Question 1

Explicit costs would include:

Accepted Answer

A) rent. 
B) the interest loss of the business owner on money withdrawn from his/her saving account and invested in the business. 
C) the loss of rent on a building the business owner owns and uses in his/her business. 
D) the opportunity costs of the business owner's time. 
E) the use of tools owned by the business owner and dedicated to the business. 
A) rent. 
B) the interest loss of the business owner on money withdrawn from his/her saving account and invested in the business. 
C) the loss of rent on a building the business owner owns and uses in his/her business. 
D) the opportunity costs of the business owner's time. 
E) the use of tools owned by the business owner and dedicated to the business. A

Question 2

If a firm has total revenue of $200 million,explicit costs of $190 million and implicit costs of $10 million,its economic profit is:

Accepted Answer

A) $200 million. 
B) $70 million. 
C) $10 million. 
D) $0 million. 
E) -$10 million. 
A) $200 million. 
B) $70 million. 
C) $10 million. 
D) $0 million. 
E) -$10 million. D

Question 3

Which of the following is true if the total variable cost curve is rising?

Accepted Answer

A) Average fixed cost is increasing. 
B) Marginal cost is decreasing. 
C) Marginal cost is increasing. 
D) Average fixed cost is constant. 
A) Average fixed cost is increasing. 
B) Marginal cost is decreasing. 
C) Marginal cost is increasing. 
D) Average fixed cost is constant. C

Question 4

Marginal product measures the change in:

Accepted Answer

A) total cost brought about by changing production by one unit. 
B) product price brought about by changing production by one unit. 
C) a firm's revenue brought about by changing production by one unit. 
D) the firm's output brought about by employing one additional unit of input. 
E) the firm's profit brought about by employing one more input. 
A) total cost brought about by changing production by one unit. 
B) product price brought about by changing production by one unit. 
C) a firm's revenue brought about by changing production by one unit. 
D) the firm's output brought about by employing one additional unit of input. 
E) the firm's profit brought about by employing one more input.

Question 5

Total cost is equal to total fixed costs plus total variable cost.

Accepted Answer

A) True 
 B)False

Question 6

The short-run production function is based on the assumption that:

Accepted Answer

A) employees have different skills. 
B) employees are paid different wage rates. 
C) all factors of production can be changed. 
D) technology is constant. 
A) employees have different skills. 
B) employees are paid different wage rates. 
C) all factors of production can be changed. 
D) technology is constant.

Question 7

Exhibit 6-3 A marginal product curve
  
-As shown in Exhibit 6-3,what was the marginal product of labour when only one worker was hired?

Accepted Answer

A) 50. 
B) 100. 
C) 150. 
D) 175. 
A) 50. 
B) 100. 
C) 150. 
D) 175.

Question 8

If the total variable cost of producing 5 units of output is $10 and the total variable cost of producing 6 units is $15,the marginal cost of producing the sixth unit is $5.

Accepted Answer

A) True 
 B)False

Question 9

The primary source of scale diseconomies appears to be:

Accepted Answer

A) a firm's inability to acquire quality resources. 
B) too little demand for the firm's product. 
C) consumers who resist dealing with large firms. 
D) division of labour. 
E) the organisational difficulties of managing an ever-larger enterprise. 
A) a firm's inability to acquire quality resources. 
B) too little demand for the firm's product. 
C) consumers who resist dealing with large firms. 
D) division of labour. 
E) the organisational difficulties of managing an ever-larger enterprise.

Question 10

Exhibit 6-6 Cost schedule for firm X
  
-As shown in Exhibit 6-6,the total cost of producing 5 units is:

Accepted Answer

A) $0. 
B) $227. 
C) $250. 
D) $100. 
A) $0. 
B) $227. 
C) $250. 
D) $100.

Question 11

During the course of a week,McDonalds has enough time to hire or lay-off workers,but it does not have enough time to expand its kitchen or add an additional seating area.In this situation,McDonald's:

Accepted Answer

A) has no fixed costs. 
B) is in the short run. 
C) suffers an economic loss. 
D) earns a large profit. 
A) has no fixed costs. 
B) is in the short run. 
C) suffers an economic loss. 
D) earns a large profit.

Question 12

Suppose a firm has total revenue of $500 million,explicit costs of $200 million and implicit costs of $100 million.This firm's economic profit is:

Accepted Answer

A) $200 million. 
B) $300 million. 
C) $700 million. 
D) -$200 million. 
A) $200 million. 
B) $300 million. 
C) $700 million. 
D) -$200 million.

Question 13

Different scales of production
Exhibit 6-9 Cost curves
  
-In Exhibit 6-9,a firm finds that it is experiencing numerous managerial and information problems.The position of its short-run and long-run average total cost curves suggest that it is operating at a production level:

Accepted Answer

A) between 0 and 1000. 
B) between 1000 and 2000. 
C) between 2000 and 3000. 
D) between 3000 and 4000. 
E) where it should shut down immediately. 
A) between 0 and 1000. 
B) between 1000 and 2000. 
C) between 2000 and 3000. 
D) between 3000 and 4000. 
E) where it should shut down immediately.

Question 14

Exhibit 6-7 Short-run cost curves schedule for a pizzeria's hourly production
  
-In Exhibit 6-7,the pizzeria's fixed cost is equal to:

Accepted Answer

A) $0. 
B) $20. 
C) $50. 
D) $70. 
E) $100. 
A) $0. 
B) $20. 
C) $50. 
D) $70. 
E) $100.

Question 15

The marginal curve determines the L-shape of the AVC curve.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 6-2 Production of pizza data
  
-Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the fifth worker is.

Accepted Answer

A) 0 
B) 1 
C) 4 
D) 6 
E) 10 
A) 0 
B) 1 
C) 4 
D) 6 
E) 10

Question 17

The minimum point on the marginal cost curve corresponds to the:

Accepted Answer

A) maximum point on the total cost curve. 
B) minimum point on the total cost curve. 
C) minimum point on the average variable cost curve. 
D) midpoint of the total cost curve. 
A) maximum point on the total cost curve. 
B) minimum point on the total cost curve. 
C) minimum point on the average variable cost curve. 
D) midpoint of the total cost curve.

Question 18

Exhibit 6-3 A marginal product curve
  
-As shown in Exhibit 6-3,what was the marginal product of labour when the second worker was hired?

Accepted Answer

A) 50. 
B) 100. 
C) 150. 
D) 175. 
A) 50. 
B) 100. 
C) 150. 
D) 175.

Question 19

If the wage rate is constant:

Accepted Answer

A) the marginal cost rises as the marginal product of a variable input rises. 
B) the marginal cost is constant as the marginal product of a variable input rises. 
C) the marginal cost follows the shape of the marginal product curve. 
D) the minimum of marginal cost curve corresponds to the maximum of the marginal product curve. 
A) the marginal cost rises as the marginal product of a variable input rises. 
B) the marginal cost is constant as the marginal product of a variable input rises. 
C) the marginal cost follows the shape of the marginal product curve. 
D) the minimum of marginal cost curve corresponds to the maximum of the marginal product curve.

Question 20

Exhibit 6-10 Long-run average cost
  
-In Exhibit 6-10,short-run average total cost,short-run marginal cost and long-run average cost are all equal at which level of output per week?

Accepted Answer

A) 500 units. 
B) 1000 units. 
C) 1500 units. 
D) 2000 units. 
A) 500 units. 
B) 1000 units. 
C) 1500 units. 
D) 2000 units.

Explicit costs would include:

If a firm has total revenue of $200 million,explicit costs of $190 million and implicit costs of $10 million,its economic profit is:

Which of the following is true if the total variable cost curve is rising?

Marginal product measures the change in:

Total cost is equal to total fixed costs plus total variable cost.

The short-run production function is based on the assumption that:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,what was the marginal product of labour when only one worker was hired?

If the total variable cost of producing 5 units of output is $10 and the total variable cost of producing 6 units is $15,the marginal cost of producing the sixth unit is $5.

The primary source of scale diseconomies appears to be:

Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the total cost of producing 5 units is:

During the course of a week,McDonalds has enough time to hire or lay-off workers,but it does not have enough time to expand its kitchen or add an additional seating area.In this situation,McDonald's:

Suppose a firm has total revenue of $500 million,explicit costs of $200 million and implicit costs of $100 million.This firm's economic profit is:

Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,a firm finds that it is experiencing numerous managerial and information problems.The position of its short-run and long-run average total cost curves suggest that it is operating at a production level:

Exhibit 6-7 Short-run cost curves schedule for a pizzeria's hourly production -In Exhibit 6-7,the pizzeria's fixed cost is equal to:

The marginal curve determines the L-shape of the AVC curve.

Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the fifth worker is.

The minimum point on the marginal cost curve corresponds to the:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,what was the marginal product of labour when the second worker was hired?

If the wage rate is constant:

Exhibit 6-10 Long-run average cost -In Exhibit 6-10,short-run average total cost,short-run marginal cost and long-run average cost are all equal at which level of output per week?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 6: Production costs

Explicit costs would include:

If a firm has total revenue of $200 million,explicit costs of $190 million and implicit costs of $10 million,its economic profit is:

Which of the following is true if the total variable cost curve is rising?

Marginal product measures the change in:

Total cost is equal to total fixed costs plus total variable cost.

The short-run production function is based on the assumption that:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,what was the marginal product of labour when only one worker was hired?

If the total variable cost of producing 5 units of output is $10 and the total variable cost of producing 6 units is $15,the marginal cost of producing the sixth unit is $5.

The primary source of scale diseconomies appears to be:

Exhibit 6-6 Cost schedule for firm X -As shown in Exhibit 6-6,the total cost of producing 5 units is:

During the course of a week,McDonalds has enough time to hire or lay-off workers,but it does not have enough time to expand its kitchen or add an additional seating area.In this situation,McDonald's:

Suppose a firm has total revenue of $500 million,explicit costs of $200 million and implicit costs of $100 million.This firm's economic profit is:

Different scales of production Exhibit 6-9 Cost curves -In Exhibit 6-9,a firm finds that it is experiencing numerous managerial and information problems.The position of its short-run and long-run average total cost curves suggest that it is operating at a production level:

Exhibit 6-7 Short-run cost curves schedule for a pizzeria's hourly production -In Exhibit 6-7,the pizzeria's fixed cost is equal to:

The marginal curve determines the L-shape of the AVC curve.

Exhibit 6-2 Production of pizza data -Exhibit 6-2 shows the change in the production of pizzas as more workers are hired.The marginal product of the fifth worker is.

The minimum point on the marginal cost curve corresponds to the:

Exhibit 6-3 A marginal product curve -As shown in Exhibit 6-3,what was the marginal product of labour when the second worker was hired?

If the wage rate is constant:

Exhibit 6-10 Long-run average cost -In Exhibit 6-10,short-run average total cost,short-run marginal cost and long-run average cost are all equal at which level of output per week?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters