Question 1

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 2

The short run is a time period during which

Accepted Answer

A)  some of the firm's resources are fixed. 
B)  all of the firm's resources are fixed. 
C)  all of the firm's resources are variable. 
D)  the fixed cost equals zero. 
E)  the firm cannot increase its output. 
A)  some of the firm's resources are fixed. 
B)  all of the firm's resources are fixed. 
C)  all of the firm's resources are variable. 
D)  the fixed cost equals zero. 
E)  the firm cannot increase its output.

Question 3

-In the above figure,curve A is the ________ curve and curve C is the ________ curve.

Accepted Answer

A)  total variable cost; total fixed cost 
B)  total cost; total fixed cost 
C)  total fixed cost; total variable cost 
D)  total cost; total variable cost 
E)  total variable cost; total cost 
A)  total variable cost; total fixed cost 
B)  total cost; total fixed cost 
C)  total fixed cost; total variable cost 
D)  total cost; total variable cost 
E)  total variable cost; total cost

Question 4

Acme produces rocket shoes for use by slow coyotes.Acme's total cost schedule is given in the table below.Acme's total fixed cost is $12.Complete the table.(In the table,TFC is the total fixed cost,TVC is the total variable cost,AFC is the average fixed cost,AVC is the average variable cost,and ATC is the average total cost.)

Accepted Answer

@#IMG-DLM& The compl

Question 5

The primary goal of a business firm is to

Accepted Answer

A)  promote fairness. 
B)  make a quality product. 
C)  promote workforce job satisfaction. 
D)  maximize profit. 
E)  increase its production. 
A)  promote fairness. 
B)  make a quality product. 
C)  promote workforce job satisfaction. 
D)  maximize profit. 
E)  increase its production.

Question 6

Which of the following curves are U-shaped?
i.average variable cost curve
ii.average fixed cost curve
iii.average total cost curve

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii, and iii 
E)  Only ii 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii, and iii 
E)  Only ii

Question 7

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 8

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

Accepted Answer

The firm is experien

Question 9

Average total cost equals

Accepted Answer

A)  the change in total cost divided by the change in output. 
B)  total fixed cost divided by output. 
C)  average fixed cost plus average variable cost. 
D)  total cost minus total variable cost. 
E)  average fixed cost plus average variable cost plus marginal cost. 
A)  the change in total cost divided by the change in output. 
B)  total fixed cost divided by output. 
C)  average fixed cost plus average variable cost. 
D)  total cost minus total variable cost. 
E)  average fixed cost plus average variable cost plus marginal cost.

Question 10

As output increases,economies of scale occur when the

Accepted Answer

A)  long-run average cost increases. 
B)  long-run average cost decreases. 
C)  short-run average total cost decreases. 
D)  long-run average cost stays constant. 
E)  long-run fixed cost decreases. 
A)  long-run average cost increases. 
B)  long-run average cost decreases. 
C)  short-run average total cost decreases. 
D)  long-run average cost stays constant. 
E)  long-run fixed cost decreases.

Question 11

Suppose that a firm earned $500,000 in total revenue.At the same time,it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000.The economic profit earned by the firm equals

Accepted Answer

A)  $275,000. 
B)  $175,000. 
C)  $50,000. 
D)  $200,000. 
E)  $500,000. 
A)  $275,000. 
B)  $175,000. 
C)  $50,000. 
D)  $200,000. 
E)  $500,000.

Question 12

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 13

Marginal cost is equal to

Accepted Answer

A)  the total cost of a firm's production. 
B)  total cost minus fixed cost. 
C)  a cost that is not related to the quantity produced. 
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)  the total cost of a firm's production. 
B)  total cost minus fixed cost. 
C)  a cost that is not related to the quantity produced. 
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 14

The marginal cost curve intersects the ________ curves at their ________ points.

Accepted Answer

A)  average total cost and average fixed cost; minimum 
B)  average product and marginal product; maximum 
C)  average variable cost and total variable cost; maximum 
D)  average total cost and average variable cost; minimum 
E)  average product and marginal product; minimum 
A)  average total cost and average fixed cost; minimum 
B)  average product and marginal product; maximum 
C)  average variable cost and total variable cost; maximum 
D)  average total cost and average variable cost; minimum 
E)  average product and marginal product; minimum

Question 15

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve B is the firm's

Accepted Answer

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

Question 16

Decreasing marginal returns

Accepted Answer

A)  can be avoided if a firm watches costs. 
B)  affect all firms, but at different production levels. 
C)  affect all firms at the same level of production. 
D)  disappear when the firm produces a large enough level of output. 
E)  mean that the average product of labor starts as a negative number and then becomes positive. 
A)  can be avoided if a firm watches costs. 
B)  affect all firms, but at different production levels. 
C)  affect all firms at the same level of production. 
D)  disappear when the firm produces a large enough level of output. 
E)  mean that the average product of labor starts as a negative number and then becomes positive.

Question 17

Ayanna grows herbs.Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker.This year she doubled her land to 500 square feet,doubled her workers to 2,and grew 4,500 pounds of herbs.She sells her rare,organic herbs for $50 a pound.She pays her a worker $25,000 a year and rents her land for $100 per square foot for a year.These are her only costs.
a.What was Ayanna's total cost last year and this year?
b.What was Ayanna's average total cost last year and this year?
c.Did Ayanna experience economies or diseconomies of scale?

Accepted Answer

a.Ayanna's total cost last year was $50,

Question 18

Jake opens a pig farm in Idaho.To start his farm,he uses his entire $50,000 of savings from his savings account.The bank was paying him $2,500 interest on his saving.Explain why the $2,500 is one of Jake's costs.

Accepted Answer

When Jake provides the $50,000 to financ

Question 19

Diseconomies of scale can occur as a result of which of the following?

Accepted Answer

A)  increasing marginal returns as the firm increases its size 
B)  lower total fixed cost as the firm increases its size 
C)  management difficulties as the firm increases its size 
D)  greater specialization of labor and capital as the firm increases its size 
E)  increases in the labor force not matched by increases in the plant 
A)  increasing marginal returns as the firm increases its size 
B)  lower total fixed cost as the firm increases its size 
C)  management difficulties as the firm increases its size 
D)  greater specialization of labor and capital as the firm increases its size 
E)  increases in the labor force not matched by increases in the plant

Question 20

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Accepted Answer

A)  Total product increases as more labor is hired. 
B)  The marginal product is equal to the average product. 
C)  The marginal product is positive. 
D)  The marginal product is greater than the average product. 
E)  The marginal product is less than the average product. 
A)  Total product increases as more labor is hired. 
B)  The marginal product is equal to the average product. 
C)  The marginal product is positive. 
D)  The marginal product is greater than the average product. 
E)  The marginal product is less than the average product.

In the short run,total variable cost

The short run is a time period during which

-In the above figure,curve A is the curve and curve C is the curve.

The primary goal of a business firm is to

Which of the following curves are U-shaped? i.average variable cost curve ii.average fixed cost curve iii.average total cost curve

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

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

Average total cost equals

As output increases,economies of scale occur when the

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

Marginal cost is equal to

The marginal cost curve intersects the curves at their points.

The figure above shows some of a firm's cost curves. -Based on the figure above,curve B is the firm's

Decreasing marginal returns

Jake opens a pig farm in Idaho.To start his farm,he uses his entire $50,000 of savings from his savings account.The bank was paying him $2,500 interest on his saving.Explain why the $2,500 is one of Jake's costs.

Diseconomies of scale can occur as a result of which of the following?

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

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

In the short run,total variable cost

The short run is a time period during which

-In the above figure,curve A is the ________ curve and curve C is the ________ curve.

The primary goal of a business firm is to

Which of the following curves are U-shaped? i.average variable cost curve ii.average fixed cost curve iii.average total cost curve

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

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

Average total cost equals

As output increases,economies of scale occur when the

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

Marginal cost is equal to

The marginal cost curve intersects the ________ curves at their ________ points.

The figure above shows some of a firm's cost curves. -Based on the figure above,curve B is the firm's

Decreasing marginal returns

Jake opens a pig farm in Idaho.To start his farm,he uses his entire $50,000 of savings from his savings account.The bank was paying him $2,500 interest on his saving.Explain why the $2,500 is one of Jake's costs.

Diseconomies of scale can occur as a result of which of the following?

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

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

-In the above figure,curve A is the curve and curve C is the curve.

The marginal cost curve intersects the curves at their points.