Question 1

Which of the following is the best example of a variable cost?

Accepted Answer

A)  monthly wage payments for hired labor 
B)  annual property tax payments for a building 
C)  monthly rent payments for a warehouse 
D)  annual insurance payments for a warehouse 
A)  monthly wage payments for hired labor 
B)  annual property tax payments for a building 
C)  monthly rent payments for a warehouse 
D)  annual insurance payments for a warehouse

Question 2

Industrial organization is the study of how

Accepted Answer

A)  labor unions organize workers in industries. 
B)  profitable firms are in organized industries. 
C)  industries organize for political advantage. 
D)  firms' decisions regarding prices and quantities depend on the market conditions they face. 
A)  labor unions organize workers in industries. 
B)  profitable firms are in organized industries. 
C)  industries organize for political advantage. 
D)  firms' decisions regarding prices and quantities depend on the market conditions they face.

Question 3

Total revenue minus only explicit costs is called

Accepted Answer

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

Question 4

The difference between accounting profit and economic profit relates to

Accepted Answer

A)  the manner in which revenues are defined. 
B)  how marginal revenue is calculated. 
C)  the manner in which costs are defined. 
D)  the price of the good in the market. 
A)  the manner in which revenues are defined. 
B)  how marginal revenue is calculated. 
C)  the manner in which costs are defined. 
D)  the price of the good in the market.

Question 5

Table 13-13
  
-Refer to Table 13-13.What is the total fixed cost for this firm?

Accepted Answer

A)  $20 
B)  $30 
C)  $40 
D)  $50 
A)  $20 
B)  $30 
C)  $40 
D)  $50

Question 6

Figure 13-5
  
-Refer to Figure 13-5.Curve D intersects curve C

Accepted Answer

A)  where the firm maximizes profit. 
B)  at the minimum of average fixed cost. 
C)  at the efficient scale. 
D)  where fixed costs equal variable costs. 
A)  where the firm maximizes profit. 
B)  at the minimum of average fixed cost. 
C)  at the efficient scale. 
D)  where fixed costs equal variable costs.

Question 7

Which of the following costs of publishing a book is a fixed cost?

Accepted Answer

A)  author royalties of 5% per book 
B)  the costs of paper and binding 
C)  shipping and postage expenses 
D)  composition, typesetting, and jacket design for the book 
A)  author royalties of 5% per book 
B)  the costs of paper and binding 
C)  shipping and postage expenses 
D)  composition, typesetting, and jacket design for the book

Question 8

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,650 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

Table 13-9
  
-Refer to Table 13-9.The marginal cost of producing the 6th poster is

Accepted Answer

A)  $1.00. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00. 
A)  $1.00. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00.

Question 10

Table 13-1
  
-Refer to Table 13-1.What is total output when 1 worker is hired?

Accepted Answer

A)  30 
B)  40 
C)  120 
D)  160 
A)  30 
B)  40 
C)  120 
D)  160

Question 11

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=6,Q=147)and (L=7,Q=174).The marginal product of the seventh worker is

Accepted Answer

A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  174 units of output. 
A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  174 units of output.

Question 12

A firm has a fixed cost of $200 in its first year of operation.When the firm produces 99 units of output,its total costs are $4,000.The marginal cost of producing the 100th unit of output is $700.What is the total cost of producing 100 units?

Accepted Answer

A)  $900 
B)  $4,200 
C)  $4,700 
D)  $4,900 
A)  $900 
B)  $4,200 
C)  $4,700 
D)  $4,900

Question 13

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 variable cost was

Accepted Answer

A)  $2.43. 
B)  $4.00. 
C)  $6.00. 
D)  $6.43. 
A)  $2.43. 
B)  $4.00. 
C)  $6.00. 
D)  $6.43.

Question 14

Diminishing marginal product suggests that the marginal

Accepted Answer

A)  cost of an extra worker is unchanged. 
B)  cost of an extra worker is less than the previous worker's marginal cost. 
C)  product of an extra worker is less than the previous worker's marginal product. 
D)  product of an extra worker is greater than the previous worker's marginal product. 
A)  cost of an extra worker is unchanged. 
B)  cost of an extra worker is less than the previous worker's marginal cost. 
C)  product of an extra worker is less than the previous worker's marginal product. 
D)  product of an extra worker is greater than the previous worker's marginal product.

Question 15

If the marginal-cost curve is rising,then so is the average-total-cost curve.

Accepted Answer

A) True 
 B)False

Question 16

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Accepted Answer

A) True 
 B)False

Question 17

Table 13-16
Listed in the table are the long-run total costs for three different firms.
  
-Refer to Table 13-16.Firm B is experiencing constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 18

Economic profit

Accepted Answer

A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit. 
A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit.

Question 19

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

Accepted Answer

A)  output is not variable. 
B)  the number of workers used to produce the firm's product is fixed. 
C)  the size of the factory is fixed. 
D)  there are no fixed costs. 
A)  output is not variable. 
B)  the number of workers used to produce the firm's product is fixed. 
C)  the size of the factory is fixed. 
D)  there are no fixed costs.

Question 20

Table 13-7
The Flying Elvis Copter Rides
  
-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

Exam 13: The Costs of Production.

Which of the following is the best example of a variable cost?

Industrial organization is the study of how

Total revenue minus only explicit costs is called

The difference between accounting profit and economic profit relates to

Table 13-13 -Refer to Table 13-13.What is the total fixed cost for this firm?

Figure 13-5 -Refer to Figure 13-5.Curve D intersects curve C

Which of the following costs of publishing a book is a fixed cost?

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,650 when output is 40 units.Firm A exhibits

Table 13-9 -Refer to Table 13-9.The marginal cost of producing the 6th poster is

Table 13-1 -Refer to Table 13-1.What is total output when 1 worker is hired?

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=6,Q=147)and (L=7,Q=174).The marginal product of the seventh worker is

A firm has a fixed cost of $200 in its first year of operation.When the firm produces 99 units of output,its total costs are $4,000.The marginal cost of producing the 100th unit of output is $700.What is the total cost of producing 100 units?

Diminishing marginal product suggests that the marginal

If the marginal-cost curve is rising,then so is the average-total-cost curve.

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16.Firm B is experiencing constant returns to scale.

Economic profit

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

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

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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