Question 1

In the long run,when marginal cost is above average total cost,the average total cost curve exhibits

Accepted Answer

A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) efficient scale. 
A) economies of scale. 
B) diseconomies of scale. 
C) constant returns to scale. 
D) efficient scale.

Question 2

Table 13-8
  
-Refer to Table 13-8.What is the marginal cost of the 4th gigaplot at Jimmy's Gigaplot factory?

Accepted Answer

A) $13 
B) $15 
C) $19 
D) $64 
A) $13 
B) $15 
C) $19 
D) $64

Question 3

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Jan started up a small lemonade stand business last month.Variable costs for Jan's lemonade stand now include the cost of

Accepted Answer

A) building the lemonade stand. 
B) hiring an artist to design a logo for her sign. 
C) lemonade mix. 
D) All of the above are correct. 
A) building the lemonade stand. 
B) hiring an artist to design a logo for her sign. 
C) lemonade mix. 
D) All of the above are correct.

Question 5

Which of the following costs of publishing a book is a fixed cost?

Accepted Answer

A) Author royalties of 5% per book. 
B) The costs of paper and binding. 
C) Shipping and postage expenses. 
D) Composition, typesetting, and jacket design for the book. 
A) Author royalties of 5% per book. 
B) The costs of paper and binding. 
C) Shipping and postage expenses. 
D) Composition, typesetting, and jacket design for the book.

Question 6

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 and then diseconomies of scale as output increases from 1 to 7?

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 7

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 70 corks per hour and operates 8 hours per day,what is Gallo's total labor cost per day?

Accepted Answer

A) $72 
B) $96 
C) $480 
D) $576 
A) $72 
B) $96 
C) $480 
D) $576

Question 8

When a firm is able to put idle equipment to use by hiring another worker,

Accepted Answer

A) variable costs will rise. 
B) variable costs will fall. 
C) fixed costs will fall. 
D) fixed costs and variable costs will rise. 
A) variable costs will rise. 
B) variable costs will fall. 
C) fixed costs will fall. 
D) fixed costs and variable costs will rise.

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.What is the marginal product of the second worker?

Accepted Answer

A) 110 
B) 200 
C) 260 
D) 300 
A) 110 
B) 200 
C) 260 
D) 300

Question 10

The value of a business owner's time is an example of

Accepted Answer

A) an opportunity cost. 
B) a fixed cost. 
C) an explicit cost. 
D) total revenue. 
A) an opportunity cost. 
B) a fixed cost. 
C) an explicit cost. 
D) total revenue.

Question 11

When marginal cost is rising,average variable cost

Accepted Answer

A) must be rising. 
B) must be falling. 
C) must be constant. 
D) could be rising or falling. 
A) must be rising. 
B) must be falling. 
C) must be constant. 
D) could be rising or falling.

Question 12

Table 13-10
Consider the following table of long-run total cost for four different firms
  
-Refer to Table 13-10.Which firm has constant returns to 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 13

Table 13-8
  
-Refer to Table 13-8.What is the total cost of producing 7 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A) $140 
B) $150 
C) $153 
D) $158 
A) $140 
B) $150 
C) $153 
D) $158

Question 14

Figure 13-1
The figure below depicts a production function for a firm that produces cookies.
  
-Refer to Figure 13-1.As the number of workers increases,

Accepted Answer

A) total output increases, but at a decreasing rate. 
B) marginal product increases, but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases. 
A) total output increases, but at a decreasing rate. 
B) marginal product increases, but at a decreasing rate. 
C) marginal product increases at an increasing rate. 
D) total output decreases.

Question 15

Variable cost divided by change in quantity produced is

Accepted Answer

A) average variable cost. 
B) marginal cost. 
C) average total cost. 
D) None of the above is correct. 
A) average variable cost. 
B) marginal cost. 
C) average total cost. 
D) None of the above is correct.

Question 16

Which of the following explains why long-run average cost at first decreases as output increases?

Accepted Answer

A) diseconomies of scale 
B) less-efficient use of inputs 
C) fixed costs becoming spread out over more units of output 
D) gains from specialization of inputs 
A) diseconomies of scale 
B) less-efficient use of inputs 
C) fixed costs becoming spread out over more units of output 
D) gains from specialization of inputs

Question 17

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes. 
A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes.

Question 18

Jane decides to open her own business and earns $50,000 in accounting profit the first year.When deciding to open her own business she turned down three separate job offers with annual salaries of $30,000,$40,000,and $45,000.What is Jane's economic profit from running her own business?

Accepted Answer

A) $-65,000 
B) $5,000 
C) $10,000 
D) $20,000 
A) $-65,000 
B) $5,000 
C) $10,000 
D) $20,000

Question 19

Implicit costs

Accepted Answer

A) do not require an outlay of money by the firm. 
B) do not enter into the economist's measurement of a firm's profit. 
C) are also known as variable costs. 
D) are not part of an economist's measurement of opportunity cost. 
A) do not require an outlay of money by the firm. 
B) do not enter into the economist's measurement of a firm's profit. 
C) are also known as variable costs. 
D) are not part of an economist's measurement of opportunity cost.

Question 20

Figure 13-1
The figure below depicts a production function for a firm that produces cookies.
  
-Refer to Figure 13-1.With regard to cookie production,the figure implies

Accepted Answer

A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) increasing marginal product of workers. 
A) diminishing marginal product of workers. 
B) diminishing marginal cost of cookie production. 
C) decreasing cost of cookie production. 
D) increasing marginal product of workers.

Exam 13: The Costs of Production

In the long run,when marginal cost is above average total cost,the average total cost curve exhibits

Table 13-8 -Refer to Table 13-8.What is the marginal cost of the 4th gigaplot at Jimmy's Gigaplot factory?

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Suppose Jan started up a small lemonade stand business last month.Variable costs for Jan's lemonade stand now include the cost of

Which of the following costs of publishing a book is a fixed cost?

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 and then diseconomies of scale as output increases from 1 to 7?

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 70 corks per hour and operates 8 hours per day,what is Gallo's total labor cost per day?

When a firm is able to put idle equipment to use by hiring another worker,

The value of a business owner's time is an example of

When marginal cost is rising,average variable cost

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

Table 13-8 -Refer to Table 13-8.What is the total cost of producing 7 gigaplots at Jimmy's Gigaplot factory?

Figure 13-1 The figure below depicts a production function for a firm that produces cookies. -Refer to Figure 13-1.As the number of workers increases,

Variable cost divided by change in quantity produced is

Which of the following explains why long-run average cost at first decreases as output increases?

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Jane decides to open her own business and earns $50,000 in accounting profit the first year.When deciding to open her own business she turned down three separate job offers with annual salaries of $30,000,$40,000,and $45,000.What is Jane's economic profit from running her own business?

Implicit costs

Figure 13-1 The figure below depicts a production function for a firm that produces cookies. -Refer to Figure 13-1.With regard to cookie production,the figure implies

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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