Question 1

Interest is considered a(n)

Accepted Answer

A)  explicit cost when the firm pays a bank to borrow money. 
B)  implicit cost when the firm owner uses his or her own funds to buy capital. 
C)  return to entrepreneurship if the firm owner uses her own funds to buy capital. 
D)  form of depreciation if the cost of borrowing increases. 
E)  Both answers A and B are true. 
A)  explicit cost when the firm pays a bank to borrow money. 
B)  implicit cost when the firm owner uses his or her own funds to buy capital. 
C)  return to entrepreneurship if the firm owner uses her own funds to buy capital. 
D)  form of depreciation if the cost of borrowing increases. 
E)  Both answers A and B are true.

Question 2

-The above table gives the total cost schedule for oil changes at the local Jiffy Lube.
a.What is Jiffy Lube's total fixed cost?
b.What is the total variable cost of 2 oil changes?
c.What is the average variable cost of 4 oil changes?
d.What is the average fixed cost of 2 oil changes?
e.What is the marginal cost of the 3rd oil change?

Accepted Answer

a.The total fixed cost is $10.At zero ou

Question 3

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per week) }
\end{array} \
\hline 0 & 0 \
1 & 30 \
2 & 55 \
3 & 75 \
4 & 80 \
5 & 82
\end{array}$$
-Kenya owns a lawn mowing company.His total product schedule is in the above table.Decreasing marginal returns first occur with the

Accepted Answer

A)  first worker. 
B)  second worker. 
C)  third worker. 
D)  fourth worker. 
E)  fifth worker. 
A)  first worker. 
B)  second worker. 
C)  third worker. 
D)  fourth worker. 
E)  fifth worker.

Question 4

$$\begin{array} { | c | c | c | c | c | c | } 
\hline \text { OUTPUT } & \text { Total Cost } & \text { Fixed Cost } & \text { Variable Cost } & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Cost }
\end{array} \
\hline 0 & \$ 100 & \$ 100 & & & \
\hline 1 & \$ 140 & \$ 100 & \$ 40 & \$ 40 & \$ 140 \
\hline 2 & \$ 160 & \$ 100 & \$ 60 & \$ 30 & \$ 80 \
\hline 3 & \$ 200 & \$ 100 & \$ 100 & \$ 33.33 & \$ 67 \
\hline 4 & \$ 240 & \$ 100 & \$ 140 & \$ 35 & \$ 60 \
\hline 5 & \$ 330 & \$ 100 & \$ 230 & \$ 46 & \$ 66 \
\hline
\end{array}$$
-The table above gives the cost schedule for The X Firm.The data show that The X Firm's ________ curve is ________.

Accepted Answer

A)  ATC; U-shaped because the firm fixed costs are spread over larger amounts of output and the firm experiences decreasing marginal returns 
B)  AFC; U-shaped because the firm spreads its fixed costs over larger and large amounts of output 
C)  AVC; always declining because costs are divided across ever-increasing amounts of output 
D)  MC; U-shaped because explicit costs exceed implicit costs 
E)  ATC; U-shaped because output increases as costs increase 
A)  ATC; U-shaped because the firm fixed costs are spread over larger amounts of output and the firm experiences decreasing marginal returns 
B)  AFC; U-shaped because the firm spreads its fixed costs over larger and large amounts of output 
C)  AVC; always declining because costs are divided across ever-increasing amounts of output 
D)  MC; U-shaped because explicit costs exceed implicit costs 
E)  ATC; U-shaped because output increases as costs increase

Question 5

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.When output i

Question 6

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

Accepted Answer

A)  The firm might be making an economic profit but we need more information about implicit costs to know for sure. 
B)  The firm is definitely making an economic profit because it must be minimizing its opportunity cost. 
C)  The firm is incurring an economic loss if implicit costs are $10,000. 
D)  The firm is making a normal profit if implicit costs are $0. 
E)  The firm may be making an economic profit but only if implicit costs are negative. 
A)  The firm might be making an economic profit but we need more information about implicit costs to know for sure. 
B)  The firm is definitely making an economic profit because it must be minimizing its opportunity cost. 
C)  The firm is incurring an economic loss if implicit costs are $10,000. 
D)  The firm is making a normal profit if implicit costs are $0. 
E)  The firm may be making an economic profit but only if implicit costs are negative.

Question 7

The total variable cost curve ________ because ________ as output increases.

Accepted Answer

A)  slopes upward; variable cost increases 
B)  slopes upward; marginal cost increases 
C)  slopes downward; variable cost increases 
D)  slopes downward; marginal cost increases 
E)  is horizontal; fixed cost does not change 
A)  slopes upward; variable cost increases 
B)  slopes upward; marginal cost increases 
C)  slopes downward; variable cost increases 
D)  slopes downward; marginal cost increases 
E)  is horizontal; fixed cost does not change

Question 8

A normal profit is

Accepted Answer

A)  part of a firm's opportunity cost. 
B)  equal to total revenue minus total opportunity cost. 
C)  the same as economic profit. 
D)  the same as accounting profit. 
E)  almost always zero if the company is run efficiently. 
A)  part of a firm's opportunity cost. 
B)  equal to total revenue minus total opportunity cost. 
C)  the same as economic profit. 
D)  the same as accounting profit. 
E)  almost always zero if the company is run efficiently.

Question 9

The short run is a time period that is

Accepted Answer

A)  equal to a day. 
B)  too short to change the amount of labor hired. 
C)  too short to change the size of the firm's plant. 
D)  long enough to change the size of the firm's plant. 
E)  too short to change the amount of any resource the firm employs. 
A)  equal to a day. 
B)  too short to change the amount of labor hired. 
C)  too short to change the size of the firm's plant. 
D)  long enough to change the size of the firm's plant. 
E)  too short to change the amount of any resource the firm employs.

Question 10

Jones Production started business with a small scale plant.Fortunately for Smith,the owner of Jones Production,the business grew rapidly.The table below gives the total costs and the associated output for each year.
a.Complete the table by finding the average cost for each scale.
 $$\begin{array} { c c c c } 
\text { Year } & \text { Total output } & \begin{array} { l } 
\text { Total cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Average cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 100 & 1,000 & - \
2 & 240 & 2,000 & - \
3 & 500 & 4,000 & - \
4 & 1,000 & 8,000 & - \
5 & 1,800 & 16,000 & - \
6 & 2,500 & 32,000 & - \
\hline
\end{array}$$ 
b.Over what range of total product (output)did Jones Production experience economies of scale,constant returns to scale,and diseconomies of scale?

Accepted Answer

\[\begin{array} { c c c c } 
\text { Yea

Question 11

Lauren runs a chili restaurant in San Francisco.Her total revenue last year was $110,000.The rent on her restaurant was $48,000,her labor costs were $42,000,and her materials,food and other variable costs were $20,000.Lauren could have worked as a biologist and earned $50,000 per year.An economist calculates her implicit costs as

Accepted Answer

A)  $150,000. 
B)  $63,000. 
C)  $50,000. 
D)  $110,000. 
E)  $0 because Lauren did not work as a biologist. 
A)  $150,000. 
B)  $63,000. 
C)  $50,000. 
D)  $110,000. 
E)  $0 because Lauren did not work as a biologist.

Question 12

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

Accepted Answer

A)  wages paid to employees 
B)  interest paid to a bank on a building loan 
C)  the cost of using capital an owner donates to the business 
D)  dollars paid to a supplier for materials used in production 
E)  liability insurance payments made only once a year 
A)  wages paid to employees 
B)  interest paid to a bank on a building loan 
C)  the cost of using capital an owner donates to the business 
D)  dollars paid to a supplier for materials used in production 
E)  liability insurance payments made only once a year

Question 13

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve C is the firm's

Accepted Answer

A)  marginal cost curve. 
B)  total cost curve. 
C)  average total cost curve. 
D)  average variable cost curve. 
E)  average fixed cost curve. 
A)  marginal cost curve. 
B)  total cost curve. 
C)  average total cost curve. 
D)  average variable cost curve. 
E)  average fixed cost curve.

Question 14

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (rolls of paper produced per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 27
\end{array}$$
-The table above shows

Accepted Answer

A)  a total product schedule. 
B)  the market for labor. 
C)  a production possibility frontier. 
D)  a supply schedule. 
E)  a demand for labor schedule. 
A)  a total product schedule. 
B)  the market for labor. 
C)  a production possibility frontier. 
D)  a supply schedule. 
E)  a demand for labor schedule.

Question 15

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 28
\end{array}$$
-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the ________ worker is hired,the average product of labor ________ the marginal product of labor.

Accepted Answer

A)  4th; exceeds 
B)  5th; exceeds 
C)  6th; exceeds 
D)  7th; is less than 
E)  7th; equals 
A)  4th; exceeds 
B)  5th; exceeds 
C)  6th; exceeds 
D)  7th; is less than 
E)  7th; equals

Question 16

The marginal product of labor is

Accepted Answer

A)  total product divided by labor. 
B)  the change in total product divided by the increase in labor. 
C)  a measure of labor. 
D)  output that does not meet quality specifications. 
E)  total product minus the quantity of labor. 
A)  total product divided by labor. 
B)  the change in total product divided by the increase in labor. 
C)  a measure of labor. 
D)  output that does not meet quality specifications. 
E)  total product minus the quantity of labor.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (frijoles) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 1,000 \
\hline 5 & 1,000 & 3,000 \
\hline 10 & 3,000 & 5,000 \
\hline 15 & 4,000 & 7,000 \
\hline 20 & 4,500 & 9,000 \
\hline
\end{array}$$
-The above table gives some production and cost information for Flaming Fernando's,a restaurant that sells Fiery Frijoles.What is the average variable cost of producing 1,000 frijoles?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $3,000 
E)  More information is needed to determine the answer. 
A)  $1 
B)  $2 
C)  $3 
D)  $3,000 
E)  More information is needed to determine the answer.

Question 18

The marginal product of labor is the change in

Accepted Answer

A)  total cost from employing one more worker. 
B)  total revenue from employing one more worker. 
C)  average product from employing one more worker. 
D)  total output from employing one more worker. 
E)  total output divided by the change in cost from employing one more worker. 
A)  total cost from employing one more worker. 
B)  total revenue from employing one more worker. 
C)  average product from employing one more worker. 
D)  total output from employing one more worker. 
E)  total output divided by the change in cost from employing one more worker.

Question 19

From a firm's viewpoint,opportunity cost is the

Accepted Answer

A)  best alternative use customers can find for the firm's output. 
B)  cost the firm must pay for the factors of production it employs to attract them from their best alternative use. 
C)  accounting cost of resources. 
D)  price a firm can charge for its output. 
E)  cost of acquiring the opportunity to sell to its customers. 
A)  best alternative use customers can find for the firm's output. 
B)  cost the firm must pay for the factors of production it employs to attract them from their best alternative use. 
C)  accounting cost of resources. 
D)  price a firm can charge for its output. 
E)  cost of acquiring the opportunity to sell to its customers.

Question 20

A cost paid in money is

Accepted Answer

A)  not an opportunity cost. 
B)  an implicit cost and an opportunity cost. 
C)  an explicit cost and an opportunity cost. 
D)  not an accounting cost. 
E)  an explicit cost but not an opportunity cost. 
A)  not an opportunity cost. 
B)  an implicit cost and an opportunity cost. 
C)  an explicit cost and an opportunity cost. 
D)  not an accounting cost. 
E)  an explicit cost but not an opportunity cost.

Interest is considered a(n)

Quantity of labor (workers) Total product (lawns mowed per week) 0 0 1 30 2 55 3 75 4 80 5 82 -Kenya owns a lawn mowing company.His total product schedule is in the above table.Decreasing marginal returns first occur with the

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

The total variable cost curve because as output increases.

A normal profit is

The short run is a time period that is

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

The figure above shows some of a firm's cost curves. -Based on the figure above,curve C is the firm's

Quantity of labor (workers) Total product (rolls of paper produced per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 27 -The table above shows

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the worker is hired,the average product of labor the marginal product of labor.

The marginal product of labor is

The marginal product of labor is the change in

From a firm's viewpoint,opportunity cost is the

A cost paid in money is

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 14: Production and Cost

Interest is considered a(n)

Quantity of labor (workers) Total product (lawns mowed per week) 0 0 1 30 2 55 3 75 4 80 5 82 -Kenya owns a lawn mowing company.His total product schedule is in the above table.Decreasing marginal returns first occur with the

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

The total variable cost curve ________ because ________ as output increases.

A normal profit is

The short run is a time period that is

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

The figure above shows some of a firm's cost curves. -Based on the figure above,curve C is the firm's

Quantity of labor (workers) Total product (rolls of paper produced per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 27 -The table above shows

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the ________ worker is hired,the average product of labor ________ the marginal product of labor.

The marginal product of labor is

The marginal product of labor is the change in

From a firm's viewpoint,opportunity cost is the

A cost paid in money is

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The total variable cost curve because as output increases.

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the worker is hired,the average product of labor the marginal product of labor.