Question 1

If a firm owns the building that it is located in, what is the firm's rental rate?

Accepted Answer

A)  the opportunity cost of renting it to someone else 
B)  the additional output that can be produced with another building 
C)  It has no rental rate because the firm owns the resource. 
D)  the difference between the marginal product of capital and the marginal product of labor 
A)  the opportunity cost of renting it to someone else 
B)  the additional output that can be produced with another building 
C)  It has no rental rate because the firm owns the resource. 
D)  the difference between the marginal product of capital and the marginal product of labor

Question 2

Anju currently earns $70,000 as a data analyst but wants to open a donut shop. She estimates that equipment and rent will be $30,000 per year, labor (other than her own) will cost $50,000 per year, and ingredients will cost $15,000 per year. How much revenue will the donut shop need to earn for her to make an accounting profit? An economic profit?

Accepted Answer

Total accounting costs are $30,000 + $50

Question 3

The cost of a unit of labor is the:

Accepted Answer

A)  rental rate. 
B)  wage. 
C)  profit. 
D)  input. 
A)  rental rate. 
B)  wage. 
C)  profit. 
D)  input.

Question 4

Use the figure Short-Run Graph. For a given level of output, which of the following correctly describes the relationship between these three curves?
​
Figure: Short-Run Graph

Accepted Answer

A)  A + B = C 
B)  A + C = B 
C)  A - C = B 
D)  B + C = A 
A)  A + B = C 
B)  A + C = B 
C)  A - C = B 
D)  B + C = A

Question 5

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 accounting profit?

Accepted Answer

A)  $250,000 
B)  $350,000 
C)  -$200,000 
D)  $150,000 
A)  $250,000 
B)  $350,000 
C)  -$200,000 
D)  $150,000

Question 6

Which of the following is included in the calculation of economic profit that is NOT included in the calculation of accounting profit?

Accepted Answer

A)  total revenue 
B)  explicit cost 
C)  implicit cost 
D)  marginal cost 
A)  total revenue 
B)  explicit cost 
C)  implicit cost 
D)  marginal cost

Question 7

Which of the following MUST be true in order for a firm to make a profit?

Accepted Answer

A)  Price must be greater than average total cost. 
B)  Price must be greater than marginal cost. 
C)  Price must be greater than fixed cost. 
D)  Price must be greater than variable cost. 
A)  Price must be greater than average total cost. 
B)  Price must be greater than marginal cost. 
C)  Price must be greater than fixed cost. 
D)  Price must be greater than variable cost.

Question 8

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

Accepted Answer

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

Question 9

Labor has two tasks at an ice cream shop - scoop ice cream and work the cash register. Use the example of an ice cream store to explain how the marginal product of labor of the first two units of labor increases but then the marginal product of labor of the third unit of labor starts decreasing.

Accepted Answer

When there is just one worker, that work

Question 10

Burgin's Broilers produced one more chicken, and as a result its long-run average total cost increased. What must be true?

Accepted Answer

A)  Burgin's Broilers is experiencing economies of scale when it increases output. 
B)  Burgin's Broilers is experiencing increasing fixed costs. 
C)  Burgin's Broilers is experiencing diseconomies of scale when it increases output. 
D)  Burgin's Broilers is losing money. 
A)  Burgin's Broilers is experiencing economies of scale when it increases output. 
B)  Burgin's Broilers is experiencing increasing fixed costs. 
C)  Burgin's Broilers is experiencing diseconomies of scale when it increases output. 
D)  Burgin's Broilers is losing money.

Question 11

Given the current mix of inputs, a firm's marginal product of labor is 30, and the price of labor is $10. The marginal product of capital is 120, and the price of capital is $30. Is this the cost-minimizing choice of inputs?

Accepted Answer

No, the cost-minimizing choice of inputs

Question 12

When a firm increases output and that results in a decrease in the average total cost of producing a good, the firm is experiencing:

Accepted Answer

A)  decreasing marginal cost. 
B)  increasing average total cost. 
C)  economies of scope. 
D)  economies of scale. 
A)  decreasing marginal cost. 
B)  increasing average total cost. 
C)  economies of scope. 
D)  economies of scale.

Question 13

Roger makes short films. After he rents his film equipment for $20,000, he cannot change that decision. It costs him $5,000 per film for editing, location expenses, and other expenses incurred for each film. What is his variable cost if he produces 10 films?

Accepted Answer

A)  $5,000 
B)  $50,000 
C)  $70,000 
D)  $7,000 
A)  $5,000 
B)  $50,000 
C)  $70,000 
D)  $7,000

Question 14

An automobile manufacturer is currently producing 10,000 cars per month. At the current combination of inputs, the marginal product of labor is 1,000, and the marginal product of capital is 640. The price of another unit of labor is $100, and the price of another unit of capital is $80. Should this firm change its combination of inputs? Explain.

Accepted Answer

Yes, the firm should increase the quanti

Question 15

If total output increases when one more worker is added, then marginal product of labor is:

Accepted Answer

A)  negative. 
B)  positive. 
C)  equal to zero. 
D)  greater than the marginal product of the previous unit. 
A)  negative. 
B)  positive. 
C)  equal to zero. 
D)  greater than the marginal product of the previous unit.

Question 16

Use 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 is the average cost of producing two swings?

Accepted Answer

A)  $2,500 
B)  $5,200 
C)  $2,000 
D)  $2,625 
A)  $2,500 
B)  $5,200 
C)  $2,000 
D)  $2,625

Question 17

Generally, a firm can lower its cost of producing a given level of output by hiring:

Accepted Answer

A)  more of whatever input has the highest marginal product. 
B)  less of what has a higher marginal utility per dollar spent. 
C)  any combination of inputs. 
D)  more of the input with the highest marginal product per dollar spent. 
A)  more of whatever input has the highest marginal product. 
B)  less of what has a higher marginal utility per dollar spent. 
C)  any combination of inputs. 
D)  more of the input with the highest marginal product per dollar spent.

Question 18

The marginal _____ of an input is the increase in output that is gained from employment of an additional unit of that input.

Accepted Answer

A)  revenue product 
B)  revenue 
C)  product 
D)  cost 
A)  revenue product 
B)  revenue 
C)  product 
D)  cost

Question 19

The cost of all inputs that can be changed in the short run are a firm's _____ cost.

Accepted Answer

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

Question 20

When Frank produces 200 hot dogs, his fixed cost is $200, and his variable cost is $500. If he gets a price of $7 per hot dog when he sells them at a ball game, which of the following is true?

Accepted Answer

A)  He is making a profit. 
B)  He is making a loss. 
C)  His fixed costs are increasing. 
D)  His price is less than his marginal cost. 
A)  He is making a profit. 
B)  He is making a loss. 
C)  His fixed costs are increasing. 
D)  His price is less than his marginal cost.

If a firm owns the building that it is located in, what is the firm's rental rate?

The cost of a unit of labor is the:

Use the figure Short-Run Graph. For a given level of output, which of the following correctly describes the relationship between these three curves? Figure: Short-Run Graph

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 accounting profit?

Which of the following is included in the calculation of economic profit that is NOT included in the calculation of accounting profit?

Which of the following MUST be true in order for a firm to make a profit?

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

Labor has two tasks at an ice cream shop - scoop ice cream and work the cash register. Use the example of an ice cream store to explain how the marginal product of labor of the first two units of labor increases but then the marginal product of labor of the third unit of labor starts decreasing.

Burgin's Broilers produced one more chicken, and as a result its long-run average total cost increased. What must be true?

Given the current mix of inputs, a firm's marginal product of labor is 30, and the price of labor is $10. The marginal product of capital is 120, and the price of capital is $30. Is this the cost-minimizing choice of inputs?

When a firm increases output and that results in a decrease in the average total cost of producing a good, the firm is experiencing:

Roger makes short films. After he rents his film equipment for $20,000, he cannot change that decision. It costs him $5,000 per film for editing, location expenses, and other expenses incurred for each film. What is his variable cost if he produces 10 films?

If total output increases when one more worker is added, then marginal product of labor is:

Use 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 is the average cost of producing two swings?

Generally, a firm can lower its cost of producing a given level of output by hiring:

The marginal _____ of an input is the increase in output that is gained from employment of an additional unit of that input.

The cost of all inputs that can be changed in the short run are a firm's _____ cost.

When Frank produces 200 hot dogs, his fixed cost is $200, and his variable cost is $500. If he gets a price of $7 per hot dog when he sells them at a ball game, which of the following is true?

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

If a firm owns the building that it is located in, what is the firm's rental rate?

The cost of a unit of labor is the:

Use the figure Short-Run Graph. For a given level of output, which of the following correctly describes the relationship between these three curves? ​ Figure: Short-Run Graph

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 accounting profit?

Which of the following is included in the calculation of economic profit that is NOT included in the calculation of accounting profit?

Which of the following MUST be true in order for a firm to make a profit?

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

Labor has two tasks at an ice cream shop - scoop ice cream and work the cash register. Use the example of an ice cream store to explain how the marginal product of labor of the first two units of labor increases but then the marginal product of labor of the third unit of labor starts decreasing.

Burgin's Broilers produced one more chicken, and as a result its long-run average total cost increased. What must be true?

Given the current mix of inputs, a firm's marginal product of labor is 30, and the price of labor is $10. The marginal product of capital is 120, and the price of capital is $30. Is this the cost-minimizing choice of inputs?

When a firm increases output and that results in a decrease in the average total cost of producing a good, the firm is experiencing:

Roger makes short films. After he rents his film equipment for $20,000, he cannot change that decision. It costs him $5,000 per film for editing, location expenses, and other expenses incurred for each film. What is his variable cost if he produces 10 films?

If total output increases when one more worker is added, then marginal product of labor is:

Use 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 is the average cost of producing two swings?

Generally, a firm can lower its cost of producing a given level of output by hiring:

The marginal _____ of an input is the increase in output that is gained from employment of an additional unit of that input.

The cost of all inputs that can be changed in the short run are a firm's _____ cost.

When Frank produces 200 hot dogs, his fixed cost is $200, and his variable cost is $500. If he gets a price of $7 per hot dog when he sells them at a ball game, which of the following is true?

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 figure Short-Run Graph. For a given level of output, which of the following correctly describes the relationship between these three curves? Figure: Short-Run Graph

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