Question 1

When,for a firm,long-run average total cost decreases as the quantity of output increases,we have a situation of

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) coordination problems arising from the large size of the firm. 
D) fixed costs greatly exceeding variable costs. 
A) economies of scale. 
B) diseconomies of scale. 
C) coordination problems arising from the large size of the firm. 
D) fixed costs greatly exceeding variable costs.

Question 2

Figure 13-8
The figure below depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-8.This firm experiences diseconomies of scale at what output levels?

Accepted Answer

A) output levels above N 
B) output levels between M and N 
C) output levels below M 
D) All of the above are correct, if the firm is operating in the long run. 
A) output levels above N 
B) output levels between M and N 
C) output levels below M 
D) All of the above are correct, if the firm is operating in the long run.

Question 3

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.Which of the following costs are most likely to be considered fixed costs?

Accepted Answer

A) The cost of mustard 
B) The cost of hotdog buns 
C) Wages paid to workers that sell hotdogs 
D) The cost of bookkeeping services 
A) The cost of mustard 
B) The cost of hotdog buns 
C) Wages paid to workers that sell hotdogs 
D) The cost of bookkeeping services

Question 4

The firm's efficient scale is the quantity of output that minimizes

Accepted Answer

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

Question 5

Economies of scale occur when

Accepted Answer

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

Question 6

The length of the short run

Accepted Answer

A) is different for different types of firms. 
B) can never exceed 3 years. 
C) can never exceed 1 year. 
D) is always less than 6 months. 
A) is different for different types of firms. 
B) can never exceed 3 years. 
C) can never exceed 1 year. 
D) is always less than 6 months.

Question 7

Table 13-3
  
-Refer to Table 13-3.Assume Gallo's currently employs 5 workers.What is the marginal product of labor when Gallo's adds a 6th worker?

Accepted Answer

A) 5 corks per hour 
B) 15 corks per hour 
C) 25 corks per hour 
D) 70 corks per hour 
A) 5 corks per hour 
B) 15 corks per hour 
C) 25 corks per hour 
D) 70 corks per hour

Question 8

Miller Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Accepted Answer

A) $500 
B) $1,000 
C) $1,500 
D) $2,000 
A) $500 
B) $1,000 
C) $1,500 
D) $2,000

Question 9

The efficient scale of the firm is the quantity of output that

Accepted Answer

A) maximizes marginal product. 
B) maximizes profit. 
C) minimizes average total cost. 
D) minimizes average variable cost. 
A) maximizes marginal product. 
B) maximizes profit. 
C) minimizes average total cost. 
D) minimizes average variable cost.

Question 10

In the long run,a factory is usually considered a fixed input.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 13-3
Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 13-3.Tony's accountant would most likely figure the total cost of his wheat planting to equal

Accepted Answer

A) $25 
B) $130 
C) $300 
D) $380 
A) $25 
B) $130 
C) $300 
D) $380

Question 12

For a firm,the production function represents the relationship between

Accepted Answer

A) implicit costs and explicit costs. 
B) quantity of inputs and total cost. 
C) quantity of inputs and quantity of output. 
D) quantity of output and total cost. 
A) implicit costs and explicit costs. 
B) quantity of inputs and total cost. 
C) quantity of inputs and quantity of output. 
D) quantity of output and total cost.

Question 13

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

Accepted Answer

A) $16.34 
B) $22.00 
C) $22.17 
D) $22.57 
A) $16.34 
B) $22.00 
C) $22.17 
D) $22.57

Question 14

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Accepted Answer

A) accounting profit amounted to $20 million. 
B) economic profit amounted to $20 million. 
C) total revenue amounted to $20 million. 
D) explicit costs amounted to $20 million. 
A) accounting profit amounted to $20 million. 
B) economic profit amounted to $20 million. 
C) total revenue amounted to $20 million. 
D) explicit costs amounted to $20 million.

Question 15

On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A) The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D) All of the above are correct. 
A) The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B) The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C) The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D) All of the above are correct.

Question 16

Table 13-2
  
-Refer to Table 13-2.At which number of workers does diminishing marginal product begin?

Accepted Answer

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

Question 17

In the long run for Firm A,total cost is $105 when output is 3 units and $120 when output is 4 units.Does Firm A exhibit economies or diseconomies of scale?

Accepted Answer

A) Diseconomies of scale, since total cost is rising as output rises. 
B) Diseconomies of scale, since average total cost is falling as output rises. 
C) Economies of scale, since total cost is rising as output rises. 
D) Economies of scale, since average total cost is falling as output rises. 
A) Diseconomies of scale, since total cost is rising as output rises. 
B) Diseconomies of scale, since average total cost is falling as output rises. 
C) Economies of scale, since total cost is rising as output rises. 
D) Economies of scale, since average total cost is falling as output rises.

Question 18

Suppose that when 2 units of labor,the only variable input into the production process,are hired,the total cost of production is $100 and that when 3 units of labor are hired the total cost of production is $120.In addition,assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired.What is the firm's fixed cost?

Accepted Answer

A) $40 
B) $60 
C) $80 
D) $100 
A) $40 
B) $60 
C) $80 
D) $100

Question 19

Table 13-9
  
-Refer to Table 13-9.What is the total fixed cost for this firm?

Accepted Answer

A) $20 
B) $30 
C) $40 
D) $50 
A) $20 
B) $30 
C) $40 
D) $50

Question 20

Economic profit is equal to

Accepted Answer

A) total revenue minus the explicit cost of producing goods and services. 
B) total revenue minus the opportunity cost of producing goods and services. 
C) total revenue minus the accounting cost of producing goods and services. 
D) average revenue minus the average cost of producing the last unit of a good or service. 
A) total revenue minus the explicit cost of producing goods and services. 
B) total revenue minus the opportunity cost of producing goods and services. 
C) total revenue minus the accounting cost of producing goods and services. 
D) average revenue minus the average cost of producing the last unit of a good or service.

Exam 13: The Costs of Production

When,for a firm,long-run average total cost decreases as the quantity of output increases,we have a situation of

Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-8.This firm experiences diseconomies of scale at what output levels?

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.Which of the following costs are most likely to be considered fixed costs?

The firm's efficient scale is the quantity of output that minimizes

Economies of scale occur when

The length of the short run

Table 13-3 -Refer to Table 13-3.Assume Gallo's currently employs 5 workers.What is the marginal product of labor when Gallo's adds a 6th worker?

Miller Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

The efficient scale of the firm is the quantity of output that

In the long run,a factory is usually considered a fixed input.

For a firm,the production function represents the relationship between

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

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Table 13-2 -Refer to Table 13-2.At which number of workers does diminishing marginal product begin?

In the long run for Firm A,total cost is $105 when output is 3 units and $120 when output is 4 units.Does Firm A exhibit economies or diseconomies of scale?

Table 13-9 -Refer to Table 13-9.What is the total fixed cost for this firm?

Economic profit is equal to

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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