Question 1

Some costs do NOT vary with the quantity of output produced.What are those costs called

Accepted Answer

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

Question 2

A firm faces the following long-run total-cost curve and is deciding what size factory to build.Refer to the graph below to answer the following questions:
a.When this firm is deciding what size factory to build,is it making a short-run or long-run decision
b.If it wants to produce 200 units,what short-run total-cost curve is consistent with the factory it should choose
 What about 450 units and 700 units
c.Is the firm experiencing economies or diseconomies of scale between 200 and 700 units
d.What is the minimum efficient scale of production facing this firm

Accepted Answer

a.long-run decision

Question 3

At all levels of production beyond the point where the marginal-cost curve crosses the average variable cost curve,what happens to average variable cost

Accepted Answer

A) It rises. 
B) It rises then falls. 
C) It falls. 
D) It falls then rises. 
A) It rises. 
B) It rises then falls. 
C) It falls. 
D) It falls then rises.

Question 4

What does diminishing marginal product suggest

Accepted Answer

A) Additional units of output become less costly as more output is produced. 
B) Marginal cost is upward sloping. 
C) The firm is at full capacity. 
D) Average product is rising. 
A) Additional units of output become less costly as more output is produced. 
B) Marginal cost is upward sloping. 
C) The firm is at full capacity. 
D) Average product is rising.

Question 5

Suppose adding another unit of labour leads to a smaller increase in output than previous units of labour provided.What property does this suggest

Accepted Answer

A) diminishing labour 
B) negative marginal labour 
C) diminishing marginal product 
D) negative marginal product 
A) diminishing labour 
B) negative marginal labour 
C) diminishing marginal product 
D) negative marginal product

Question 6

In the long run,what happens to inputs

Accepted Answer

A) Inputs that were fixed in the short run remain fixed. 
B) Inputs that were fixed in the short run become variable. 
C) Inputs that were variable in the short run will increase. 
D) Inputs that were variable in the short run will decrease. 
A) Inputs that were fixed in the short run remain fixed. 
B) Inputs that were fixed in the short run become variable. 
C) Inputs that were variable in the short run will increase. 
D) Inputs that were variable in the short run will decrease.

Question 7

As a firm moves along its long-run average-cost curve,it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Question 8

Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-5.Which of the curves is most likely to characterize the short-run average-total-cost curve of the smallest factory

Accepted Answer

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

Question 9

What is the fundamental reason that marginal cost eventually rises as output increases

Accepted Answer

A) economies of scale 
B) diseconomies of scale 
C) diminishing marginal product 
D) rising average fixed cost 
A) economies of scale 
B) diseconomies of scale 
C) diminishing marginal product 
D) rising average fixed cost

Question 10

When marginal cost exceeds average total cost,what do we know

Accepted Answer

A) Average fixed cost must be rising. 
B) Average total cost must be rising. 
C) Average total cost must be falling. 
D) Marginal cost must be falling. 
A) Average fixed cost must be rising. 
B) Average total cost must be rising. 
C) Average total cost must be falling. 
D) Marginal cost must be falling.

Question 11

The fact that many decisions are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Accepted Answer

A) True 
 B)False

Question 12

If the marginal-cost curve is rising,so is the average-total-cost curve.

Accepted Answer

A) True 
 B)False

Question 13

Figure 13-6
  
-Refer to Figure 13-6.When does the firm experience diseconomies of scale

Accepted Answer

A) if it changes its level of output from Q₁ to Q₂ 
B) if it changes its level of output from Q₂ to Q₃ 
C) if it changes its level of output from Q₃ to Q₄ 
D) if it changes its level of output from Q₄ to Q₅ 
A) if it changes its level of output from Q₁ to Q₂ 
B) if it changes its level of output from Q₂ to Q₃ 
C) if it changes its level of output from Q₃ to Q₄ 
D) if it changes its level of output from Q₄ to Q₅

Question 14

Table 13-1
  
-Refer to Table 13-1.What is the marginal cost of producing the first widget

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 15

What is the marginal product of labour equal to

Accepted Answer

A) the incremental cost associated with a one-unit increase in labour 
B) the incremental profit associated with a one-unit increase in labour 
C) the increase in labour necessary to generate a one-unit increase in output 
D) the increase in output obtained from a one-unit increase in labour 
A) the incremental cost associated with a one-unit increase in labour 
B) the incremental profit associated with a one-unit increase in labour 
C) the increase in labour necessary to generate a one-unit increase in output 
D) the increase in output obtained from a one-unit increase in labour

Question 16

Table 13-1
  
-Refer to Table 13-1.What is the average fixed cost of producing five widgets

Accepted Answer

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

Question 17

To an economist,which question is answered in the field of industrial organization

Accepted Answer

A) Why are consumers subject to the law of demand? 
B) Why do firms experience falling marginal product of labour? 
C) How does the difference in the number of firms affect prices and the efficiency of market outcomes? 
D) Why do firms consider production costs when determining product supply? 
A) Why are consumers subject to the law of demand? 
B) Why do firms experience falling marginal product of labour? 
C) How does the difference in the number of firms affect prices and the efficiency of market outcomes? 
D) Why do firms consider production costs when determining product supply?

Question 18

What does diminishing marginal product imply

Accepted Answer

A) The marginal cost of an extra worker is unchanged. 
B) The marginal cost of an extra worker is less than the previous worker's marginal cost. 
C) The marginal product of an extra worker is less than the previous worker's marginal product. 
D) The marginal product of an extra worker is greater than the previous worker's marginal product. 
A) The marginal cost of an extra worker is unchanged. 
B) The marginal cost of an extra worker is less than the previous worker's marginal cost. 
C) The marginal product of an extra worker is less than the previous worker's marginal product. 
D) The marginal product of an extra worker is greater than the previous worker's marginal product.

Question 19

Economists and accountants both include forgone income as a cost to a small business owner.

Accepted Answer

A) True 
 B)False

Question 20

What is economic profit equal to

Accepted Answer

A) explicit revenue minus the explicit cost of producing goods and services 
B) total revenue minus the opportunity cost of producing goods and services 
C) accounting revenue minus the accounting cost of producing goods and services 
D) total revenue minus the explicit cost of producing goods and services 
A) explicit revenue minus the explicit cost of producing goods and services 
B) total revenue minus the opportunity cost of producing goods and services 
C) accounting revenue minus the accounting cost of producing goods and services 
D) total revenue minus the explicit cost of producing goods and services

Exam 13: The Costs of Production

Some costs do NOT vary with the quantity of output produced.What are those costs called

At all levels of production beyond the point where the marginal-cost curve crosses the average variable cost curve,what happens to average variable cost

What does diminishing marginal product suggest

Suppose adding another unit of labour leads to a smaller increase in output than previous units of labour provided.What property does this suggest

In the long run,what happens to inputs

As a firm moves along its long-run average-cost curve,it is adjusting the size of its factory to the quantity of production.

Figure 13-5 This figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-5.Which of the curves is most likely to characterize the short-run average-total-cost curve of the smallest factory

What is the fundamental reason that marginal cost eventually rises as output increases

When marginal cost exceeds average total cost,what do we know

The fact that many decisions are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

If the marginal-cost curve is rising,so is the average-total-cost curve.

Figure 13-6 -Refer to Figure 13-6.When does the firm experience diseconomies of scale

Table 13-1 -Refer to Table 13-1.What is the marginal cost of producing the first widget

What is the marginal product of labour equal to

Table 13-1 -Refer to Table 13-1.What is the average fixed cost of producing five widgets

To an economist,which question is answered in the field of industrial organization

What does diminishing marginal product imply

Economists and accountants both include forgone income as a cost to a small business owner.

What is economic profit equal to

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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