Question 1

The nature of a firm's cost (fixed or variable)depends on the

Accepted Answer

A)  firm's revenues. 
B)  time horizon under consideration. 
C)  price the firm charges for output. 
D)  explicit but not implicit costs. 
A)  firm's revenues. 
B)  time horizon under consideration. 
C)  price the firm charges for output. 
D)  explicit but not implicit costs.

Question 2

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Accepted Answer

A)  $10 
B)  $15 
C)  $100 
D)  $150 
A)  $10 
B)  $15 
C)  $100 
D)  $150

Question 3

If marginal cost is equal to average total cost,then

Accepted Answer

A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average variable cost is minimized. 
D)  marginal cost is zero. 
A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average variable cost is minimized. 
D)  marginal cost is zero.

Question 4

Table 13-1
  
-Refer to Table 13-1.What is total output when 4 workers are hired?

Accepted Answer

A)  -10 
B)  70 
C)  120 
D)  160 
A)  -10 
B)  70 
C)  120 
D)  160

Question 5

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

Accepted Answer

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

Question 6

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Accepted Answer

A)  a technological advance resulting in increased productivity 
B)  higher property taxes charged by the municipal government 
C)  increased wages to attract additional computer operators 
D)  a reduction in subsidies from the state government 
A)  a technological advance resulting in increased productivity 
B)  higher property taxes charged by the municipal government 
C)  increased wages to attract additional computer operators 
D)  a reduction in subsidies from the state government

Question 7

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 8

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

Accepted Answer

A)  $50 
B)  $140 
C)  $360 
D)  $410 
A)  $50 
B)  $140 
C)  $360 
D)  $410

Question 9

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Accepted Answer

A)  the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses 
B)  the cost of the steel that is used in producing automobiles 
C)  the cost of the electricity of running the machines on the factory floor 
D)  All of the above are correct. 
A)  the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses 
B)  the cost of the steel that is used in producing automobiles 
C)  the cost of the electricity of running the machines on the factory floor 
D)  All of the above are correct.

Question 10

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Accepted Answer

A)  average fixed cost 
B)  average variable cost 
C)  average total cost 
D)  marginal cost 
A)  average fixed cost 
B)  average variable cost 
C)  average total cost 
D)  marginal cost

Question 11

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Accepted Answer

A)  competition. 
B)  opportunity costs. 
C)  specialization. 
D)  incentives. 
A)  competition. 
B)  opportunity costs. 
C)  specialization. 
D)  incentives.

Question 12

Analyzing the behavior of the firm enhances our understanding of

Accepted Answer

A)  what decisions lie behind the market supply curve. 
B)  how consumers allocate their income to purchase scarce resources. 
C)  how financial institutions set interest rates. 
D)  whether resources are allocated fairly. 
A)  what decisions lie behind the market supply curve. 
B)  how consumers allocate their income to purchase scarce resources. 
C)  how financial institutions set interest rates. 
D)  whether resources are allocated fairly.

Question 13

When a factory is operating in the short run,

Accepted Answer

A)  it cannot alter variable costs. 
B)  total cost and variable cost are usually the same. 
C)  average fixed cost rises as output increases. 
D)  it cannot adjust the quantity of fixed inputs. 
A)  it cannot alter variable costs. 
B)  total cost and variable cost are usually the same. 
C)  average fixed cost rises as output increases. 
D)  it cannot adjust the quantity of fixed inputs.

Question 14

Table 13-12
Betty's Bakery
  
-Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

Accepted Answer

A)  $14.00 
B)  $18.50 
C)  $22.50 
D)  $26.50 
A)  $14.00 
B)  $18.50 
C)  $22.50 
D)  $26.50

Question 15

Scenario 13-15
Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs.
-Refer to Scenario 13-15.Farmer Jack's production function will

Accepted Answer

A)  decrease at a decreasing rate. 
B)  decrease at an increasing rate. 
C)  increase at a decreasing rate. 
D)  increase at an increasing rate. 
A)  decrease at a decreasing rate. 
B)  decrease at an increasing rate. 
C)  increase at a decreasing rate. 
D)  increase at an increasing rate.

Question 16

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?
(i)shoe polish
(ii)rent on the shoe stand
(iii)wages Pete could earn delivering newspapers
(iv)interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

Accepted Answer

A)  (i) only 
B)  (i) and (ii) only 
C)  (iii) and (iv) only 
D)  (i), (ii), (iii), and (iv) 
A)  (i) only 
B)  (i) and (ii) only 
C)  (iii) and (iv) only 
D)  (i), (ii), (iii), and (iv)

Question 17

The average-total-cost curve is unaffected by diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 18

Table 13-9
  
-Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

Accepted Answer

A)  $1.00 
B)  $10.00 
C)  $11.00 
D)  It can't be determined from the information given. 
A)  $1.00 
B)  $10.00 
C)  $11.00 
D)  It can't be determined from the information given.

Question 19

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 20

Figure 13-10
  
-Refer to Figure 13-10.The firm experiences economies of scale if it changes its level of output from

Accepted Answer

A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5. 
A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5.

The nature of a firm's cost (fixed or variable)depends on the

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

If marginal cost is equal to average total cost,then

Table 13-1 -Refer to Table 13-1.What is total output when 4 workers are hired?

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

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

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?

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

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Analyzing the behavior of the firm enhances our understanding of

When a factory is operating in the short run,

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

The average-total-cost curve is unaffected by diminishing marginal product.

Table 13-9 -Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

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

Figure 13-10 -Refer to Figure 13-10.The firm experiences economies of scale if it changes its level of output from

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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Exam 13: The Costs of Production.

The nature of a firm's cost (fixed or variable)depends on the

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

If marginal cost is equal to average total cost,then

Table 13-1 -Refer to Table 13-1.What is total output when 4 workers are hired?

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

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

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?

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

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Analyzing the behavior of the firm enhances our understanding of

When a factory is operating in the short run,

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

The average-total-cost curve is unaffected by diminishing marginal product.

Table 13-9 -Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

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

Figure 13-10 -Refer to Figure 13-10.The firm experiences economies of scale if it changes its level of output from

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters