

Marginal cost is equal to average total cost when

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

​Economies of scale commonly arise because of coordination problems.

Figure 13-2 ​ -Refer to Figure 13-2. Which of the curves is most likely to represent marginal cost?

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

Figure 13-5 -Refer to Figure 13-5. The efficient scale of production occurs at which quantity?

Table 13-9 ​ ​ Labor (Number of w orkers) Output (Units) Fixed Cost (Dollars) Variable Cost (Dollars) 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75 -Refer to Table 13-9. The average total cost of producing 240 units is

An example of an explicit cost of production would be the

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

Which of the following expressions is correct?

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Implicit costs are costs that do not require an outlay of money by the firm.

For a typical firm, fixed costs increase in direct proportion to the increases in output.

Although economists and accountants treat many costs differently, they both treat the cost of capital the same.

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

Economies of scale commonly arise because of coordination problems.

Figure 13-2 -Refer to Figure 13-2. Which of the curves is most likely to represent marginal cost?

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

Table 13-9 Labor (Number of w orkers) Output (Units) Fixed Cost (Dollars) Variable Cost (Dollars) 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75 -Refer to Table 13-9. The average total cost of producing 240 units is