Question 1

In the short run,firms increase output

Accepted Answer

A)  only by increasing the size of their plant. 
B)  only by decreasing the size of their plant. 
C)  only by increasing the amount of labor used. 
D)  only by decreasing the amount of labor used. 
E)  either increasing the amount of labor used or increasing the size of their plant. 
A)  only by increasing the size of their plant. 
B)  only by decreasing the size of their plant. 
C)  only by increasing the amount of labor used. 
D)  only by decreasing the amount of labor used. 
E)  either increasing the amount of labor used or increasing the size of their plant.

Question 2

The opportunity cost of owning and using a firm's capital is defined as the capital's

Accepted Answer

A)  variable cost. 
B)  fixed cost. 
C)  economic depreciation. 
D)  nonpayment depreciation. 
E)  explicit cost. 
A)  variable cost. 
B)  fixed cost. 
C)  economic depreciation. 
D)  nonpayment depreciation. 
E)  explicit cost.

Question 3

When marginal cost is positive,total cost is ________ as output increases.

Accepted Answer

A)  increasing 
B)  decreasing 
C)  constant 
D)  negative 
E)  undefined 
A)  increasing 
B)  decreasing 
C)  constant 
D)  negative 
E)  undefined

Question 4

The difference between a firm's total revenue and its total cost is its ________ profit.

Accepted Answer

A)  explicit 
B)  normal 
C)  economic 
D)  accounting 
E)  excess 
A)  explicit 
B)  normal 
C)  economic 
D)  accounting 
E)  excess

Question 5

Cost curves shift if
i.technology changes.
ii.the prices of factors of production change.
iii.productivity changes.

Accepted Answer

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

Question 6

The U-shaped average total cost curve is

Accepted Answer

A)  a result of firms' wanting to find the output level where cost is at its minimum. 
B)  unrealistic because average total cost always increases as output increases. 
C)  the result of average fixed cost falling and decreasing marginal returns as output increases. 
D)  a result of constant marginal returns. 
E)  a result of increasing marginal returns. 
A)  a result of firms' wanting to find the output level where cost is at its minimum. 
B)  unrealistic because average total cost always increases as output increases. 
C)  the result of average fixed cost falling and decreasing marginal returns as output increases. 
D)  a result of constant marginal returns. 
E)  a result of increasing marginal returns.

Question 7

Which of the following is an example of an implicit cost?

Accepted Answer

A)  rent on a building 
B)  the cost of fertilizer for a farmer 
C)  the economic depreciation of capital equipment the business owns 
D)  the cost of fuel and materials. 
E)  wages paid to workers 
A)  rent on a building 
B)  the cost of fertilizer for a farmer 
C)  the economic depreciation of capital equipment the business owns 
D)  the cost of fuel and materials. 
E)  wages paid to workers

Question 8

When the marginal product is increasing as the quantity increases,then as the quantity increases the

Accepted Answer

A)  average product is decreasing. 
B)  marginal cost is decreasing. 
C)  total cost is decreasing. 
D)  total product is decreasing. 
E)  fixed cost is increasing. 
A)  average product is decreasing. 
B)  marginal cost is decreasing. 
C)  total cost is decreasing. 
D)  total product is decreasing. 
E)  fixed cost is increasing.

Question 9

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Accepted Answer

A technological change that increases pr

Question 10

Economies of scale and diseconomies of scale explain

Accepted Answer

A)  cost behavior in the short run. 
B)  profit maximization in the long run. 
C)  the U-shape of the long-run average cost curve. 
D)  the U-shape of the short-run average total cost curve. 
E)  the U-shape of the marginal cost curves. 
A)  cost behavior in the short run. 
B)  profit maximization in the long run. 
C)  the U-shape of the long-run average cost curve. 
D)  the U-shape of the short-run average total cost curve. 
E)  the U-shape of the marginal cost curves.

Question 11

Jones Production started business with a small scale plant.Fortunately for Smith,the owner of Jones Production,the business grew rapidly.The table below gives the total costs and the associated output for each year.
a.Complete the table by finding the average cost for each scale.
   
b.Over what range of total product (output)did Jones Production experience economies of scale,constant returns to scale,and diseconomies of scale?

Accepted Answer

@#IMG-DLM& 
a.The completed table is above.
b.Ther

Question 12

The long run is defined as

Accepted Answer

A)  any time after six months. 
B)  any time after one year. 
C)  the period of time when all resources are fixed. 
D)  the period of time when most (more than 50 percent) resources are variable. 
E)  the period of time when all resources are variable. 
A)  any time after six months. 
B)  any time after one year. 
C)  the period of time when all resources are fixed. 
D)  the period of time when most (more than 50 percent) resources are variable. 
E)  the period of time when all resources are variable.

Question 13

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

Accepted Answer

@#IMG-DLM& Typical cost curves are above.The avera

Question 14

Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill his dream of catering barbecues.During his year of barbecuing he earned total revenue of $60,000.He spent $30,000 on food and supplies.He also paid his wife $10,000 to help serve food.The normal profit for an entrepreneur running a barbecue business is $3,000.Bill also rented an industrial grill/fry truck for $12,000.Bill had an economic

Accepted Answer

A)  profit of $20,000. 
B)  loss of -$32,000. 
C)  loss of -$42,000. 
D)  profit of $28,000. 
E)  profit of zero. 
A)  profit of $20,000. 
B)  loss of -$32,000. 
C)  loss of -$42,000. 
D)  profit of $28,000. 
E)  profit of zero.

Question 15

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Accepted Answer

A)  $2. 
B)  $3. 
C)  $5. 
D)  $8. 
E)  $32. 
A)  $2. 
B)  $3. 
C)  $5. 
D)  $8. 
E)  $32.

Question 16

Which of the following contributes to increasing marginal returns?

Accepted Answer

A)  decreasing implicit costs 
B)  increasing explicit costs 
C)  specialization of labor 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  decreasing implicit costs 
B)  increasing explicit costs 
C)  specialization of labor 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 17

If 25 workers can pick 100 flats of strawberries per hour,then average product is

Accepted Answer

A)  100 flats per hour. 
B)  125 flats per hour. 
C)  75 flats per hour. 
D)  4 flats per hour. 
E)  More information is needed about how many flats 24 workers can pick. 
A)  100 flats per hour. 
B)  125 flats per hour. 
C)  75 flats per hour. 
D)  4 flats per hour. 
E)  More information is needed about how many flats 24 workers can pick.

Question 18

What does the long-run average cost curve show?

Accepted Answer

A)  the interaction between average fixed cost and marginal cost 
B)  the lowest average cost to produce each output level in the long run 
C)  the distinction between long-run fixed and long-run variable costs 
D)  the lowest average marginal cost of producing each output level at any time. 
E)  Answers A, B, and C are correct. 
A)  the interaction between average fixed cost and marginal cost 
B)  the lowest average cost to produce each output level in the long run 
C)  the distinction between long-run fixed and long-run variable costs 
D)  the lowest average marginal cost of producing each output level at any time. 
E)  Answers A, B, and C are correct.

Question 19

Darryl runs a ranch in Jackson,Wyoming.The interest on the debt he incurred to buy his ranch totals $3,000 per year.For Darryl,the interest is

Accepted Answer

A)  an implicit cost. 
B)  an explicit cost. 
C)  his normal cost. 
D)  his normal profit. 
E)  part of his economic profit. 
A)  an implicit cost. 
B)  an explicit cost. 
C)  his normal cost. 
D)  his normal profit. 
E)  part of his economic profit.

Question 20

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Accepted Answer

The long-run average cost curve shows th

In the short run,firms increase output

The opportunity cost of owning and using a firm's capital is defined as the capital's

When marginal cost is positive,total cost is ________ as output increases.

The difference between a firm's total revenue and its total cost is its ________ profit.

Cost curves shift if i.technology changes. ii.the prices of factors of production change. iii.productivity changes.

The U-shaped average total cost curve is

Which of the following is an example of an implicit cost?

When the marginal product is increasing as the quantity increases,then as the quantity increases the

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Economies of scale and diseconomies of scale explain

The long run is defined as

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Which of the following contributes to increasing marginal returns?

If 25 workers can pick 100 flats of strawberries per hour,then average product is

What does the long-run average cost curve show?

Darryl runs a ranch in Jackson,Wyoming.The interest on the debt he incurred to buy his ranch totals $3,000 per year.For Darryl,the interest is

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

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,firms increase output

The opportunity cost of owning and using a firm's capital is defined as the capital's

When marginal cost is positive,total cost is ________ as output increases.

The difference between a firm's total revenue and its total cost is its ________ profit.

Cost curves shift if i.technology changes. ii.the prices of factors of production change. iii.productivity changes.

The U-shaped average total cost curve is

Which of the following is an example of an implicit cost?

When the marginal product is increasing as the quantity increases,then as the quantity increases the

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Economies of scale and diseconomies of scale explain

The long run is defined as

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Which of the following contributes to increasing marginal returns?

If 25 workers can pick 100 flats of strawberries per hour,then average product is

What does the long-run average cost curve show?

Darryl runs a ranch in Jackson,Wyoming.The interest on the debt he incurred to buy his ranch totals $3,000 per year.For Darryl,the interest is

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

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