Question 1

How is profit calculated?

Accepted Answer

A)  Profit = Total revenue - Total costs 
B)  Profit = Average revenue - Total costs 
C)  Profit = Total revenue - Average costs 
D)  Profit = Average revenue - Average costs 
A)  Profit = Total revenue - Total costs 
B)  Profit = Average revenue - Total costs 
C)  Profit = Total revenue - Average costs 
D)  Profit = Average revenue - Average costs

Question 2

No matter how many kolaches Nora bakes, she has to pay $500 in rent and equipment rental. If she makes 100 kolaches, the costs that change based on quantity are $700. What is Nora's total cost of making 100 kolaches?

Accepted Answer

A)  $700 
B)  $500 
C)  $120 
D)  $1,200 
A)  $700 
B)  $500 
C)  $120 
D)  $1,200

Question 3

The marginal cost curve:

Accepted Answer

A)  is the sum of the total cost curve and the marginal cost curve. 
B)  intersects the average total cost curve at the highest point on the average total cost curve. 
C)  intersects the average total cost curve at the lowest point on the average total cost curve. 
D)  is the sum of the marginal cost curve and the fixed cost curve. 
A)  is the sum of the total cost curve and the marginal cost curve. 
B)  intersects the average total cost curve at the highest point on the average total cost curve. 
C)  intersects the average total cost curve at the lowest point on the average total cost curve. 
D)  is the sum of the marginal cost curve and the fixed cost curve.

Question 4

Ali has a firm that provides accounting services for 300 households. If he hires an executive assistant to assist the accountants but he doesn't hire any more accountants, he can serve 320 households. What is the marginal product of the executive assistant?

Accepted Answer

A)  We cannot tell without knowing what each household is charged. 
B)  20 households 
C)  320 households 
D)  620 households 
A)  We cannot tell without knowing what each household is charged. 
B)  20 households 
C)  320 households 
D)  620 households

Question 5

Each year, a bicycle repair shop receives $120,000 in total revenue. Annual costs include $40,000 for labor, $5,000 in parts, and $30,000 in equipment rental. The owner of the bicycle repair shop owns the building and could rent it out for $12,000 per year. She could be making $50,000 per year if she worked as a project manager instead. What is the owner's accounting profit?

Accepted Answer

A)  $75,000 
B)  $33,000 
C)  -$17,000 
D)  $45,000 
A)  $75,000 
B)  $33,000 
C)  -$17,000 
D)  $45,000

Question 6

A firm's total cost is equal to its:

Accepted Answer

A)  Marginal cost + Variable cost. 
B)  Variable cost + Average cost. 
C)  Profit - Average total cost. 
D)  Fixed cost + Variable cost. 
A)  Marginal cost + Variable cost. 
B)  Variable cost + Average cost. 
C)  Profit - Average total cost. 
D)  Fixed cost + Variable cost.

Question 7

Last year Reed's Financial Services received revenues of $500,000. Labor costs were $150,000, and equipment and building rental was $100,000. The owner Reed could be making $200,000 as a software engineer if he didn't operate the financial services firm. What is Reed's economic profit?

Accepted Answer

A)  $250,000 
B)  $350,000 
C)  -$200,000 
D)  $50,000 
A)  $250,000 
B)  $350,000 
C)  -$200,000 
D)  $50,000

Question 8

Dave's Donuts sold 1,000 donuts. Total revenue was $400, and the cost of producing the 1,000 donuts was $300. What is the profit for Dave's Donuts?

Accepted Answer

A)  $500 
B)  $400 
C)  $1,000 
D)  $100 
A)  $500 
B)  $400 
C)  $1,000 
D)  $100

Question 9

If the additional cost of producing one more of a good is more than the average cost of producing one more good, then marginal cost is:

Accepted Answer

A)  decreasing. 
B)  equal to average total cost. 
C)  equal to zero. 
D)  increasing. 
A)  decreasing. 
B)  equal to average total cost. 
C)  equal to zero. 
D)  increasing.

Question 10

Alex's total cost to mow 10 lawns is $500. If he spends $400 on gas, labor, and other costs that change when quantity changes, what is his fixed cost?

Accepted Answer

A)  $100 
B)  $500 
C)  $400 
D)  $90 
A)  $100 
B)  $500 
C)  $400 
D)  $90

Question 11

If Anu takes on one more client, the marginal cost of serving that client is $100, but the average cost will be $200. Which of the following statements is FALSE based on this information?

Accepted Answer

A)  If she takes on one more client, the quantity produced is to the left of where marginal cost and average total cost intersect. 
B)  If she can sell her services for $250, she will make a profit. 
C)  The quantity where marginal cost and average total cost intersect is less than she is currently producing. 
D)  If she serves one fewer client instead, the marginal cost will still be lower than her average total cost. 
A)  If she takes on one more client, the quantity produced is to the left of where marginal cost and average total cost intersect. 
B)  If she can sell her services for $250, she will make a profit. 
C)  The quantity where marginal cost and average total cost intersect is less than she is currently producing. 
D)  If she serves one fewer client instead, the marginal cost will still be lower than her average total cost.

Question 12

Use the table The Cost of Swing Sets. Eleanor's costs of producing swing sets are given in this table, but the labels for several columns are missing. What column represents Eleanor's total cost?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

Fatima produces ceramics and purchased a kiln for $5,000. She can sell ceramic mugs at festivals for $5 each, and the cost of materials and labor used to produce each mug is $4. She knows that she can sell $4,000 worth of mugs next year. Should Fatima produce mugs? Explain.

Accepted Answer

She should produce mugs. The additional

Question 14

What is true about sunk costs?

Accepted Answer

A)  They apply only to consumers. 
B)  They apply only to producers. 
C)  They aren't part of a firm's decision making. 
D)  They can be recovered in the long run. 
A)  They apply only to consumers. 
B)  They apply only to producers. 
C)  They aren't part of a firm's decision making. 
D)  They can be recovered in the long run.

Question 15

The cost minimizing combination of inputs is the combination:

Accepted Answer

A)  that minimizes the rental rate and the wage rate. 
B)  where the marginal product of each input relative to its cost is equal. 
C)  that produces the highest possible quantity without regard to cost. 
D)  where the marginal product of labor is equal to zero. 
A)  that minimizes the rental rate and the wage rate. 
B)  where the marginal product of each input relative to its cost is equal. 
C)  that produces the highest possible quantity without regard to cost. 
D)  where the marginal product of labor is equal to zero.

Question 16

Use the table Workers and Buns Produced. What is the marginal product of the fifth worker?
​

Accepted Answer

A)  5 
B)  205 
C)  30 
D)  10 
A)  5 
B)  205 
C)  30 
D)  10

Question 17

Henrietta's fixed cost of catering meals is $1,000. She spends $14,000 on the cost of food to make meals and labor when she caters 100 meals. Which of the following is true if the price that she gets for catering a meal is $10?

Accepted Answer

A)  She is making a profit. 
B)  She is making a loss. 
C)  Her price is higher than her average total cost. 
D)  She can reduce the fixed cost of catering meals in the short run. 
A)  She is making a profit. 
B)  She is making a loss. 
C)  Her price is higher than her average total cost. 
D)  She can reduce the fixed cost of catering meals in the short run.

Question 18

Melanie is a freelance writer. If she buys a second screen for her computer, she can increase the articles she writes by 20 articles per week. What do these 20 articles represent?

Accepted Answer

A)  the marginal product of labor 
B)  the average product of labor 
C)  the production function 
D)  the marginal product of capital 
A)  the marginal product of labor 
B)  the average product of labor 
C)  the production function 
D)  the marginal product of capital

Question 19

Use the figure Short-Run Graph. The curve labeled B represents the _____ curve.
​
Figure: Short-Run Graph

Accepted Answer

A)  total cost 
B)  fixed cost 
C)  total output 
D)  variable cost 
A)  total cost 
B)  fixed cost 
C)  total output 
D)  variable cost

Question 20

The cost of inputs that cannot be changed in the short run is the _____ cost.

Accepted Answer

A)  marginal 
B)  average total 
C)  fixed 
D)  variable 
A)  marginal 
B)  average total 
C)  fixed 
D)  variable

How is profit calculated?

No matter how many kolaches Nora bakes, she has to pay $500 in rent and equipment rental. If she makes 100 kolaches, the costs that change based on quantity are $700. What is Nora's total cost of making 100 kolaches?

The marginal cost curve:

Ali has a firm that provides accounting services for 300 households. If he hires an executive assistant to assist the accountants but he doesn't hire any more accountants, he can serve 320 households. What is the marginal product of the executive assistant?

A firm's total cost is equal to its:

Last year Reed's Financial Services received revenues of $500,000. Labor costs were $150,000, and equipment and building rental was $100,000. The owner Reed could be making $200,000 as a software engineer if he didn't operate the financial services firm. What is Reed's economic profit?

Dave's Donuts sold 1,000 donuts. Total revenue was $400, and the cost of producing the 1,000 donuts was $300. What is the profit for Dave's Donuts?

If the additional cost of producing one more of a good is more than the average cost of producing one more good, then marginal cost is:

Alex's total cost to mow 10 lawns is $500. If he spends $400 on gas, labor, and other costs that change when quantity changes, what is his fixed cost?

If Anu takes on one more client, the marginal cost of serving that client is $100, but the average cost will be $200. Which of the following statements is FALSE based on this information?

Use the table The Cost of Swing Sets. Eleanor's costs of producing swing sets are given in this table, but the labels for several columns are missing. What column represents Eleanor's total cost?

Fatima produces ceramics and purchased a kiln for $5,000. She can sell ceramic mugs at festivals for $5 each, and the cost of materials and labor used to produce each mug is $4. She knows that she can sell $4,000 worth of mugs next year. Should Fatima produce mugs? Explain.

What is true about sunk costs?

The cost minimizing combination of inputs is the combination:

Use the table Workers and Buns Produced. What is the marginal product of the fifth worker?

Henrietta's fixed cost of catering meals is $1,000. She spends $14,000 on the cost of food to make meals and labor when she caters 100 meals. Which of the following is true if the price that she gets for catering a meal is $10?

Melanie is a freelance writer. If she buys a second screen for her computer, she can increase the articles she writes by 20 articles per week. What do these 20 articles represent?

Use the figure Short-Run Graph. The curve labeled B represents the _____ curve. Figure: Short-Run Graph

The cost of inputs that cannot be changed in the short run is the _____ cost.

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 8: Production Costs

How is profit calculated?

No matter how many kolaches Nora bakes, she has to pay $500 in rent and equipment rental. If she makes 100 kolaches, the costs that change based on quantity are $700. What is Nora's total cost of making 100 kolaches?

The marginal cost curve:

Ali has a firm that provides accounting services for 300 households. If he hires an executive assistant to assist the accountants but he doesn't hire any more accountants, he can serve 320 households. What is the marginal product of the executive assistant?

A firm's total cost is equal to its:

Last year Reed's Financial Services received revenues of $500,000. Labor costs were $150,000, and equipment and building rental was $100,000. The owner Reed could be making $200,000 as a software engineer if he didn't operate the financial services firm. What is Reed's economic profit?

Dave's Donuts sold 1,000 donuts. Total revenue was $400, and the cost of producing the 1,000 donuts was $300. What is the profit for Dave's Donuts?

If the additional cost of producing one more of a good is more than the average cost of producing one more good, then marginal cost is:

Alex's total cost to mow 10 lawns is $500. If he spends $400 on gas, labor, and other costs that change when quantity changes, what is his fixed cost?

If Anu takes on one more client, the marginal cost of serving that client is $100, but the average cost will be $200. Which of the following statements is FALSE based on this information?

Use the table The Cost of Swing Sets. Eleanor's costs of producing swing sets are given in this table, but the labels for several columns are missing. What column represents Eleanor's total cost?

Fatima produces ceramics and purchased a kiln for $5,000. She can sell ceramic mugs at festivals for $5 each, and the cost of materials and labor used to produce each mug is $4. She knows that she can sell $4,000 worth of mugs next year. Should Fatima produce mugs? Explain.

What is true about sunk costs?

The cost minimizing combination of inputs is the combination:

Use the table Workers and Buns Produced. What is the marginal product of the fifth worker? ​

Henrietta's fixed cost of catering meals is $1,000. She spends $14,000 on the cost of food to make meals and labor when she caters 100 meals. Which of the following is true if the price that she gets for catering a meal is $10?

Melanie is a freelance writer. If she buys a second screen for her computer, she can increase the articles she writes by 20 articles per week. What do these 20 articles represent?

Use the figure Short-Run Graph. The curve labeled B represents the _____ curve. ​ Figure: Short-Run Graph

The cost of inputs that cannot be changed in the short run is the _____ cost.

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Use the table Workers and Buns Produced. What is the marginal product of the fifth worker?

Use the figure Short-Run Graph. The curve labeled B represents the _____ curve. Figure: Short-Run Graph