Question 1

Profit is defined as

Accepted Answer

A) net revenue minus depreciation. 
B) total revenue minus total cost. 
C) average revenue minus average total cost. 
D) marginal revenue minus marginal cost. 
A) net revenue minus depreciation. 
B) total revenue minus total cost. 
C) average revenue minus average total cost. 
D) marginal revenue minus marginal cost.

Question 2

Figure 13-9
  
-Refer to Figure 13-9.The three average total cost curves on the diagram correspond to three different

Accepted Answer

A) time horizons. 
B) products. 
C) firms. 
D) factory sizes. 
A) time horizons. 
B) products. 
C) firms. 
D) factory sizes.

Question 3

Kevin quit his $65,000 a year corporate lawyer job to open up his own law practice.In Kevin's first year in business his total revenue equaled $150,000.Kevin's explicit cost during the year totaled $85,000.Using the information from Kevin's first year in business,what is his economic profit?

Accepted Answer

A) $0 
B) $20,000 
C) $65,000 
D) $85,000 
A) $0 
B) $20,000 
C) $65,000 
D) $85,000

Question 4

The amount of money that a firm pays to buy inputs is called

Accepted Answer

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

Question 5

In setting the production level,a firm's cost curves

Accepted Answer

A) by themselves do not tell us what decisions the firm will make. 
B) dictate what decisions the firm will make. 
C) have no bearing on what decisions the firm will make. 
D) None of the above is correct. 
A) by themselves do not tell us what decisions the firm will make. 
B) dictate what decisions the firm will make. 
C) have no bearing on what decisions the firm will make. 
D) None of the above is correct.

Question 6

The marginal product of an input in the production process is the increase in

Accepted Answer

A) total revenue obtained from an additional unit of that input. 
B) profit obtained from an additional unit of that input. 
C) total revenue obtained from an additional unit of that input 
D) quantity of output obtained from an additional unit of that input. 
A) total revenue obtained from an additional unit of that input. 
B) profit obtained from an additional unit of that input. 
C) total revenue obtained from an additional unit of that input 
D) quantity of output obtained from an additional unit of that input.

Question 7

Consider the following information about bread production at Beth's Bakery:  
Beth pays all her workers the same wage and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

Accepted Answer

A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant. 
A) declines as output increases from 0 to 33, but increases after that. 
B) declines as output increases from 0 to 11, but increases after that. 
C) increases as output increases from 0 to 11, but declines after that. 
D) is constant.

Question 8

Which of the following expressions is correct?

Accepted Answer

A) accounting profit = total revenue - explicit costs 
B) economic profit = total revenue - implicit costs 
C) economic profit = total revenue - explicit costs 
D) Both a and b are correct. 
A) accounting profit = total revenue - explicit costs 
B) economic profit = total revenue - implicit costs 
C) economic profit = total revenue - explicit costs 
D) Both a and b are correct.

Question 9

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.One week,Adrian earns a profit of $125.If her revenue for the week is $1100,how many boxes of chocolate did she produce?

Accepted Answer

A) 140 
B) 330 
C) 780 
D) 950 
A) 140 
B) 330 
C) 780 
D) 950

Question 10

A key difference between accountants and economists is their different treatment of the cost of capital.Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Accepted Answer

An accountant would not include the forg

Question 11

Assume Jack received all A's in his classes last semester.If Jack gets all B's in his classes this semester,his GPA may or may not fall.

Accepted Answer

A) True 
 B)False

Question 12

Table 13-8
  
-Refer to Table 13-8.What is the average variable cost of producing 6 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A) $16 
B) $17 
C) $18 
D) $19 
A) $16 
B) $17 
C) $18 
D) $19

Question 13

Economic profit

Accepted Answer

A) will never exceed accounting profit. 
B) is most often equal to accounting profit. 
C) is always at least as large as accounting profit. 
D) is a less complete measure of profitability than accounting profit. 
A) will never exceed accounting profit. 
B) is most often equal to accounting profit. 
C) is always at least as large as accounting profit. 
D) is a less complete measure of profitability than accounting profit.

Question 14

Table 13-5
  
-Refer to Table 13-5.The average total cost of producing one widget is

Accepted Answer

A) $1.00. 
B) $10.00. 
C) $11.00. 
D) $22.00. 
A) $1.00. 
B) $10.00. 
C) $11.00. 
D) $22.00.

Question 15

Table 13-10
Consider the following table of long-run total cost for four different firms
  
-Refer to Table 13-10.Firm 1's efficient scale occurs at what quantity?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 16

Which of the following can be added to profit to obtain total revenue?

Accepted Answer

A) net profit 
B) capital profit 
C) operational profit 
D) total cost 
A) net profit 
B) capital profit 
C) operational profit 
D) total cost

Question 17

Given the cost curves shown in the diagram below,the efficient scale of production occurs at point

Accepted Answer

A) a. 
B) B. 
C) C. 
D) D. 
A) a. 
B) B. 
C) C. 
D) D.

Question 18

Scenario 13-4
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-4.Average variable cost will be

Accepted Answer

A) rising at all points. 
B) falling at all points. 
C) U-shaped. 
D) constant. 
A) rising at all points. 
B) falling at all points. 
C) U-shaped. 
D) constant.

Question 19

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Accepted Answer

A) True 
 B)False

Question 20

Figure 13-8
The figure below depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-8.Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

Accepted Answer

A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD 
A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD

Exam 13: The Costs of Production

Profit is defined as

Figure 13-9 -Refer to Figure 13-9.The three average total cost curves on the diagram correspond to three different

Kevin quit his $65,000 a year corporate lawyer job to open up his own law practice.In Kevin's first year in business his total revenue equaled $150,000.Kevin's explicit cost during the year totaled $85,000.Using the information from Kevin's first year in business,what is his economic profit?

The amount of money that a firm pays to buy inputs is called

In setting the production level,a firm's cost curves

The marginal product of an input in the production process is the increase in

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

Which of the following expressions is correct?

A key difference between accountants and economists is their different treatment of the cost of capital.Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Assume Jack received all A's in his classes last semester.If Jack gets all B's in his classes this semester,his GPA may or may not fall.

Table 13-8 -Refer to Table 13-8.What is the average variable cost of producing 6 gigaplots at Jimmy's Gigaplot factory?

Economic profit

Table 13-5 -Refer to Table 13-5.The average total cost of producing one widget is

Table 13-10 Consider the following table of long-run total cost for four different firms -Refer to Table 13-10.Firm 1's efficient scale occurs at what quantity?

Which of the following can be added to profit to obtain total revenue?

Given the cost curves shown in the diagram below,the efficient scale of production occurs at point

Scenario 13-4 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-4.Average variable cost will be

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-8.Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

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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