Question 1

Accounting profit is equal to

Accepted Answer

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

Question 2

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.Marginal 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 3

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 economic profit equals

Accepted Answer

A) $-130 
B) $-80 
C) $130 
D) $170 
A) $-130 
B) $-80 
C) $130 
D) $170

Question 4

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following costs do not vary with the amount of output a firm produces?

Accepted Answer

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

Question 6

Figure 13-6
The curves below reflect information about the cost structure of a firm.
  
-Refer to Figure 13-6.Which of the curves is most likely to represent average variable cost?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 7

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 total cost was

Accepted Answer

A) $5.00 
B) $5.42 
C) $6.21 
D) $6.43 
A) $5.00 
B) $5.42 
C) $6.21 
D) $6.43

Question 8

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

Accepted Answer

A) $14.00 
B) $18.50 
C) $22.50 
D) $26.50 
A) $14.00 
B) $18.50 
C) $22.50 
D) $26.50

Question 9

If Franco's Pizza Parlor knows that the marginal cost of the 500ᵗʰ pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Accepted Answer

A) average costs are rising at Q = 500. 
B) average costs are falling at Q = 500. 
C) total costs are falling at Q = 500. 
D) average variable costs must be falling. 
A) average costs are rising at Q = 500. 
B) average costs are falling at Q = 500. 
C) total costs are falling at Q = 500. 
D) average variable costs must be falling.

Question 10

When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing total product. 
D) diminishing marginal product. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing total product. 
D) diminishing marginal product.

Question 11

For a firm,the relationship between the quantity of inputs and quantity of output is called the

Accepted Answer

A) profit function. 
B) production function. 
C) total-cost function. 
D) quantity function. 
A) profit function. 
B) production function. 
C) total-cost function. 
D) quantity function.

Question 12

In the long run,a firm that produces and sells computers gets to choose

Accepted Answer

A) how many workers to hire. 
B) the size of its factories. 
C) which short-run average-total-cost curve to use. 
D) All of the above are correct. 
A) how many workers to hire. 
B) the size of its factories. 
C) which short-run average-total-cost curve to use. 
D) All of the above are correct.

Question 13

When marginal cost is greater than average cost,average cost is

Accepted Answer

A) rising. 
B) falling. 
C) constant. 
D) either rising or falling depending on the economies of scale. 
A) rising. 
B) falling. 
C) constant. 
D) either rising or falling depending on the economies of scale.

Question 14

John has decided to start his own lawn-mowing business.To purchase the mowers and the trailer to transport the mowers,John withdrew $1,000 from his savings account,which was earning 3% interest,and borrowed an additional $2,000 from the bank at an interest rate of 7%.What is John's annual opportunity cost of the financial capital that has been invested in the business?

Accepted Answer

A) $30.00 
B) $140.00 
C) $170.00 
D) $3,000.00 
A) $30.00 
B) $140.00 
C) $170.00 
D) $3,000.00

Question 15

Whenever marginal cost is greater than average total cost,

Accepted Answer

A) marginal cost is rising. 
B) marginal cost is falling. 
C) average total cost is rising. 
D) average total cost is falling. 
A) marginal cost is rising. 
B) marginal cost is falling. 
C) average total cost is rising. 
D) average total cost is falling.

Question 16

Average total cost reveals how much total cost will change as the firm alters its level of production.

Accepted Answer

A) True 
 B)False

Question 17

Fixed costs can be defined as costs that

Accepted Answer

A) vary inversely with production. 
B) vary in proportion with production. 
C) are incurred only when production is large enough. 
D) are incurred even if nothing is produced. 
A) vary inversely with production. 
B) vary in proportion with production. 
C) are incurred only when production is large enough. 
D) are incurred even if nothing is produced.

Question 18

Table 13-3
  
-Refer to Table 13-3.Each worker at Gallo's cork factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of corks produced.Assume the number of machines does not change.If Gallo's produces at a rate of 78 corks per hour,what is the total machine cost per day?

Accepted Answer

A) $20 
B) $40 
C) $72 
D) $320 
A) $20 
B) $40 
C) $72 
D) $320

Question 19

Figure 13-7
  
-Refer to Figure 13-7.Which of the figures represents the marginal cost curve for a firm?

Accepted Answer

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

Question 20

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122)and (L = 13,Q = 132).Then the marginal product of the 13th worker is

Accepted Answer

A) 8 units of output. 
B) 10 units of output. 
C) 122 units of output. 
D) 132 units of output. 
A) 8 units of output. 
B) 10 units of output. 
C) 122 units of output. 
D) 132 units of output.

Exam 13: The Costs of Production

Accounting profit is equal to

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.Marginal cost will be

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Which of the following costs do not vary with the amount of output a firm produces?

Figure 13-6 The curves below reflect information about the cost structure of a firm. -Refer to Figure 13-6.Which of the curves is most likely to represent average variable cost?

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

If Franco's Pizza Parlor knows that the marginal cost of the 500ᵗʰ pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

For a firm,the relationship between the quantity of inputs and quantity of output is called the

In the long run,a firm that produces and sells computers gets to choose

When marginal cost is greater than average cost,average cost is

Whenever marginal cost is greater than average total cost,

Average total cost reveals how much total cost will change as the firm alters its level of production.

Fixed costs can be defined as costs that

Figure 13-7 -Refer to Figure 13-7.Which of the figures represents the marginal cost curve for a firm?

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122)and (L = 13,Q = 132).Then the marginal product of the 13th worker is

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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