Question 1

When the average product is at its maximum,

Accepted Answer

A)  the marginal product is increasing as output increases. 
B)  the marginal product is negative. 
C)  it is equal to the marginal product. 
D)  total product is also at its maximum. 
E)  total product is at its minimum. 
A)  the marginal product is increasing as output increases. 
B)  the marginal product is negative. 
C)  it is equal to the marginal product. 
D)  total product is also at its maximum. 
E)  total product is at its minimum.

Question 2

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

Accepted Answer

A)  $1000 
B)  $8000 
C)  $9000 
D)  $2,000 
E)  More information is needed to determine the answer. 
A)  $1000 
B)  $8000 
C)  $9000 
D)  $2,000 
E)  More information is needed to determine the answer.

Question 3

Jessica is a young doctor who has just started her own practice.Her previous position paid her $80,000 a year.For office space,she uses a building which she owns and which she has rented in the past for $40,000 a year.Her total revenue from her new practice is $250,000.She pays $50,000 to other firms for materials and supplies,and she pays $40,000 in wages to her office nurse.Assume that Jessica's building and equipment do not depreciate and that her normal profit is $20,000.
a.Which of Jessica's costs are explicit costs and what is their total?
b.Which of Jessica's costs are implicit costs and what is their total?
c.What is the opportunity cost of all factors of production employed by Jessica?
d.What is Jessica's economic profit?

Accepted Answer

a.Jessica's explicit costs are the wages

Question 4

Increasing marginal returns always occurs when the

Accepted Answer

A)  marginal product of an additional worker exceeds the marginal product of the previous worker. 
B)  average product of an additional worker exceeds the average product of the previous worker. 
C)  marginal product of an additional worker is less than the marginal product of the previous worker. 
D)  average product of an additional worker is less than the average product of the previous worker. 
E)  marginal product of an additional worker exceeds the average product of the previous worker. 
A)  marginal product of an additional worker exceeds the marginal product of the previous worker. 
B)  average product of an additional worker exceeds the average product of the previous worker. 
C)  marginal product of an additional worker is less than the marginal product of the previous worker. 
D)  average product of an additional worker is less than the average product of the previous worker. 
E)  marginal product of an additional worker exceeds the average product of the previous worker.

Question 5

The cost that does not change as output changes is

Accepted Answer

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

Question 6

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

Accepted Answer

The long-run average cost curv

Question 7

If Melissa owns a software company that incurs no fixed costs,then

Accepted Answer

A)  her total cost equals her total variable cost. 
B)  she will earn an economic profit. 
C)  her total variable cost is less than her total cost. 
D)  her total cost equals zero. 
E)  her marginal cost must equal zero. 
A)  her total cost equals her total variable cost. 
B)  she will earn an economic profit. 
C)  her total variable cost is less than her total cost. 
D)  her total cost equals zero. 
E)  her marginal cost must equal zero.

Question 8

Rufus runs a skunk-skinning service in West Virginia.He employs skinners at a wage rate of $240 a week for each one.He leases the shack where his workers work for $200 per week.The rent is fixed for the next two years.Last week his 10 employees managed to skin a total of 300 skunks.
a.What is the average product of labor for Rufus's company?
b.What is Rufus' total variable cost per week?
c.What is the average variable cost for Rufus's company?
d.If Rufus adds his brother Jethro to his staff,at a wage rate of $240 a week,and his company can now skin 310 skunks per week,what is Rufus's new average variable cost?

Accepted Answer

a.The average product of labor is 30 sku

Question 9

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

Accepted Answer

A)  80 
B)  25 
C)  20 
D)  5 
E)  320 
A)  80 
B)  25 
C)  20 
D)  5 
E)  320

Question 10

If 6 workers can wash 42 cars a day and 7 workers can wash 50 cars a day,then the marginal product of the 7th worker equals

Accepted Answer

A)  7.1 cars a day. 
B)  7 cars a day. 
C)  42 cars a day. 
D)  50 cars a day. 
E)  8 cars a day. 
A)  7.1 cars a day. 
B)  7 cars a day. 
C)  42 cars a day. 
D)  50 cars a day. 
E)  8 cars a day.

Question 11

________ cost is defined as a cost of production that does not entail a direct money payment.

Accepted Answer

A)  An explicit 
B)  An implicit 
C)  A total 
D)  A fixed 
E)  A marginal 
A)  An explicit 
B)  An implicit 
C)  A total 
D)  A fixed 
E)  A marginal

Question 12

Average variable cost equals

Accepted Answer

A)  fixed cost divided by output. 
B)  total variable cost divided by output. 
C)  marginal cost divided by output. 
D)  marginal cost plus fixed cost. 
E)  marginal cost multiplied by output. 
A)  fixed cost divided by output. 
B)  total variable cost divided by output. 
C)  marginal cost divided by output. 
D)  marginal cost plus fixed cost. 
E)  marginal cost multiplied by output.

Question 13

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

Accepted Answer

A)  a minimized 
B)  a maximized 
C)  an explicit 
D)  an implicit 
E)  a total 
A)  a minimized 
B)  a maximized 
C)  an explicit 
D)  an implicit 
E)  a total

Question 14

What is the difference between a normal profit and an economic profit?

Accepted Answer

A normal profit is the return to entrepr

Question 15

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Output } \
\text { (pizzas per hour) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 20 \
1 & 35 \
2 & 49 \
3 & 61 \
4 & 71 \
5 & 79 \
6 & 85 \
\hline
\end{array}$$
-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her marginal cost of producing the fifth pizza is

Accepted Answer

A)  $8. 
B)  between $8.01 and $10.00. 
C)  between $10.01 and $14.00. 
D)  between $14.01 and $78.00. 
E)  more than $78.01. 
A)  $8. 
B)  between $8.01 and $10.00. 
C)  between $10.01 and $14.00. 
D)  between $14.01 and $78.00. 
E)  more than $78.01.

Question 16

Average product is equal to

Accepted Answer

A)  marginal product + total product. 
B)  total product ÷ marginal product. 
C)  total product ÷ quantity of labor. 
D)  total product × quantity of labor. 
E)  marginal product × quantity of labor. 
A)  marginal product + total product. 
B)  total product ÷ marginal product. 
C)  total product ÷ quantity of labor. 
D)  total product × quantity of labor. 
E)  marginal product × quantity of labor.

Question 17

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

Accepted Answer

A)  end when the fourth worker is hired. 
B)  occur at all levels of employment. 
C)  occur as long as output increases. 
D)  end when the second worker is hired. 
E)  never occur. 
A)  end when the fourth worker is hired. 
B)  occur at all levels of employment. 
C)  occur as long as output increases. 
D)  end when the second worker is hired. 
E)  never occur.

Question 18

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

Accepted Answer

A)  80 
B)  25 
C)  20 
D)  5 
E)  320 
A)  80 
B)  25 
C)  20 
D)  5 
E)  320

Question 19

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Accepted Answer

The long-run average cost curve shows th

Question 20

What are economies of scale? What is the main source of economies of scale?

Accepted Answer

Economies of scale are features of the f

When the average product is at its maximum,

Increasing marginal returns always occurs when the

The cost that does not change as output changes is

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

If Melissa owns a software company that incurs no fixed costs,then

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.When 4 workers are employed,the average product is ________ lawns mowed per week.

If 6 workers can wash 42 cars a day and 7 workers can wash 50 cars a day,then the marginal product of the 7th worker equals

________ cost is defined as a cost of production that does not entail a direct money payment.

Average variable cost equals

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

What is the difference between a normal profit and an economic profit?

Output (pizzas per hour) Total cost (dollars) 0 20 1 35 2 49 3 61 4 71 5 79 6 85 -Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her marginal cost of producing the fifth pizza is

Average product is equal to

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.Increasing marginal returns

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.The marginal product of the fourth worker is ________ lawns mowed per week.

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

What are economies of scale? What is the main source of economies of scale?

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

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Exam 14: Production and Cost

When the average product is at its maximum,

Increasing marginal returns always occurs when the

The cost that does not change as output changes is

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

If Melissa owns a software company that incurs no fixed costs,then

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.When 4 workers are employed,the average product is ________ lawns mowed per week.

If 6 workers can wash 42 cars a day and 7 workers can wash 50 cars a day,then the marginal product of the 7th worker equals

________ cost is defined as a cost of production that does not entail a direct money payment.

Average variable cost equals

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

What is the difference between a normal profit and an economic profit?

Output (pizzas per hour) Total cost (dollars) 0 20 1 35 2 49 3 61 4 71 5 79 6 85 -Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her marginal cost of producing the fifth pizza is

Average product is equal to

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.Increasing marginal returns

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.The marginal product of the fourth worker is ________ lawns mowed per week.

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

What are economies of scale? What is the main source of economies of scale?

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