Question 1

A firm produces 400 units of output at a total cost of $1,200.If total variable costs are $1,000,

Accepted Answer

A)  average fixed cost is 50 cents. 
B)  average variable cost is $2. 
C)  average total cost is $2.50. 
D)  average total cost is 50 cents. 
A)  average fixed cost is 50 cents. 
B)  average variable cost is $2. 
C)  average total cost is $2.50. 
D)  average total cost is 50 cents.

Question 2

Total cost is the

Accepted Answer

A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good. 
A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good.

Question 3

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

Accepted Answer

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

Question 4

When a firm is operating at an efficient scale,

Accepted Answer

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

Question 5

Average variable cost is equal to total variable cost divided by quantity of output.

Accepted Answer

A) True 
 B)False

Question 6

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Accepted Answer

A) True 
 B)False

Question 7

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Accepted Answer

A) True 
 B)False

Question 8

Eldin is a house painter.He can paint three houses per week.He is considering hiring his friend Murphy.Murphy can paint five houses per week.What is the maximum total output possible if Eldin hires Murphy?

Accepted Answer

A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses 
A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses

Question 9

Explicit costs

Accepted Answer

A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include the value of the business owner's time. 
D)  Both b and c are correct. 
A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include the value of the business owner's time. 
D)  Both b and c are correct.

Question 10

Let L represent the number of workers hired by a firm,and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 5,Q = 125)and (L = 6,Q = 162).Then the marginal product of the 6th worker is

Accepted Answer

A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  162 units of output. 
A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  162 units of output.

Question 11

Figure 13-3
  
-Refer to Figure 13-3.The graph illustrates a typical

Accepted Answer

A)  total-cost curve. 
B)  production function. 
C)  production possibilities frontier. 
D)  fixed-cost curve. 
A)  total-cost curve. 
B)  production function. 
C)  production possibilities frontier. 
D)  fixed-cost curve.

Question 12

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Accepted Answer

A) True 
 B)False

Question 13

Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an example of an implicit cost?

Accepted Answer

A)  salaries paid to owners who work for the firm 
B)  interest on money borrowed to finance equipment purchases 
C)  cash payments for raw materials 
D)  foregone rent on office space owned and used by the firm 
A)  salaries paid to owners who work for the firm 
B)  interest on money borrowed to finance equipment purchases 
C)  cash payments for raw materials 
D)  foregone rent on office space owned and used by the firm

Question 15

Figure 13-7
  
-Refer to Figure 13-7.Which of the figures represents the total cost curve for a typical firm?

Accepted Answer

A)  Figure 1 
B)  Figure 2 
C)  Figure 3 
D)  Figure 4 
A)  Figure 1 
B)  Figure 2 
C)  Figure 3 
D)  Figure 4

Question 16

Figure 13-8
  
-Refer to Figure 13-8.Quantity C represents the output level where the firm

Accepted Answer

A)  maximizes profits. 
B)  minimizes total costs. 
C)  produces at the efficient scale. 
D)  minimizes marginal costs. 
A)  maximizes profits. 
B)  minimizes total costs. 
C)  produces at the efficient scale. 
D)  minimizes marginal costs.

Question 17

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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

Question 19

Table 13-8
  
-Refer to Table 13-8.What is the average fixed cost of producing 5 units of output?

Accepted Answer

A)  $4 
B)  $5 
C)  $40 
D)  $44 
A)  $4 
B)  $5 
C)  $40 
D)  $44

Question 20

Suppose that a worker can produce 100 units of output in 7 hours.In the 8th hour,he can produce 12 units of output.The worker can produce 112 units of output in 8 hours.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production.

A firm produces 400 units of output at a total cost of $1,200.If total variable costs are $1,000,

Total cost is the

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

When a firm is operating at an efficient scale,

Average variable cost is equal to total variable cost divided by quantity of output.

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Eldin is a house painter.He can paint three houses per week.He is considering hiring his friend Murphy.Murphy can paint five houses per week.What is the maximum total output possible if Eldin hires Murphy?

Explicit costs

Let L represent the number of workers hired by a firm,and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 5,Q = 125)and (L = 6,Q = 162).Then the marginal product of the 6th worker is

Figure 13-3 -Refer to Figure 13-3.The graph illustrates a typical

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Which of the following is an example of an implicit cost?

Figure 13-7 -Refer to Figure 13-7.Which of the figures represents the total cost curve for a typical firm?

Figure 13-8 -Refer to Figure 13-8.Quantity C represents the output level where the firm

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

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

Table 13-8 -Refer to Table 13-8.What is the average fixed cost of producing 5 units of output?

Suppose that a worker can produce 100 units of output in 7 hours.In the 8th hour,he can produce 12 units of output.The worker can produce 112 units of output in 8 hours.

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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