Question 1

Because the amount of labor a firm employs can be changed,the cost of labor is known as

Accepted Answer

A)  minimum cost. 
B)  variable cost. 
C)  maximum cost. 
D)  fixed cost. 
E)  an unavoidable cost. 
A)  minimum cost. 
B)  variable cost. 
C)  maximum cost. 
D)  fixed cost. 
E)  an unavoidable cost.

Question 2

A firm's total revenue minus its total opportunity cost is called its

Accepted Answer

A)  accounting profit. 
B)  normal profit. 
C)  economic profit. 
D)  abnormal profit. 
E)  entrepreneur's profit. 
A)  accounting profit. 
B)  normal profit. 
C)  economic profit. 
D)  abnormal profit. 
E)  entrepreneur's profit.

Question 3

What is the difference between decreasing marginal returns and negative marginal returns?

Accepted Answer

Decreasing marginal returns occur when t

Question 4

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

Accepted Answer

The normal profit is

Question 5

The long run is a time period that is

Accepted Answer

A)  five years or longer. 
B)  long enough to change the amount of labor employed. 
C)  long enough to change the size of the firm's plant and all other inputs. 
D)  long enough to change the amount of labor employed but not to change the size of the plant. 
E)  None of the above answers describes the long run. 
A)  five years or longer. 
B)  long enough to change the amount of labor employed. 
C)  long enough to change the size of the firm's plant and all other inputs. 
D)  long enough to change the amount of labor employed but not to change the size of the plant. 
E)  None of the above answers describes the long run.

Question 6

Diseconomies of scale is

Accepted Answer

A)  a short run phenomenon. 
B)  the result of decreasing marginal returns. 
C)  a long run phenomenon. 
D)  the result of increasing marginal returns. 
E)  possible only when the firm's plant size is fixed. 
A)  a short run phenomenon. 
B)  the result of decreasing marginal returns. 
C)  a long run phenomenon. 
D)  the result of increasing marginal returns. 
E)  possible only when the firm's plant size is fixed.

Question 7

-The above figure represents the average total cost curves of a wheat farmer.
a.Which average total cost curve has the lowest average total cost of producing 30,000 bushels of wheat?
b.Over what range of output is the farmer experiencing economies of scale?
c.Over what range of output is the farmer experiencing diseconomies of scale?
d.Which average total cost curve has the lowest possible average cost of production?
e.Which average total cost curve represents the largest plant?

Accepted Answer

a.ATC₃ has the lowest average total cost

Question 8

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

Accepted Answer

A)  $250,000 
B)  $200,000 
C)  $190,000 
D)  $167,000 
E)  $180,000 
A)  $250,000 
B)  $200,000 
C)  $190,000 
D)  $167,000 
E)  $180,000

Question 9

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

Accepted Answer

The drivers' wages are a variable cost b

Question 10

At the Punjab Bakery,two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour.The marginal product of the third worker is

Accepted Answer

A)  18 cakes, and the average product for three workers is 6 cakes. 
B)  9 cakes and is equal to the average product. 
C)  4 cakes, and the average product for three workers is 6 cakes. 
D)  32 cakes, and the average product for three workers is 9 cakes. 
E)  6 cakes, and the average product for three workers is also 6 cakes. 
A)  18 cakes, and the average product for three workers is 6 cakes. 
B)  9 cakes and is equal to the average product. 
C)  4 cakes, and the average product for three workers is 6 cakes. 
D)  32 cakes, and the average product for three workers is 9 cakes. 
E)  6 cakes, and the average product for three workers is also 6 cakes.

Question 11

Which of the following costs can be positive when output is zero?

Accepted Answer

A)  average variable cost 
B)  total variable cost 
C)  marginal cost 
D)  total fixed cost 
E)  None of the above because when output is zero there are no costs. 
A)  average variable cost 
B)  total variable cost 
C)  marginal cost 
D)  total fixed cost 
E)  None of the above because when output is zero there are no costs.

Question 12

The vertical distance between the total cost curve and the total variable cost curve ________ as output increases and the vertical distance between the average total cost curve and average variable cost curve ________ as output increases.

Accepted Answer

A)  is constant; decreases 
B)  decreases; is constant 
C)  increases; decreases 
D)  decreases; increases 
E)  decreases; decreases 
A)  is constant; decreases 
B)  decreases; is constant 
C)  increases; decreases 
D)  decreases; increases 
E)  decreases; decreases

Question 13

Moving along the total product curve,which of the following is held constant?

Accepted Answer

A)  quantity of labor 
B)  total product 
C)  technology 
D)  total cost 
E)  None of the above answers is correct. 
A)  quantity of labor 
B)  total product 
C)  technology 
D)  total cost 
E)  None of the above answers is correct.

Question 14

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Accepted Answer

A)  increasing marginal returns 
B)  diseconomies of scale 
C)  economies of scale 
D)  random luck 
E)  decreasing cost of marginal returns 
A)  increasing marginal returns 
B)  diseconomies of scale 
C)  economies of scale 
D)  random luck 
E)  decreasing cost of marginal returns

Question 15

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Accepted Answer

A technological change that increases pr

Question 16

Which of the following is a fixed cost for ACME manufacturing?

Accepted Answer

A)  wages paid to labor 
B)  the annual fire and theft insurance premiums 
C)  the utility bill 
D)  raw material costs 
E)  the cost of shipping its product to market 
A)  wages paid to labor 
B)  the annual fire and theft insurance premiums 
C)  the utility bill 
D)  raw material costs 
E)  the cost of shipping its product to market

Question 17

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (dogs groomed per week) }
\end{array} \
\hline 0 & 0 \
1 & 40 \
2 & 100 \
3 & 150 \
4 & 190 \
5 & 220 \
6 & 240
\end{array}$$
-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her total cost equals

Accepted Answer

A)  $2,400. 
B)  $300. 
C)  $7.50. 
D)  $10.00. 
E)  $1,800. 
A)  $2,400. 
B)  $300. 
C)  $7.50. 
D)  $10.00. 
E)  $1,800.

Question 18

Marginal cost equals

Accepted Answer

A)  total cost minus total variable cost. 
B)  total fixed cost divided by total output. 
C)  total variable cost divided by total output. 
D)  the change in total cost that results from a one-unit increase in output. 
E)  the change in fixed cost that results from a one-unit increase in output. 
A)  total cost minus total variable cost. 
B)  total fixed cost divided by total output. 
C)  total variable cost divided by total output. 
D)  the change in total cost that results from a one-unit increase in output. 
E)  the change in fixed cost that results from a one-unit increase in output.

Question 19

In the short run,total variable cost

Accepted Answer

A)  includes the cost of capital. 
B)  includes the cost of labor. 
C)  includes both the cost of capital and of labor. 
D)  does not change when production changes. 
E)  is positive when output is zero. 
A)  includes the cost of capital. 
B)  includes the cost of labor. 
C)  includes both the cost of capital and of labor. 
D)  does not change when production changes. 
E)  is positive when output is zero.

Question 20

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (dogs groomed per week) }
\end{array} \
\hline 0 & 0 \
1 & 40 \
2 & 100 \
3 & 150 \
4 & 190 \
5 & 220 \
6 & 240
\end{array}$$
-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average fixed cost equals

Accepted Answer

A)  $600. 
B)  $2.50. 
C)  $7.50. 
D)  $10.00. 
E)  $6.00. 
A)  $600. 
B)  $2.50. 
C)  $7.50. 
D)  $10.00. 
E)  $6.00.

Because the amount of labor a firm employs can be changed,the cost of labor is known as

A firm's total revenue minus its total opportunity cost is called its

What is the difference between decreasing marginal returns and negative marginal returns?

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

The long run is a time period that is

Diseconomies of scale is

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

At the Punjab Bakery,two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour.The marginal product of the third worker is

Which of the following costs can be positive when output is zero?

The vertical distance between the total cost curve and the total variable cost curve as output increases and the vertical distance between the average total cost curve and average variable cost curve as output increases.

Moving along the total product curve,which of the following is held constant?

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Which of the following is a fixed cost for ACME manufacturing?

Marginal cost equals

In the short run,total variable cost

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

Because the amount of labor a firm employs can be changed,the cost of labor is known as

A firm's total revenue minus its total opportunity cost is called its

What is the difference between decreasing marginal returns and negative marginal returns?

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

The long run is a time period that is

Diseconomies of scale is

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

At the Punjab Bakery,two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour.The marginal product of the third worker is

Which of the following costs can be positive when output is zero?

The vertical distance between the total cost curve and the total variable cost curve ________ as output increases and the vertical distance between the average total cost curve and average variable cost curve ________ as output increases.

Moving along the total product curve,which of the following is held constant?

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Which of the following is a fixed cost for ACME manufacturing?

Marginal cost equals

In the short run,total variable cost

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 vertical distance between the total cost curve and the total variable cost curve as output increases and the vertical distance between the average total cost curve and average variable cost curve as output increases.