Question 1

If a firm produces nothing,which of the following costs will be zero?

Accepted Answer

A) total cost 
B) fixed cost 
C) opportunity cost 
D) variable cost 
A) total cost 
B) fixed cost 
C) opportunity cost 
D) variable cost

Question 2

Marginal cost equals (i)	change in total cost divided by change in quantity produced.
(ii)	change in variable cost divided by change in quantity produced.
(iii)	the average fixed cost of the current unit.

Accepted Answer

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

Question 3

Which of these assumptions is often realistic for a firm in the short run?

Accepted Answer

A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory, but not the number of workers it employs. 
C) The firm can vary the number of workers it employs, but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs. 
A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory, but not the number of workers it employs. 
C) The firm can vary the number of workers it employs, but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs.

Question 4

If the marginal cost curve is rising,then so is the average total cost curve.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 13-6
Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs.
-Refer to Scenario 13-6.Jack's production function will

Accepted Answer

A) Decrease at a decreasing rate. 
B) Decrease at an increasing rate. 
C) Increase at a decreasing rate. 
D) Increase at an increasing rate. 
A) Decrease at a decreasing rate. 
B) Decrease at an increasing rate. 
C) Increase at a decreasing rate. 
D) Increase at an increasing rate.

Question 6

Marginal cost increases as the quantity of output increases.This reflects the property of

Accepted Answer

A) increasing total cost. 
B) diminishing total cost. 
C) increasing marginal product. 
D) diminishing marginal product. 
A) increasing total cost. 
B) diminishing total cost. 
C) increasing marginal product. 
D) diminishing marginal product.

Question 7

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-7
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
  
-Refer to Table 13-7.What is the average variable cost for the month if six instructional modules are produced?

Accepted Answer

A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33 
A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33

Question 9

Economies of scale arise when

Accepted Answer

A) an economy is self-sufficient in production. 
B) individuals in a society are self-sufficient. 
C) fixed costs are large relative to variable costs. 
D) workers are able to specialize in a particular task. 
A) an economy is self-sufficient in production. 
B) individuals in a society are self-sufficient. 
C) fixed costs are large relative to variable costs. 
D) workers are able to specialize in a particular task.

Question 10

Which of the following is not a property of a firm's cost curves?

Accepted Answer

A) Marginal cost must eventually rise as a result of diminishing marginal product. 
B) Average total cost is U-shaped. 
C) Economies of scale will exist when average total cost falls as output rises. 
D) Average total cost will cross marginal cost at the minimum of marginal cost. 
A) Marginal cost must eventually rise as a result of diminishing marginal product. 
B) Average total cost is U-shaped. 
C) Economies of scale will exist when average total cost falls as output rises. 
D) Average total cost will cross marginal cost at the minimum of marginal cost.

Question 11

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Accepted Answer

It depicts a relationship betw

Question 12

Assume a certain firm regards the number of workers it employs as variable,and that it regards the size of its factory as fixed.This assumption is often realistic

Accepted Answer

A) in the short run, but not in the long run. 
B) in the long run, but not in the short run. 
C) both in the short run and in the long run. 
D) neither in the short run nor in the long run. 
A) in the short run, but not in the long run. 
B) in the long run, but not in the short run. 
C) both in the short run and in the long run. 
D) neither in the short run nor in the long run.

Question 13

As a firm moves along its long-run average cost curve,it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Question 14

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 15

Figure 13-3
  
-Refer to Figure 13-3.Which of the following could explain why the total product curve shifted in this diagram?

Accepted Answer

A) A reduction in capital equipment available to the firm. 
B) Labor skills have become rusty and outdated in the firm. 
C) The firm has developed new technology in its production facility. 
D) The firm is now receiving a higher price for its product. 
A) A reduction in capital equipment available to the firm. 
B) Labor skills have become rusty and outdated in the firm. 
C) The firm has developed new technology in its production facility. 
D) The firm is now receiving a higher price for its product.

Question 16

Average total cost is increasing whenever

Accepted Answer

A) total cost is increasing. 
B) marginal cost is increasing. 
C) marginal cost is less than average total cost. 
D) marginal cost is greater than average total cost. 
A) total cost is increasing. 
B) marginal cost is increasing. 
C) marginal cost is less than average total cost. 
D) marginal cost is greater than average total cost.

Question 17

Table 13-10
Consider the following table of long-run total cost for four different firms
  
-Refer to Table 13-10.Which firm has economies of scale over the entire range of output?

Accepted Answer

A) Firm 1 
B) Firm 2 
C) Firm 3 
D) Firm 4 
A) Firm 1 
B) Firm 2 
C) Firm 3 
D) Firm 4

Question 18

Which of the following statements about costs is correct?

Accepted Answer

A) When marginal cost is less than average total cost, average total cost is rising. 
B) The total cost curve is U-shaped. 
C) As the quantity of output increases, marginal cost eventually rises. 
D) All of the above are correct. 
A) When marginal cost is less than average total cost, average total cost is rising. 
B) The total cost curve is U-shaped. 
C) As the quantity of output increases, marginal cost eventually rises. 
D) All of the above are correct.

Question 19

Scenario 13-5
A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 13-5.In producing the 7,000 staplers,the firm's average variable cost was

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) $8. 
A) $2. 
B) $4. 
C) $6. 
D) $8.

Question 20

Total cost can be divided into two types of costs.Those two types are

Accepted Answer

A) fixed costs and variable costs. 
B) fixed costs and marginal costs. 
C) variable costs and marginal costs. 
D) average costs and marginal costs. 
A) fixed costs and variable costs. 
B) fixed costs and marginal costs. 
C) variable costs and marginal costs. 
D) average costs and marginal costs.

Exam 13: The Costs of Production

If a firm produces nothing,which of the following costs will be zero?

Marginal cost equals (i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. (iii) the average fixed cost of the current unit.

Which of these assumptions is often realistic for a firm in the short run?

If the marginal cost curve is rising,then so is the average total cost curve.

Marginal cost increases as the quantity of output increases.This reflects the property of

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Economies of scale arise when

Which of the following is not a property of a firm's cost curves?

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Assume a certain firm regards the number of workers it employs as variable,and that it regards the size of its factory as fixed.This assumption is often realistic

As a firm moves along its long-run average cost curve,it is adjusting the size of its factory to the quantity of production.

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Figure 13-3 -Refer to Figure 13-3.Which of the following could explain why the total product curve shifted in this diagram?

Average total cost is increasing whenever

Table 13-10 Consider the following table of long-run total cost for four different firms -Refer to Table 13-10.Which firm has economies of scale over the entire range of output?

Which of the following statements about costs is correct?

Total cost can be divided into two types of costs.Those two types are

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

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