Question 1

For a construction company that builds houses,which of the following costs would be a fixed cost?

Accepted Answer

A) The $50,000 per year salary paid to a construction foreman 
B) The $30,000 per year salary paid to the company's bookkeeper 
C) The $10,000 per year premium paid to an insurance company 
D) All of the above are correct. 
A) The $50,000 per year salary paid to a construction foreman 
B) The $30,000 per year salary paid to the company's bookkeeper 
C) The $10,000 per year premium paid to an insurance company 
D) All of the above are correct.

Question 2

Figure 13-2
The figure below depicts a total cost function for a firm that produces cookies.
  
-Refer to Figure 13-2.Which of the following is true of the production function (not pictured)that underlies this total cost function? (i)	Total output increases as the quantity of inputs increases,but at a decreasing rate.
(ii.	Marginal product is diminishing for all levels of input usage.
(iii)	The slope of the production function decreases as the quantity of inputs increases.

Accepted Answer

A) (i) only 
B) (ii) and (iii) 
C) (i) and (iii) 
D) All of the above are correct. 
A) (i) only 
B) (ii) and (iii) 
C) (i) and (iii) 
D) All of the above are correct.

Question 3

Variable costs equal fixed costs when nothing is produced.

Accepted Answer

A) True 
 B)False

Question 4

XYZ corporation produced 300 units of output but sold only 275 of the units it produced.The average cost of production for each unit of output produced was $100.Each of the 275 units sold was sold for a price of $95.Total profit for the XYZ corporation would be

Accepted Answer

A) -$3,875. 
B) $26,125. 
C) $28,500. 
D) $30,000. 
A) -$3,875. 
B) $26,125. 
C) $28,500. 
D) $30,000.

Question 5

Table 13-8
  
-Refer to Table 13-8.What is the average variable cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A) $14 
B) $15 
C) $16 
D) $17 
A) $14 
B) $15 
C) $16 
D) $17

Question 6

If marginal cost is greater than average total cost then

Accepted Answer

A) profits are increasing. 
B) economies of scale are becoming greater. 
C) average total cost remains constant. 
D) average total cost is increasing. 
A) profits are increasing. 
B) economies of scale are becoming greater. 
C) average total cost remains constant. 
D) average total cost is increasing.

Question 7

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Accepted Answer

A) True 
 B)False

Question 8

A local potato chip company plans to keep and maintain its chip factory,which is estimated to last 25 years.All cost decisions it makes during the 25-year period

Accepted Answer

A) are short-run decisions. 
B) are long-run decisions. 
C) involve only maintenance of the factory. 
D) are zero, since the cost decisions were made at the beginning of the business. 
A) are short-run decisions. 
B) are long-run decisions. 
C) involve only maintenance of the factory. 
D) are zero, since the cost decisions were made at the beginning of the business.

Question 9

Table 13-8
  
-Refer to Table 13-8.What is the total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A) $48 
B) $53 
C) $58 
D) $62 
A) $48 
B) $53 
C) $58 
D) $62

Question 10

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an implicit cost? (i)	the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
(ii)	interest paid on the firm's debt
(iii)	rent paid by the firm to lease office space

Accepted Answer

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

Question 12

Table 13-5
  
-Refer to Table 13-5.The average fixed cost of producing five widgets is

Accepted Answer

A) $1.00 
B) $2.00 
C) $3.00 
D) $5.00 
A) $1.00 
B) $2.00 
C) $3.00 
D) $5.00

Question 13

Variable cost divided by quantity produced is

Accepted Answer

A) average total cost. 
B) marginal cost. 
C) profit. 
D) None of the above is correct. 
A) average total cost. 
B) marginal cost. 
C) profit. 
D) None of the above is correct.

Question 14

Which of the following statements is false?

Accepted Answer

A) In the long run, there are no fixed costs. 
B) Marginal cost is independent of fixed costs. 
C) Economies of scale is a short-run concept. 
D) Diminishing marginal product explains increasing marginal cost. 
A) In the long run, there are no fixed costs. 
B) Marginal cost is independent of fixed costs. 
C) Economies of scale is a short-run concept. 
D) Diminishing marginal product explains increasing marginal cost.

Question 15

Diseconomies of scale occur when

Accepted Answer

A) average fixed costs are falling. 
B) average fixed costs are constant. 
C) long-run average total costs rise as output increases. 
D) long-run average total costs fall as output increases. 
A) average fixed costs are falling. 
B) average fixed costs are constant. 
C) long-run average total costs rise as output increases. 
D) long-run average total costs fall as output increases.

Question 16

Figure 13-8
The figure below depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-8.In the long run,the firm can operate on which of the following average total cost curves?

Accepted Answer

A) ATCA 
B) ATCB 
C) ATCC 
D) All of the above are correct. 
A) ATCA 
B) ATCB 
C) ATCC 
D) All of the above are correct.

Question 17

For Firm A,when 4 units of labor,the only variable input into the production process,are hired,the firm produces 50 units of output.If the fixed cost of production is $4,the variable cost per unit of labor is $20,and the marginal product of labor for the fifth unit of labor is 2,what is the average total cost of production when labor is 5 units?

Accepted Answer

A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80 
A) $2.00 
B) $20.00 
C) $20.80 
D) $22.80

Question 18

The total cost to the firm of producing zero units of output is

Accepted Answer

A) zero in both the short run and the long run. 
B) its fixed cost in the short run and zero in the long run. 
C) its fixed cost in both the short run and the long run. 
D) its variable cost in both the short run and the long run. 
A) zero in both the short run and the long run. 
B) its fixed cost in the short run and zero in the long run. 
C) its fixed cost in both the short run and the long run. 
D) its variable cost in both the short run and the long run.

Question 19

The cost of producing an additional unit of output is the firm's

Accepted Answer

A) marginal cost. 
B) productivity offset. 
C) variable cost. 
D) average variable cost. 
A) marginal cost. 
B) productivity offset. 
C) variable cost. 
D) average variable cost.

Question 20

Table 13-6
Adrian's Premium Chocolates produces boxes of chocolates for its mail order catalogue business. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs.
  
-Refer to Table 13-6.What is the total cost associated with making 890 boxes of premium chocolates per week?

Accepted Answer

A) $1,250 
B) $1,325 
C) $1,400 
D) $1,575 
A) $1,250 
B) $1,325 
C) $1,400 
D) $1,575

Exam 13: The Costs of Production

For a construction company that builds houses,which of the following costs would be a fixed cost?

Variable costs equal fixed costs when nothing is produced.

XYZ corporation produced 300 units of output but sold only 275 of the units it produced.The average cost of production for each unit of output produced was $100.Each of the 275 units sold was sold for a price of $95.Total profit for the XYZ corporation would be

Table 13-8 -Refer to Table 13-8.What is the average variable cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

If marginal cost is greater than average total cost then

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

A local potato chip company plans to keep and maintain its chip factory,which is estimated to last 25 years.All cost decisions it makes during the 25-year period

Table 13-8 -Refer to Table 13-8.What is the total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Which of the following is an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space

Table 13-5 -Refer to Table 13-5.The average fixed cost of producing five widgets is

Variable cost divided by quantity produced is

Which of the following statements is false?

Diseconomies of scale occur when

Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-8.In the long run,the firm can operate on which of the following average total cost curves?

The total cost to the firm of producing zero units of output is

The cost of producing an additional unit of output is the firm's

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters