Question 1

Figure 13-7
  
-Refer to Figure 13-7.Which of the figures represents the total 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 2

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

Accepted Answer

A) Variable cost 
B) Average variable cost 
C) Average total cost 
D) Marginal cost 
A) Variable cost 
B) Average variable cost 
C) Average total cost 
D) Marginal cost

Question 3

In the short run,a firm incurs fixed costs

Accepted Answer

A) only if it incurs variable costs. 
B) only if it produces no output. 
C) only if it produces a positive quantity of output. 
D) whether it produces output or not. 
A) only if it incurs variable costs. 
B) only if it produces no output. 
C) only if it produces a positive quantity of output. 
D) whether it produces output or not.

Question 4

Susan used to work as a telemarketer,earning $25,000 per year.She gave up that job to start a catering business.In calculating the economic profit of her catering business,the $25,000 income that she gave up is counted as part of the catering firm's

Accepted Answer

A) total revenue. 
B) opportunity costs. 
C) explicit costs. 
D) marginal costs. 
A) total revenue. 
B) opportunity costs. 
C) explicit costs. 
D) marginal costs.

Question 5

Figure 13-3
  
-Refer to Figure 13-3.In this diagram,the shift in the total product curve represents an increase in the firm's

Accepted Answer

A) costs of production. 
B) productivity. 
C) diseconomies. 
D) market share. 
A) costs of production. 
B) productivity. 
C) diseconomies. 
D) market share.

Question 6

Accountants often ignore implicit costs.

Accepted Answer

A) True 
 B)False

Question 7

Economists assume that the goal of the firm is to maximize

Accepted Answer

A) total revenue. 
B) total profits. 
C) total costs. 
D) total satisfaction. 
A) total revenue. 
B) total profits. 
C) total costs. 
D) total satisfaction.

Question 8

Average total cost is very high when a small amount of output is produced because

Accepted Answer

A) average variable cost is high. 
B) average fixed cost is high. 
C) marginal cost is high. 
D) marginal product is high. 
A) average variable cost is high. 
B) average fixed cost is high. 
C) marginal cost is high. 
D) marginal product is high.

Question 9

Diminishing marginal product exists when the total cost curve becomes flatter as outputs increases.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that marginal cost when three workers are hired is $40 and the average total cost when three workers are hired is $50.What is the total cost of production when three workers are hired?

Accepted Answer

A) $50 
B) $90 
C) $120 
D) $150 
A) $50 
B) $90 
C) $120 
D) $150

Question 11

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Accepted Answer

A) True 
 B)False

Question 12

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.If Gallo's produces at a rate of 35 corks per hour,what is the total labor cost per hour?

Accepted Answer

A) $40 
B) $48 
C) $384 
D) $424 
A) $40 
B) $48 
C) $384 
D) $424

Question 13

Gordon is a senior majoring in computer network development at Smart State University.While he has been attending college,Gordon started a computer consulting business to help senior citizens set up their network connections and teach them how to use e-mail.Gordon charges $25 per hour for his consulting services.Gordon also works 5 hours a week for the Economics Department to maintain that department's Web page.The Economics Department pays Gordon $20 per hour.From this information we can conclude:

Accepted Answer

A) Gordon should increase the number of hours he works for the Economics Department to make it comparable to his consulting business income. 
B) Gordon is obviously not maximizing his well-being if he continues to work for the Economics Department. 
C) If Gordon chooses one hour at the beach with his friends rather than spend one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beach. 
D) Both b and c are correct 
A) Gordon should increase the number of hours he works for the Economics Department to make it comparable to his consulting business income. 
B) Gordon is obviously not maximizing his well-being if he continues to work for the Economics Department. 
C) If Gordon chooses one hour at the beach with his friends rather than spend one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beach. 
D) Both b and c are correct

Question 14

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.Which of the following statements is (are)true? (i)	Farmer Jack experiences decreasing marginal product.
(ii)	Farmer Jack's production function is nonlinear.
(iii)	Farmer Jack's total cost curve is linear.

Accepted Answer

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

Question 15

A production function is a relationship between

Accepted Answer

A) inputs and quantity of output. 
B) inputs and revenue. 
C) inputs and costs. 
D) inputs and profit. 
A) inputs and quantity of output. 
B) inputs and revenue. 
C) inputs and costs. 
D) inputs and profit.

Question 16

The marginal product of labor can be defined as

Accepted Answer

A) change in profit/change in labor. 
B) change in output/change in labor. 
C) change in labor/change in output. 
D) change in labor/change in total cost. 
A) change in profit/change in labor. 
B) change in output/change in labor. 
C) change in labor/change in output. 
D) change in labor/change in total cost.

Question 17

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.The firm's accounting profit for the year was

Accepted Answer

A) $-3,000. 
B) $-5,000 
C) $7,000. 
D) $17,000. 
A) $-3,000. 
B) $-5,000 
C) $7,000. 
D) $17,000.

Question 18

Table 13-9
  
-Refer to Table 13-9.What is variable cost when output equals 30 units?

Accepted Answer

A) $4.00 
B) $4.33 
C) $40.00 
D) $90.00 
A) $4.00 
B) $4.33 
C) $40.00 
D) $90.00

Question 19

Average total cost is equal to

Accepted Answer

A) output/total cost. 
B) total cost - total quantity of output. 
C) average variable cost + total fixed cost. 
D) total cost/output. 
A) output/total cost. 
B) total cost - total quantity of output. 
C) average variable cost + total fixed cost. 
D) total cost/output.

Question 20

Implicit costs are costs that do not require an outlay of money by the firm.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

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

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

In the short run,a firm incurs fixed costs

Susan used to work as a telemarketer,earning $25,000 per year.She gave up that job to start a catering business.In calculating the economic profit of her catering business,the $25,000 income that she gave up is counted as part of the catering firm's

Figure 13-3 -Refer to Figure 13-3.In this diagram,the shift in the total product curve represents an increase in the firm's

Accountants often ignore implicit costs.

Economists assume that the goal of the firm is to maximize

Average total cost is very high when a small amount of output is produced because

Diminishing marginal product exists when the total cost curve becomes flatter as outputs increases.

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

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.If Gallo's produces at a rate of 35 corks per hour,what is the total labor cost per hour?

A production function is a relationship between

The marginal product of labor can be defined as

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.The firm's accounting profit for the year was

Table 13-9 -Refer to Table 13-9.What is variable cost when output equals 30 units?

Average total cost is equal to

Implicit costs are costs that do not require an outlay of money by the firm.

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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