Question 1

What would be an example of an implicit cost of production

Accepted Answer

A) the cost of lost income a student could have earned had they not gone to university 
B) the cost of raw materials for producing bread in a bakery 
C) the cost of a delivery truck in a business that rarely makes deliveries 
D) the cost of employee training programs 
A) the cost of lost income a student could have earned had they not gone to university 
B) the cost of raw materials for producing bread in a bakery 
C) the cost of a delivery truck in a business that rarely makes deliveries 
D) the cost of employee training programs

Question 2

What do we know about fixed costs

Accepted Answer

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

Question 3

Table 13-1
  
-Refer to Table 13-1.What is the variable cost of producing zero widgets

Accepted Answer

A) $0 
B) $1.00 
C) $10.25 
D) $11.00 
A) $0 
B) $1.00 
C) $10.25 
D) $11.00

Question 4

In reference to setting the production level,what do we know about a firm's cost curves

Accepted Answer

A) By themselves, they do not tell us what decisions the firm will make. 
B) They dictate what decisions the firm will make. 
C) They have no bearing on what decisions the firm will make. 
D) They are tied to the price factor dictated by the firm. 
A) By themselves, they do not tell us what decisions the firm will make. 
B) They dictate what decisions the firm will make. 
C) They have no bearing on what decisions the firm will make. 
D) They are tied to the price factor dictated by the firm.

Question 5

Economists normally assume that people start their own businesses to help society maximize its income.

Accepted Answer

A) True 
 B)False

Question 6

For a firm,what does "constant returns to scale" refer to

Accepted Answer

A) Short-run average total cost changes at a constant rate as the quantity of output changes. 
B) Short-run average total cost does not change as the quantity of output changes. 
C) Long-run average total cost does not change as the quantity of output changes. 
D) Long-run average total cost changes at a constant rate as the quantity of output changes. 
A) Short-run average total cost changes at a constant rate as the quantity of output changes. 
B) Short-run average total cost does not change as the quantity of output changes. 
C) Long-run average total cost does not change as the quantity of output changes. 
D) Long-run average total cost changes at a constant rate as the quantity of output changes.

Question 7

Average variable cost is equal to total variable cost divided by quantity of output.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 13-4
A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-4.How will average total cost behave

Accepted Answer

A) It will always rise. 
B) It will always fall. 
C) It will be U-shaped, first falling and then rising. 
D) It will remain constant. 
A) It will always rise. 
B) It will always fall. 
C) It will be U-shaped, first falling and then rising. 
D) It will remain constant.

Question 9

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 10

Table 13-3  
-Refer to Table 13-3.How many instructional modules are produced when the marginal cost is $1300

Accepted Answer

A) 7 
B) 8 
C) 9 
D) 10 
A) 7 
B) 8 
C) 9 
D) 10

Question 11

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 12

The production function depicts a relationship between which two variables? Draw a production function that exhibits diminishing marginal product.

Accepted Answer

It depicts the relationship be

Question 13

Which of the following can be explained by diminishing marginal product

Accepted Answer

A) diseconomies of scale 
B) decreasing marginal cost 
C) economies of scale 
D) increasing marginal cost 
A) diseconomies of scale 
B) decreasing marginal cost 
C) economies of scale 
D) increasing marginal cost

Question 14

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 15

The average total-cost curve is unaffected by diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 16

Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-5.Which curve represents the long-run average total cost

Accepted Answer

A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD 
A) ATCA 
B) ATCB 
C) ATCC 
D) ATCD

Question 17

What is the firm's efficient scale

Accepted Answer

A) the quantity of output that minimizes average total cost 
B) the quantity of output that minimizes average fixed cost 
C) the quantity of output that minimizes average variable cost 
D) the quantity of output that minimizes marginal cost 
A) the quantity of output that minimizes average total cost 
B) the quantity of output that minimizes average fixed cost 
C) the quantity of output that minimizes average variable cost 
D) the quantity of output that minimizes marginal cost

Question 18

For a certain firm,the number of workers hired is the only variable input.When this firm's production function is illustrated on a graph,what is measured on the axes

Accepted Answer

A) The number of workers is measured on the horizontal axis, and the quantity of output is measured on the vertical axis. 
B) The number of workers is measured on the horizontal axis, and variable cost is measured on the vertical axis. 
C) The number of workers is measured on the horizontal axis, and profit is measured on the vertical axis. 
D) The number of workers is measured on the horizontal axis, and total cost is measured on the vertical axis. 
A) The number of workers is measured on the horizontal axis, and the quantity of output is measured on the vertical axis. 
B) The number of workers is measured on the horizontal axis, and variable cost is measured on the vertical axis. 
C) The number of workers is measured on the horizontal axis, and profit is measured on the vertical axis. 
D) The number of workers is measured on the horizontal axis, and total cost is measured on the vertical axis.

Question 19

What does variable cost divided by quantity produced equal

Accepted Answer

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

Question 20

Scenario 13-4
A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-4.How will average fixed cost behave

Accepted Answer

A) It will always rise. 
B) It will always fall. 
C) It will be U-shaped, first falling and then rising. 
D) It will remain constant. 
A) It will always rise. 
B) It will always fall. 
C) It will be U-shaped, first falling and then rising. 
D) It will remain constant.

Exam 13: The Costs of Production

What would be an example of an implicit cost of production

What do we know about fixed costs

Table 13-1 -Refer to Table 13-1.What is the variable cost of producing zero widgets

In reference to setting the production level,what do we know about a firm's cost curves

Economists normally assume that people start their own businesses to help society maximize its income.

For a firm,what does "constant returns to scale" refer to

Average variable cost is equal to total variable cost divided by quantity of output.

Scenario 13-4 A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level. -Refer to Scenario 13-4.How will average total cost behave

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

Table 13-3 -Refer to Table 13-3.How many instructional modules are produced when the marginal cost is $1300

Several related measures of cost can be derived from a firm's total cost.

The production function depicts a relationship between which two variables? Draw a production function that exhibits diminishing marginal product.

Which of the following can be explained by diminishing marginal product

Variable costs usually change as the firm alters the quantity of output produced.

The average total-cost curve is unaffected by diminishing marginal product.

Figure 13-5 This figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-5.Which curve represents the long-run average total cost

What is the firm's efficient scale

For a certain firm,the number of workers hired is the only variable input.When this firm's production function is illustrated on a graph,what is measured on the axes

What does variable cost divided by quantity produced equal

Scenario 13-4 A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level. -Refer to Scenario 13-4.How will average fixed cost behave

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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