Question 1

Table 13-1
  
-Refer to Table 13-1.What is total output when 5 workers are hired?

Accepted Answer

A)  -10 
B)  120 
C)  160 
D)  190 
A)  -10 
B)  120 
C)  160 
D)  190

Question 2

Bob Edwards owns a bagel shop.Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC)curve as a function of the number of bagels produced.The results indicate a U-shaped average total cost curve.Bob's economist explains that ATC is U-shaped for two reasons.The first is the existence of diminishing marginal product,which causes it to rise.What would be the second reason? Assume that the marginal cost curve is linear.(Hint: The second reason relates to average fixed cost)

Accepted Answer

Average fixed cost always decl

Question 3

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 4

Fixed costs can be defined as costs that

Accepted Answer

A)  vary inversely with production. 
B)  vary in proportion with production. 
C)  are incurred only when production is large enough. 
D)  are incurred even if nothing is produced. 
A)  vary inversely with production. 
B)  vary in proportion with production. 
C)  are incurred only when production is large enough. 
D)  are incurred even if nothing is produced.

Question 5

For a construction company that builds houses,which of the following costs would be a fixed cost?

Accepted Answer

A)  the $20 per hour wage paid to a construction foreman 
B)  the $30,000 per year salary paid to the company's bookkeeper 
C)  the $2 per worker-hour paid to the state government for workers' compensation insurance 
D)  All of the above are correct. 
A)  the $20 per hour wage paid to a construction foreman 
B)  the $30,000 per year salary paid to the company's bookkeeper 
C)  the $2 per worker-hour paid to the state government for workers' compensation insurance 
D)  All of the above are correct.

Question 6

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Accepted Answer

A)  $25. 
B)  $75. 
C)  $100. 
D)  $175. 
A)  $25. 
B)  $75. 
C)  $100. 
D)  $175.

Question 7

Which of the following statements about costs is correct?

Accepted Answer

A)  When marginal cost is less than average total cost, average total cost is rising. 
B)  The total cost curve is U-shaped. 
C)  As the quantity of output increases, marginal cost eventually rises. 
D)  All of the above are correct. 
A)  When marginal cost is less than average total cost, average total cost is rising. 
B)  The total cost curve is U-shaped. 
C)  As the quantity of output increases, marginal cost eventually rises. 
D)  All of the above are correct.

Question 8

Katherine gives piano lessons for $15 per hour.She also grows flowers,which she arranges and sells at the local farmer's market.One day she spends 5 hours planting $50 worth of seeds in her garden.Once the seeds have grown into flowers,she can sell them for $150 at the farmer's market.Katherine's accounting profits are

Accepted Answer

A)  $100, and her economic profits are $25. 
B)  $100, and her economic profits are $75. 
C)  $25, and her economic profits are $100. 
D)  $75, and her economic profits are $125. 
A)  $100, and her economic profits are $25. 
B)  $100, and her economic profits are $75. 
C)  $25, and her economic profits are $100. 
D)  $75, and her economic profits are $125.

Question 9

Bev is opening her own court-reporting business.She financed the business by withdrawing money from her personal savings account.When she closed the account,the bank representative mentioned that she would have earned $300 in interest next year.If Bev hadn't opened her own business,she would have earned a salary of $25,000.In her first year,Bev's revenues were $30,000.Which of the following statements is correct?

Accepted Answer

A)  Bev's total explicit costs are $25,300. 
B)  Bev's total implicit costs are $300. 
C)  Bev's accounting profits exceed her economic profits by $300. 
D)  Bev's economic profit is $4,700. 
A)  Bev's total explicit costs are $25,300. 
B)  Bev's total implicit costs are $300. 
C)  Bev's accounting profits exceed her economic profits by $300. 
D)  Bev's economic profit is $4,700.

Question 10

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

Accepted Answer

A)  $25 
B)  $50 
C)  $110 
D)  $220 
A)  $25 
B)  $50 
C)  $110 
D)  $220

Question 11

Accounting profit is equal to

Accepted Answer

A)  marginal revenue minus marginal cost. 
B)  total revenue minus the explicit cost of producing goods and services. 
C)  total revenue minus the opportunity cost of producing goods and services. 
D)  average revenue minus the average cost of producing the last unit of a good or service. 
A)  marginal revenue minus marginal cost. 
B)  total revenue minus the explicit cost of producing goods and services. 
C)  total revenue minus the opportunity cost of producing goods and services. 
D)  average revenue minus the average cost of producing the last unit of a good or service.

Question 12

Marginal cost equals
(i)change in total cost divided by change in quantity produced.
(ii)change in variable cost divided by change in quantity produced.
(iii)the average fixed cost of the current unit.

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

Table 13-15
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-13.Which firm's long-run marginal cost decreases as output increases?

Accepted Answer

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

Question 15

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 16

Figure 13-2
  
-Refer to Figure 13-2.The graph illustrates a typical production function.Based on its shape,what does the corresponding total cost curve look like?

Accepted Answer

A)  an upward-sloping curve that increases at an increasing rate 
B)  an upward-sloping curve that increases at a decreasing rate 
C)  a downward-sloping curve 
D)  a horizontal straight line 
A)  an upward-sloping curve that increases at an increasing rate 
B)  an upward-sloping curve that increases at a decreasing rate 
C)  a downward-sloping curve 
D)  a horizontal straight line

Question 17

The opportunity cost of capital is an implicit cost almost every business incurs.

Accepted Answer

A) True 
 B)False

Question 18

The total cost to the firm of producing zero units of output is

Accepted Answer

A)  zero in both the short run and the long run. 
B)  its fixed cost in the short run and zero in the long run. 
C)  its fixed cost in both the short run and the long run. 
D)  its variable cost in both the short run and the long run. 
A)  zero in both the short run and the long run. 
B)  its fixed cost in the short run and zero in the long run. 
C)  its fixed cost in both the short run and the long run. 
D)  its variable cost in both the short run and the long run.

Question 19

Scenario 13-17
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-17.Average total cost will be

Accepted Answer

A)  rising at all points. 
B)  falling at all points. 
C)  constant. 
D)  U-shaped. 
A)  rising at all points. 
B)  falling at all points. 
C)  constant. 
D)  U-shaped.

Question 20

A student might describe information about the costs of production as

Accepted Answer

A)  exciting and fresh. 
B)  unimportant for understanding market structure. 
C)  dry and technical. 
D)  vibrant and enthralling. 
A)  exciting and fresh. 
B)  unimportant for understanding market structure. 
C)  dry and technical. 
D)  vibrant and enthralling.

Table 13-1 -Refer to Table 13-1.What is total output when 5 workers are hired?

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Fixed costs can be defined as costs that

For a construction company that builds houses,which of the following costs would be a fixed cost?

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Which of the following statements about costs is correct?

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

Accounting profit is equal to

Marginal cost equals (i)change in total cost divided by change in quantity produced. (ii)change in variable cost divided by change in quantity produced. (iii)the average fixed cost of the current unit.

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

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm's long-run marginal cost decreases as output increases?

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Figure 13-2 -Refer to Figure 13-2.The graph illustrates a typical production function.Based on its shape,what does the corresponding total cost curve look like?

The opportunity cost of capital is an implicit cost almost every business incurs.

The total cost to the firm of producing zero units of output is

Scenario 13-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-17.Average total cost will be

A student might describe information about the costs of production as

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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Exam 13: The Costs of Production.

Table 13-1 -Refer to Table 13-1.What is total output when 5 workers are hired?

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Fixed costs can be defined as costs that

For a construction company that builds houses,which of the following costs would be a fixed cost?

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Which of the following statements about costs is correct?

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

Accounting profit is equal to

Marginal cost equals (i)change in total cost divided by change in quantity produced. (ii)change in variable cost divided by change in quantity produced. (iii)the average fixed cost of the current unit.

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

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm's long-run marginal cost decreases as output increases?

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Figure 13-2 -Refer to Figure 13-2.The graph illustrates a typical production function.Based on its shape,what does the corresponding total cost curve look like?

The opportunity cost of capital is an implicit cost almost every business incurs.

The total cost to the firm of producing zero units of output is

Scenario 13-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-17.Average total cost will be

A student might describe information about the costs of production as

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