Question 1

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Accepted Answer

A) True 
 B)False

Question 2

There is general agreement among economists that the long-run time period exceeds one year.

Accepted Answer

A) True 
 B)False

Question 3

A firm that produces and sells furniture gets to choose

Accepted Answer

A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short run and the long run. 
D) the number of machines it uses in the short run but not in the long run. 
A) how many workers to hire in both the short run and the long run. 
B) the size of its factories in the short run but not in the long run. 
C) which short-run average-total-cost curve to use in both the short run and the long run. 
D) the number of machines it uses in the short run but not in the long run.

Question 4

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 B?

Accepted Answer

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

Question 5

An example of an explicit cost would be the wages that a business owner pays her employees.

Accepted Answer

A) True 
 B)False

Question 6

Table 13-6
Consider the following information about baseball production at Bobby's Baseball Factory.
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Marginal Product } \
\text { (Baseballs) }
\end{array} \
\hline 1 & 3 \
\hline 2 & 5 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 7 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline
\end{array}$$ ​
​
-Refer to Table 13-6. Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

Accepted Answer

A) as output rises from 0 to 10, but rises after that. 
B) as output rises from 0 to 26, but rises after that. 
C) as output rises from 0 to 33, but increases after that. 
D) continually as output rises. 
A) as output rises from 0 to 10, but rises after that. 
B) as output rises from 0 to 26, but rises after that. 
C) as output rises from 0 to 33, but increases after that. 
D) continually as output rises.

Question 7

The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.

Accepted Answer

A) True 
 B)False

Question 8

Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explains that ATC is U-shaped for two reasons. The first is the existence of diminishing marginal product, which causes it to rise. What would be the second reason? Assume that the marginal cost curve is linear. (Hint: The second reason relates to average fixed cost)

Accepted Answer

Average fixed cost always decl

Question 9

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Accepted Answer

A) the number of workers and the quantity of output. 
B) marginal product and marginal cost. 
C) the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor. 
D) fixed inputs and variable inputs in the short run. 
A) the number of workers and the quantity of output. 
B) marginal product and marginal cost. 
C) the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor. 
D) fixed inputs and variable inputs in the short run.

Question 10

Profit equals total revenue minus total cost.

Accepted Answer

A) True 
 B)False

Question 11

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900.
​

Accepted Answer

A) True 
 B)False

Question 12

Marginal costs are costs that do not vary with the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 13

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon also quit his job as a waiter, which paid $20,000. According to an economist, Jaxon's opportunity cost of opening the tattoo parlor equals $20,900.

Accepted Answer

A) True 
 B)False

Question 14

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Accepted Answer

Danita's store size is likely to be fixe

Question 16

In the long run,

Accepted Answer

A) inputs that were fixed in the short run remain fixed. 
B) inputs that were fixed in the short run become variable. 
C) inputs that were variable in the short run become fixed. 
D) variable inputs are rarely used. 
A) inputs that were fixed in the short run remain fixed. 
B) inputs that were fixed in the short run become variable. 
C) inputs that were variable in the short run become fixed. 
D) variable inputs are rarely used.

Question 17

Accountants keep track of the money that flows into and out of firms.

Accepted Answer

A) True 
 B)False

Question 18

The shape of the total-cost curve is inversely related to the shape of the production function.

Accepted Answer

A) True 
 B)False

Question 19

Economists and accountants both include forgone income as a cost to a small business owner.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 13: The Costs of Production

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

There is general agreement among economists that the long-run time period exceeds one year.

A firm that produces and sells furniture gets to choose

An example of an explicit cost would be the wages that a business owner pays her employees.

The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Profit equals total revenue minus total cost.

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900. ​

Marginal costs are costs that do not vary with the quantity of output produced.

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

In the long run,

Accountants keep track of the money that flows into and out of firms.

The shape of the total-cost curve is inversely related to the shape of the production function.

Economists and accountants both include forgone income as a cost to a small business owner.

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.

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

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900.