Question 1

The change in a firm's total cost from producing one more unit of a good or service is the firm's

Accepted Answer

A) explicit cost of production. 
B) marginal cost of production. 
C) average cost of production. 
D) implicit cost of production. 
A) explicit cost of production. 
B) marginal cost of production. 
C) average cost of production. 
D) implicit cost of production.

Question 2

The average total cost of production

Accepted Answer

A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output. 
A) is the extra cost required to produce one more unit. 
B) equals the explicit cost of production. 
C) equals total cost of production divided by the level of output. 
D) equals total cost of production multiplied times the level of output.

Question 3

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 4

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

Accepted Answer

Assume the two companies are o

Question 5

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

Accepted Answer

A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor 
A) the relationship between the marginal and average product of labor 
B) the law of diminishing returns 
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor 
D) the division of labor

Question 6

A U-shaped long run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Accepted Answer

A) True 
 B)False

Question 7

Figure 8-3
   
Fancy Footwear manufactures shoes. Figure 8-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run.
-Refer to Figure 8-3.For what quantity of labor does production display diminishing returns?

Accepted Answer

A) for more than 1 units of labor 
B) for more than 4 unit of labor 
C) for more than 5 units of labor 
D) for more than 8 units of labor 
A) for more than 1 units of labor 
B) for more than 4 unit of labor 
C) for more than 5 units of labor 
D) for more than 8 units of labor

Question 8

If the firm is producing no output in the short run,then its total costs are zero.

Accepted Answer

A) True 
 B)False

Question 9

Marginal cost is the

Accepted Answer

A) change in average cost when an additional unit of output is produced. 
B) the additional output when total cost is increased by one dollar. 
C) additional cost of producing an additional unit of output. 
D) change in the price of inputs if a firm buys more inputs to produce an additional unit of output. 
A) change in average cost when an additional unit of output is produced. 
B) the additional output when total cost is increased by one dollar. 
C) additional cost of producing an additional unit of output. 
D) change in the price of inputs if a firm buys more inputs to produce an additional unit of output.

Question 10

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

Accepted Answer

A) ABC is experiencing diseconomies of scale. 
B) ABC is experiencing diminishing returns. 
C) to reach minimum efficient scale ABC would have to sell at least 3,000 routers each month. 
D) ABC will soon go out of business. 
A) ABC is experiencing diseconomies of scale. 
B) ABC is experiencing diminishing returns. 
C) to reach minimum efficient scale ABC would have to sell at least 3,000 routers each month. 
D) ABC will soon go out of business.

Question 11

As output increases

Accepted Answer

A) average variable cost becomes smaller and smaller. 
B) the difference between average total cost and average variable cost decreases. 
C) marginal cost increases continuously. 
D) the difference between average total cost and average variable cost becomes greater and greater. 
A) average variable cost becomes smaller and smaller. 
B) the difference between average total cost and average variable cost decreases. 
C) marginal cost increases continuously. 
D) the difference between average total cost and average variable cost becomes greater and greater.

Question 12

Marginal cost is calculated for a particular increase in output by

Accepted Answer

A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output. 
A) multiplying the total cost by the change in output. 
B) multiplying the change in total cost by the change in output. 
C) dividing the total cost by the change in output. 
D) dividing the change in total cost by the change in output.

Question 13

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

Accepted Answer

A) Jennifer's explicit costs fall and her implicit costs rise. 
B) Jennifer's total costs fall. 
C) Jennifer's implicit costs fall. 
D) Jennifer's opportunity costs fall. 
A) Jennifer's explicit costs fall and her implicit costs rise. 
B) Jennifer's total costs fall. 
C) Jennifer's implicit costs fall. 
D) Jennifer's opportunity costs fall.

Question 14

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material.Based on this information,what is the amount of her implicit costs?

Accepted Answer

A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500 
A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500

Question 15

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

Accepted Answer

A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity, it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design. 
A) Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. 
B) as Toyota expanded its capacity, it experienced diseconomies of scale. 
C) Toyota was focused on "churning" out cars for which it did not invest sufficiently in training its workers. 
D) high demand for Toyota's cars prevented the company from focusing on its strength: auto design.

Question 16

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

Accepted Answer

A) the marginal cost curve 
B) the average fixed cost curve 
C) the average total cost curve 
D) the average variable cost curve 
A) the marginal cost curve 
B) the average fixed cost curve 
C) the average total cost curve 
D) the average variable cost curve

Question 17

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

Accepted Answer

As the level of output increases,the val

Question 18

Which of the following is not a reason why firms experience economies of scale?

Accepted Answer

A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialized, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms. 
A) Technology can make it possible to increase production with a smaller increase in at least one input. 
B) Workers and managers can become more specialized, enabling them to be more productive. 
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors. 
D) As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Question 19

Figure 8-1
  
-Refer to Figure 8-1.The marginal product of the 3rd worker is

Accepted Answer

A) 57. 
B) 19. 
C) 15. 
D) 11. 
A) 57. 
B) 19. 
C) 15. 
D) 11.

Question 20

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

Accepted Answer

A) the first workers hired get to use the best equipment. 
B) specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point, a firm has hired too many workers. 
A) the first workers hired get to use the best equipment. 
B) specialization allows a worker to focus on one task, thereby increasing her proficiency at that task. 
C) the best workers are hired first and later hires are not as skillful. 
D) beyond some point, a firm has hired too many workers.

The change in a firm's total cost from producing one more unit of a good or service is the firm's

The average total cost of production

Economic costs include implicit costs but not explicit costs.

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

A U-shaped long run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Figure 8-3 Fancy Footwear manufactures shoes. Figure 8-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. -Refer to Figure 8-3.For what quantity of labor does production display diminishing returns?

If the firm is producing no output in the short run,then its total costs are zero.

Marginal cost is the

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

As output increases

Marginal cost is calculated for a particular increase in output by

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

Which of the following is not a reason why firms experience economies of scale?

Figure 8-1 -Refer to Figure 8-1.The marginal product of the 3rd worker is

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

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Exam 8: Technology, production, and Costs

The change in a firm's total cost from producing one more unit of a good or service is the firm's

The average total cost of production

Economic costs include implicit costs but not explicit costs.

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

In his book The Wealth of Nations,Adam Smith employed the example of a pin factory in order to explain what economic concept?

A U-shaped long run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Figure 8-3 Fancy Footwear manufactures shoes. Figure 8-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. -Refer to Figure 8-3.For what quantity of labor does production display diminishing returns?

If the firm is producing no output in the short run,then its total costs are zero.

Marginal cost is the

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month,but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore

As output increases

Marginal cost is calculated for a particular increase in output by

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

The president of Toyota's Georgetown plant was quoted as saying,"Demand for high volumes saps your energy.Over a period of time,it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

As the level of output increases,what happens to the value of average fixed cost,and what happens to the difference between the value of average total cost and average variable cost?

Which of the following is not a reason why firms experience economies of scale?

Figure 8-1 -Refer to Figure 8-1.The marginal product of the 3rd worker is

One reason why,in the short run,the marginal product of labor might increase initially as more workers are hired is that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters