Question 1

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith described a visit he made to a

Accepted Answer

A)  car factory. 
B)  pin factory. 
C)  washing machine factory. 
D)  farm. 
A)  car factory. 
B)  pin factory. 
C)  washing machine factory. 
D)  farm.

Question 2

An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Accepted Answer

A) True 
 B)False

Question 3

Figure 13-1
  
-Refer to Figure 13-1.Suppose the production function shifts from TP1 to TP2.Such a shift in the total product curve is most likely due to an increase in the firm's

Accepted Answer

A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share. 
A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share.

Question 4

Whenever marginal cost is greater than average total cost,

Accepted Answer

A)  average total cost is rising. 
B)  marginal cost is falling. 
C)  average total cost is falling. 
D)  Both b and c are correct. 
A)  average total cost is rising. 
B)  marginal cost is falling. 
C)  average total cost is falling. 
D)  Both b and c are correct.

Question 5

If marginal cost is rising,

Accepted Answer

A)  average variable cost must be falling. 
B)  average fixed cost must be rising. 
C)  marginal product must be falling. 
D)  marginal product must be rising. 
A)  average variable cost must be falling. 
B)  average fixed cost must be rising. 
C)  marginal product must be falling. 
D)  marginal product must be rising.

Question 6

Table 13-9
  
-Refer to Table 13-9.The total cost of producing 1 poster is

Accepted Answer

A)  $1.00. 
B)  $10.00. 
C)  $11.00. 
D)  $22.00. 
A)  $1.00. 
B)  $10.00. 
C)  $11.00. 
D)  $22.00.

Question 7

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 8

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Accepted Answer

A)  $1.10. 
B)  $6.50. 
C)  $15.00. 
D)  $16.50. 
A)  $1.10. 
B)  $6.50. 
C)  $15.00. 
D)  $16.50.

Question 9

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop.The interest rate is 5 percent for both the bank loan and her personal savings.Her opportunity cost of capital is $250.

Accepted Answer

A) True 
 B)False

Question 10

If long-run average total cost decreases as the quantity of output increases,the firm is experiencing

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  coordination problems arising from the large size of the firm. 
D)  fixed costs greatly exceeding variable costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  coordination problems arising from the large size of the firm. 
D)  fixed costs greatly exceeding variable costs.

Question 11

Total cost can be divided into two types of costs:

Accepted Answer

A)  fixed costs and variable costs. 
B)  fixed costs and marginal costs. 
C)  variable costs and marginal costs. 
D)  average costs and marginal costs. 
A)  fixed costs and variable costs. 
B)  fixed costs and marginal costs. 
C)  variable costs and marginal costs. 
D)  average costs and marginal costs.

Question 12

There is general agreement among economists that the long-run time period exceeds one year.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Table 13-13
  
-Refer to Table 13-13.What is average variable cost when output is 50 units?

Accepted Answer

A)  $3.60 
B)  $4.00 
C)  $4.40 
D)  $4.80 
A)  $3.60 
B)  $4.00 
C)  $4.40 
D)  $4.80

Question 15

Figure 13-5
  
-Refer to Figure 13-5.Curve A 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 16

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 four units of output are produced,the total cost is $175,and the average variable cost is $33.75.What would the average fixed cost be if ten units were produced?

Accepted Answer

A)  $4 
B)  $10 
C)  $40 
D)  $135 
A)  $4 
B)  $10 
C)  $40 
D)  $135

Question 17

When marginal cost is rising,average variable cost

Accepted Answer

A)  must be rising. 
B)  must be falling. 
C)  must be constant. 
D)  could be rising or falling. 
A)  must be rising. 
B)  must be falling. 
C)  must be constant. 
D)  could be rising or falling.

Question 18

Total revenue minus only implicit costs is called

Accepted Answer

A)  accounting profit. 
B)  economic profit. 
C)  opportunity cost. 
D)  None of the above is correct. 
A)  accounting profit. 
B)  economic profit. 
C)  opportunity cost. 
D)  None of the above is correct.

Question 19

If the total cost curve gets steeper as output increases,the firm is experiencing

Accepted Answer

A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing marginal product. 
D)  increasing marginal product. 
A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing marginal product. 
D)  increasing marginal product.

Question 20

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA).Johnny's cumulative GPA will be better next semester if he
(i)performs better than he did last semester.
(ii)performs better than his cumulative GPA.
(iii)gives an average performance.

Accepted Answer

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

Exam 13: The Costs of Production.

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith described a visit he made to a

An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Figure 13-1 -Refer to Figure 13-1.Suppose the production function shifts from TP1 to TP2.Such a shift in the total product curve is most likely due to an increase in the firm's

Whenever marginal cost is greater than average total cost,

If marginal cost is rising,

Table 13-9 -Refer to Table 13-9.The total cost of producing 1 poster is

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop.The interest rate is 5 percent for both the bank loan and her personal savings.Her opportunity cost of capital is $250.

If long-run average total cost decreases as the quantity of output increases,the firm is experiencing

Total cost can be divided into two types of costs:

There is general agreement among economists that the long-run time period exceeds one year.

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

Table 13-13 -Refer to Table 13-13.What is average variable cost when output is 50 units?

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

When marginal cost is rising,average variable cost

Total revenue minus only implicit costs is called

If the total cost curve gets steeper as output increases,the firm is experiencing

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA).Johnny's cumulative GPA will be better next semester if he (i)performs better than he did last semester. (ii)performs better than his cumulative GPA. (iii)gives an average performance.

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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