Question 1

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  an efficient use of resources. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  an efficient use of resources.

Question 2

Scenario 13-11
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also during the first year, the cookie business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Zach's time.
-Refer to Scenario 13-11.Zach's economic profit for the year was

Accepted Answer

A)  $-506,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000. 
A)  $-506,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000.

Question 3

The average-fixed-cost curve is constant.

Accepted Answer

A) True 
 B)False

Question 4

Daphne sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

Accepted Answer

A)  $25. 
B)  $124.50. 
C)  $125. 
D)  $150. 
A)  $25. 
B)  $124.50. 
C)  $125. 
D)  $150.

Question 5

If Tanya sells 200 glasses of fruit punch at $0.50 each,her total revenues are

Accepted Answer

A)  $100. 
B)  $199.50. 
C)  $200. 
D)  $400. 
A)  $100. 
B)  $199.50. 
C)  $200. 
D)  $400.

Question 6

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

Accepted Answer

A)  wages Pete could earn washing windows 
B)  dividends Pete's money was earning in the stock market before Pete sold his stock and bought a shoe-shine booth 
C)  the cost of shoe polish 
D)  Both b and c are correct. 
A)  wages Pete could earn washing windows 
B)  dividends Pete's money was earning in the stock market before Pete sold his stock and bought a shoe-shine booth 
C)  the cost of shoe polish 
D)  Both b and c are correct.

Question 7

Scenario 13-8
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-8.Ellie's annual implicit costs will equal

Accepted Answer

A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700. 
A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700.

Question 8

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

Accepted Answer

A)  diseconomies of scale because total cost is rising as output rises. 
B)  diseconomies of scale because average total cost is rising as output rises. 
C)  economies of scale because total cost is rising as output rises. 
D)  economies of scale because average total cost is falling as output rises. 
A)  diseconomies of scale because total cost is rising as output rises. 
B)  diseconomies of scale because average total cost is rising as output rises. 
C)  economies of scale because total cost is rising as output rises. 
D)  economies of scale because average total cost is falling as output rises.

Question 9

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 implicit 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 10

Scenario 13-16
A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 13-16.In producing the 7,000 staplers,the firm's average fixed cost was

Accepted Answer

A)  $1.00. 
B)  $1.32. 
C)  $2.21. 
D)  $2.43. 
A)  $1.00. 
B)  $1.32. 
C)  $2.21. 
D)  $2.43.

Question 11

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Accepted Answer

A)  accounting profit was $20 million. 
B)  economic profit was $20 million. 
C)  total revenue was $20 million. 
D)  explicit costs was $20 million. 
A)  accounting profit was $20 million. 
B)  economic profit was $20 million. 
C)  total revenue was $20 million. 
D)  explicit costs was $20 million.

Question 12

Total revenue minus both explicit and implicit costs is called

Accepted Answer

A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  total cost. 
A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  total cost.

Question 13

Scenario 13-7
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-7.What are Wanda's implicit costs per glass?

Accepted Answer

A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02 
A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02

Question 14

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

Accepted Answer

A)  rises. 
B)  remains unaffected. 
C)  falls. 
D)  All of the above are possible depending on the shape of the marginal cost curve. 
A)  rises. 
B)  remains unaffected. 
C)  falls. 
D)  All of the above are possible depending on the shape of the marginal cost curve.

Question 15

To an economist,the field of industrial organization answers which of the following questions?

Accepted Answer

A)  Why are consumers subject to the law of demand? 
B)  Why do firms experience diminishing marginal products of inputs? 
C)  How does the number of firms affect prices and the efficiency of market outcomes? 
D)  Why do firms consider production costs when determining product supply? 
A)  Why are consumers subject to the law of demand? 
B)  Why do firms experience diminishing marginal products of inputs? 
C)  How does the number of firms affect prices and the efficiency of market outcomes? 
D)  Why do firms consider production costs when determining product supply?

Question 16

Table 13-5
  
-Refer to Table 13-5.The marginal product of the third worker is

Accepted Answer

A)  1,000 units. 
B)  900 units. 
C)  700 units. 
D)  500 units. 
A)  1,000 units. 
B)  900 units. 
C)  700 units. 
D)  500 units.

Question 17

Scenario 13-10
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-10.An economist would calculate the total profit for one birdhouse to be

Accepted Answer

A)  $7. 
B)  $11. 
C)  $12. 
D)  $15. 
A)  $7. 
B)  $11. 
C)  $12. 
D)  $15.

Question 18

Table 13-12
Betty's Bakery
  
-Refer to Table 13-12.What is the average total cost of producing 6 cakes at Betty's Bakery?

Accepted Answer

A)  $16.34 
B)  $22.00 
C)  $22.17 
D)  $22.57 
A)  $16.34 
B)  $22.00 
C)  $22.17 
D)  $22.57

Question 19

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $4,500.The marginal cost of producing the 101st unit of output is $300.What is the total cost of producing 101 units?

Accepted Answer

A)  $46.53 
B)  $800 
C)  $4,800 
D)  $5,300 
A)  $46.53 
B)  $800 
C)  $4,800 
D)  $5,300

Question 20

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

Accepted Answer

A) True 
 B)False

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

The average-fixed-cost curve is constant.

Daphne sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

If Tanya sells 200 glasses of fruit punch at $0.50 each,her total revenues are

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Total revenue minus both explicit and implicit costs is called

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

To an economist,the field of industrial organization answers which of the following questions?

Table 13-5 -Refer to Table 13-5.The marginal product of the third worker is

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 6 cakes at Betty's Bakery?

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $4,500.The marginal cost of producing the 101st unit of output is $300.What is the total cost of producing 101 units?

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

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

Exam 13: The Costs of Production.

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

The average-fixed-cost curve is constant.

Daphne sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

If Tanya sells 200 glasses of fruit punch at $0.50 each,her total revenues are

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Total revenue minus both explicit and implicit costs is called

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

To an economist,the field of industrial organization answers which of the following questions?

Table 13-5 -Refer to Table 13-5.The marginal product of the third worker is

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 6 cakes at Betty's Bakery?

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $4,500.The marginal cost of producing the 101st unit of output is $300.What is the total cost of producing 101 units?

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

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