Question 1

Explicit costs

Accepted Answer

A)  do not require an outlay of money by the firm. 
B)  enter into the accountant's measurement of a firm's profit. 
C)  enter into the economist's measurement of a firm's profit. 
D)  Both b and c are correct. 
A)  do not require an outlay of money by the firm. 
B)  enter into the accountant's measurement of a firm's profit. 
C)  enter into the economist's measurement of a firm's profit. 
D)  Both b and c are correct.

Question 2

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes).The firm's total cost is

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $500. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $500.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  For most producers, the average total cost curve never crosses the marginal cost curve. 
B)  The average fixed cost curve must eventually rise. 
C)  The average total cost curve first rises, then falls with increased output. 
D)  The marginal cost curve eventually rises with the quantity of output. 
A)  For most producers, the average total cost curve never crosses the marginal cost curve. 
B)  The average fixed cost curve must eventually rise. 
C)  The average total cost curve first rises, then falls with increased output. 
D)  The marginal cost curve eventually rises with the quantity of output.

Question 4

When a firm is able to put idle equipment to use by hiring another worker,

Accepted Answer

A)  variable costs will rise. 
B)  variable costs will fall. 
C)  fixed costs will fall. 
D)  both fixed costs and variable costs will rise. 
A)  variable costs will rise. 
B)  variable costs will fall. 
C)  fixed costs will fall. 
D)  both fixed costs and variable costs will rise.

Question 5

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 total economic 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 6

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

Question 7

Table 13-1
  
-Refer to Table 13-1.What is total output when 2 workers are hired?

Accepted Answer

A)  10 
B)  40 
C)  70 
D)  120 
A)  10 
B)  40 
C)  70 
D)  120

Question 8

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Accepted Answer

A)  average variable cost of 21 pairs of boots is $23. 
B)  average total cost of 21 pairs of boots is $23. 
C)  average total cost of 21 pairs of boots is $15.09. 
D)  marginal cost of the 20th pair of boots is $20. 
A)  average variable cost of 21 pairs of boots is $23. 
B)  average total cost of 21 pairs of boots is $23. 
C)  average total cost of 21 pairs of boots is $15.09. 
D)  marginal cost of the 20th pair of boots is $20.

Question 9

Economists assume that the typical person who starts her own business does so with the intention of

Accepted Answer

A)  donating the profits from her business to charity. 
B)  capturing the highest number of sales in her industry. 
C)  maximizing profits. 
D)  minimizing costs. 
A)  donating the profits from her business to charity. 
B)  capturing the highest number of sales in her industry. 
C)  maximizing profits. 
D)  minimizing costs.

Question 10

Figure 13-5
  
-Refer to Figure 13-5.Curve D represents which type of cost curve?

Accepted Answer

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

Question 11

Suppose that a firm has only one variable input,labor,and firm output is zero when labor is zero.When the firm hires 6 workers the firm produces 90 units of output.Fixed costs of production are $6 and the variable cost per unit of labor is $10.The marginal product of the seventh unit of labor is 4.Given this information,what is the marginal cost of production when the firm hires the 7th worker?

Accepted Answer

A)  $1.50 
B)  $2.50 
C)  $5 
D)  $10 
A)  $1.50 
B)  $2.50 
C)  $5 
D)  $10

Question 12

Table 13-15
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-13.Firm 1's efficient scale occurs at what quantity?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 13

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-9.Which curve represents the long-run average total cost?

Accepted Answer

A)  ATCA 
B)  ATCB 
C)  ATCC 
D)  ATCD 
A)  ATCA 
B)  ATCB 
C)  ATCC 
D)  ATCD

Question 14

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that when the firm hires 4 workers,the firm produces 50 units of output.If the fixed cost of production is $4,the variable cost per unit of labor is $20,and the marginal product of labor for the fifth unit of labor is 2,what is the average total cost of production when the firm hires 5 workers?

Accepted Answer

A)  $2.00 
B)  $20.00 
C)  $20.80 
D)  $22.80 
A)  $2.00 
B)  $20.00 
C)  $20.80 
D)  $22.80

Question 15

Scenario 13-14
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 13-14.Farmer Brown's marginal-cost curve is

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  constant. 
D)  U-shaped. 
A)  increasing. 
B)  decreasing. 
C)  constant. 
D)  U-shaped.

Question 16

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Accepted Answer

The production function depict

Question 17

Figure 13-2
  
-Refer to Figure 13-2.The graph illustrates a typical

Accepted Answer

A)  total-cost curve. 
B)  production function. 
C)  production possibilities frontier. 
D)  marginal product of labor curve. 
A)  total-cost curve. 
B)  production function. 
C)  production possibilities frontier. 
D)  marginal product of labor curve.

Question 18

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.According to Ellie's accountant,which of the following revenue totals will yield her business $50,000 in profits?

Accepted Answer

A)  $55,200 
B)  $105,200 
C)  $132,500 
D)  $185,700 
A)  $55,200 
B)  $105,200 
C)  $132,500 
D)  $185,700

Question 19

In the long run,a firm that produces and sells electronic book readers gets to choose

Accepted Answer

A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct. 
A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct.

Question 20

Jennifer is a junior in college.Her current cumulative grade point average (GPA)is 3.5 out of a 4.0 scale.Jennifer is hoping that by the time she graduates,she can raise her cumulative GPA to a 3.7.Which of the following statements is correct?

Accepted Answer

A)  If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. 
B)  If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. 
C)  Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. 
D)  Either b or c could be correct. 
A)  If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. 
B)  If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. 
C)  Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. 
D)  Either b or c could be correct.

Explicit costs

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes).The firm's total cost is

Which of the following statements is correct?

When a firm is able to put idle equipment to use by hiring another worker,

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.

Table 13-1 -Refer to Table 13-1.What is total output when 2 workers are hired?

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Economists assume that the typical person who starts her own business does so with the intention of

Figure 13-5 -Refer to Figure 13-5.Curve D represents which type of cost curve?

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Firm 1's efficient scale occurs at what quantity?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.Which curve represents the long-run average total cost?

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Figure 13-2 -Refer to Figure 13-2.The graph illustrates a typical

In the long run,a firm that produces and sells electronic book readers gets to choose

Jennifer is a junior in college.Her current cumulative grade point average (GPA)is 3.5 out of a 4.0 scale.Jennifer is hoping that by the time she graduates,she can raise her cumulative GPA to a 3.7.Which of the following statements is correct?

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.

Explicit costs

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes).The firm's total cost is

Which of the following statements is correct?

When a firm is able to put idle equipment to use by hiring another worker,

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.

Table 13-1 -Refer to Table 13-1.What is total output when 2 workers are hired?

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Economists assume that the typical person who starts her own business does so with the intention of

Figure 13-5 -Refer to Figure 13-5.Curve D represents which type of cost curve?

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Firm 1's efficient scale occurs at what quantity?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.Which curve represents the long-run average total cost?

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Figure 13-2 -Refer to Figure 13-2.The graph illustrates a typical

In the long run,a firm that produces and sells electronic book readers gets to choose

Jennifer is a junior in college.Her current cumulative grade point average (GPA)is 3.5 out of a 4.0 scale.Jennifer is hoping that by the time she graduates,she can raise her cumulative GPA to a 3.7.Which of the following statements is correct?

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