Question 1

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing marginal returns. 
E)  decreasing cost of marginal returns. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  decreasing marginal returns. 
E)  decreasing cost of marginal returns. A

Question 2

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.When output is zero,there are no variable costs because there are no variable inputs being employed.However,in the short run there might be fixed resources,in which case the firm would still have some fixed costs it must pay.

Question 3

Lauren runs a chili restaurant in San Francisco.Her total revenue last year was $110,000.The rent on her restaurant was $48,000,her labor costs were $42,000,and her materials,food and other variable costs were $20,000.Lauren could have worked as a biologist and earned $50,000 per year.An economist calculates her implicit costs as

Accepted Answer

A)  $150,000. 
B)  $63,000. 
C)  $50,000. 
D)  $110,000. 
E)  $0 because Lauren did not work as a biologist. 
A)  $150,000. 
B)  $63,000. 
C)  $50,000. 
D)  $110,000. 
E)  $0 because Lauren did not work as a biologist. C

Question 4

-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 5

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

Accepted Answer

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

Question 6

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her total variable cost of producing four pizzas per hour is

Accepted Answer

A)  $20. 
B)  $49. 
C)  $51. 
D)  $71. 
E)  Some amount, but more information is needed to determine this total variable cost. 
A)  $20. 
B)  $49. 
C)  $51. 
D)  $71. 
E)  Some amount, but more information is needed to determine this total variable cost.

Question 7

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

Accepted Answer

A normal profit is the return to entrepr

Question 8

The average product is the greatest in the short run when the

Accepted Answer

A)  total product is maximized. 
B)  marginal product is equal to zero. 
C)  marginal product is maximized. 
D)  marginal product is equal to the average product. 
E)  marginal product is greater than the average product. 
A)  total product is maximized. 
B)  marginal product is equal to zero. 
C)  marginal product is maximized. 
D)  marginal product is equal to the average product. 
E)  marginal product is greater than the average product.

Question 9

-The table above has the total product schedule for an imaginary good called a widget.Each unit of labor costs $25 and the total cost of capital is $100.
a.Use this information to complete the table.In the table,TFC is the total fixed cost,TVC is the total variable cost,TC is the total cost,AFC is the average fixed cost,AVC is the average variable cost,ATC is the average total cost,and MC is the marginal cost.
   
b.Suppose that labor becomes twice as expensive (so that one unit of labor now costs $50)but nothing else changes.Complete the above table with the new cost schedules.If you plotted the cost curves,how would the increased wage rate affect the cost curves?

Accepted Answer

@#IMG-DLM& 
a.The completed table is above.All the

Question 10

Which of the following is an implicit cost in Jim's business venture?
i.the salary Jim could have earned at another job
ii.the interest Jim must pay on the loan he incurred to help open his business
iii.the interest Jim lost when he used his savings to help open his business

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 11

The figure above shows a firm's total product curve.
-Which of the points show efficient production points?

Accepted Answer

A)  All points above the TP curve 
B)  All points on the TP curve 
C)  All the darkened points below the TP curve 
D)  All the points above and on the TP curve 
E)  All the darkened points below and on the TP curve 
A)  All points above the TP curve 
B)  All points on the TP curve 
C)  All the darkened points below the TP curve 
D)  All the points above and on the TP curve 
E)  All the darkened points below and on the TP curve

Question 12

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output,then the marginal product of the 10th worker is

Accepted Answer

A)  1,700 units. 
B)  1,550 units. 
C)  150 units. 
D)  170 units. 
E)  155 units. 
A)  1,700 units. 
B)  1,550 units. 
C)  150 units. 
D)  170 units. 
E)  155 units.

Question 13

What resources can a firm change in the short run? In the long run?

Accepted Answer

In the short run,the firm can change its

Question 14

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the ________ worker is hired,the average product of labor ________ the marginal product of labor.

Accepted Answer

A)  4th; exceeds 
B)  5th; exceeds 
C)  6th; exceeds 
D)  7th; is less than 
E)  7th; equals 
A)  4th; exceeds 
B)  5th; exceeds 
C)  6th; exceeds 
D)  7th; is less than 
E)  7th; equals

Question 15

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 16

The marginal product of labor is the change in

Accepted Answer

A)  total cost from employing one more worker. 
B)  total revenue from employing one more worker. 
C)  average product from employing one more worker. 
D)  total output from employing one more worker. 
E)  total output divided by the change in cost from employing one more worker. 
A)  total cost from employing one more worker. 
B)  total revenue from employing one more worker. 
C)  average product from employing one more worker. 
D)  total output from employing one more worker. 
E)  total output divided by the change in cost from employing one more worker.

Question 17

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

Accepted Answer

Average fixed cost is calculated by divi

Question 18

For a business,opportunity cost measures

Accepted Answer

A)  only the cost of labor and materials. 
B)  only the implicit costs of the business. 
C)  the cost of all the factors of production the firm employs. 
D)  only the explicit costs the firm must pay. 
E)  all of the firm's costs including its normal profit and its economic profit. 
A)  only the cost of labor and materials. 
B)  only the implicit costs of the business. 
C)  the cost of all the factors of production the firm employs. 
D)  only the explicit costs the firm must pay. 
E)  all of the firm's costs including its normal profit and its economic profit.

Question 19

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

Accepted Answer

A)  short-run cost. 
B)  variable cost. 
C)  productivity cost. 
D)  fixed cost. 
E)  marginal cost. 
A)  short-run cost. 
B)  variable cost. 
C)  productivity cost. 
D)  fixed cost. 
E)  marginal cost.

Question 20

The total variable cost curve ________ because ________ as output increases.

Accepted Answer

A)  slopes upward; variable cost increases 
B)  slopes upward; marginal cost increases 
C)  slopes downward; variable cost increases 
D)  slopes downward; marginal cost increases 
E)  is horizontal; fixed cost does not change 
A)  slopes upward; variable cost increases 
B)  slopes upward; marginal cost increases 
C)  slopes downward; variable cost increases 
D)  slopes downward; marginal cost increases 
E)  is horizontal; fixed cost does not change

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

-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.

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her total variable cost of producing four pizzas per hour is

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

The average product is the greatest in the short run when the

Which of the following is an implicit cost in Jim's business venture? i.the salary Jim could have earned at another job ii.the interest Jim must pay on the loan he incurred to help open his business iii.the interest Jim lost when he used his savings to help open his business

The figure above shows a firm's total product curve. -Which of the points show efficient production points?

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output,then the marginal product of the 10th worker is

What resources can a firm change in the short run? In the long run?

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the worker is hired,the average product of labor the marginal product of labor.

Marginal cost equals

The marginal product of labor is the change in

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

For a business,opportunity cost measures

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

The total variable cost curve because as output increases.

Getting Started

The Usand 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

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

-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.

In a figure showing the average total cost curve and the average variable cost curve,the vertical distance between the two curves is equal to the

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her total variable cost of producing four pizzas per hour is

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

The average product is the greatest in the short run when the

Which of the following is an implicit cost in Jim's business venture? i.the salary Jim could have earned at another job ii.the interest Jim must pay on the loan he incurred to help open his business iii.the interest Jim lost when he used his savings to help open his business

The figure above shows a firm's total product curve. -Which of the points show efficient production points?

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output,then the marginal product of the 10th worker is

What resources can a firm change in the short run? In the long run?

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the ________ worker is hired,the average product of labor ________ the marginal product of labor.

Marginal cost equals

The marginal product of labor is the change in

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

For a business,opportunity cost measures

In the short run,a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

The total variable cost curve ________ because ________ as output increases.

Getting Started

The Usand 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 table above shows the total product schedule for Rick's Lawn Service,a yard care company.When the worker is hired,the average product of labor the marginal product of labor.

The total variable cost curve because as output increases.