Question 1

What is the term for the amount of money that a wheat farmer could have earned if he had planted barley instead of wheat

Accepted Answer

A) an explicit cost 
B) an accounting cost 
C) an implicit cost 
D) forgone accounting profit 
A) an explicit cost 
B) an accounting cost 
C) an implicit cost 
D) forgone accounting profit

Question 2

What would be an example of an explicit cost of production

Accepted Answer

A) the cost of forgone labour earnings for an entrepreneur 
B) the cost of the lost opportunity to invest in other capital markets when the money is invested in one's business 
C) the cost of gas for a long haul truck driver 
D) the cost of training programs postponed indefinitely 
A) the cost of forgone labour earnings for an entrepreneur 
B) the cost of the lost opportunity to invest in other capital markets when the money is invested in one's business 
C) the cost of gas for a long haul truck driver 
D) the cost of training programs postponed indefinitely

Question 3

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

Accepted Answer

A) $2.00 
B) $2.50 
C) $3.33 
D) $5.00 
A) $2.00 
B) $2.50 
C) $3.33 
D) $5.00

Question 4

If a firm wants to capitalize on economies of scale,how may it be able to do so

Accepted Answer

A) by assigning limited tasks to employees, so they can master those tasks 
B) by employing a smaller number of workers 
C) by producing a smaller quantity of output 
D) by producing only one product 
A) by assigning limited tasks to employees, so they can master those tasks 
B) by employing a smaller number of workers 
C) by producing a smaller quantity of output 
D) by producing only one product

Question 5

When is average total cost increasing

Accepted Answer

A) whenever total cost is increasing 
B) whenever marginal cost is increasing 
C) whenever marginal cost is less than average total cost 
D) whenever marginal cost is greater than average total cost 
A) whenever total cost is increasing 
B) whenever marginal cost is increasing 
C) whenever marginal cost is less than average total cost 
D) whenever marginal cost is greater than average total cost

Question 6

What is one of the most important properties of cost curves

Accepted Answer

A) For most producers, the average-total-cost curve never crosses the marginal cost curve. 
B) The average-fixed-cost curve must eventually rise. 
C) The average-total-cost curve first rises, then falls with increased output. 
D) The marginal-cost curve eventually rises with the quantity of output. 
A) For most producers, the average-total-cost curve never crosses the marginal cost curve. 
B) The average-fixed-cost curve must eventually rise. 
C) The average-total-cost curve first rises, then falls with increased output. 
D) The marginal-cost curve eventually rises with the quantity of output.

Question 7

Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.
  
-Refer to Figure 13-5.At levels of output below M,what does the firm experience

Accepted Answer

A) economies of scale 
B) diseconomies of scale 
C) economic profit 
D) accounting profit 
A) economies of scale 
B) diseconomies of scale 
C) economic profit 
D) accounting profit

Question 8

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

Accepted Answer

A) $1.00 
B) $3.50 
C) $5.00 
D) $6.00 
A) $1.00 
B) $3.50 
C) $5.00 
D) $6.00

Question 9

The shape of the marginal-cost curve tells a producer something about the marginal product of her workers.

Accepted Answer

A) True 
 B)False

Question 10

Figure 13-4
The curves in this figure reflect information about the average total cost, average fixed cost, average variable cost, and marginal cost for a firm.
  
-Refer to Figure 13-4.Which of the curves is most likely to represent average variable cost

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 11

A certain firm manufactures and sells computer chips.Suppose that last year it sold 4 million chips at a price of $10 per chip.Which of the following terminology correctly accounts for the $40 million to this firm

Accepted Answer

A) Its accounting profit amounted to $40 million. 
B) Its economic profit amounted to $40 million. 
C) Its total revenue amounted to $40 million. 
D) Its explicit costs amounted to $40 million. 
A) Its accounting profit amounted to $40 million. 
B) Its economic profit amounted to $40 million. 
C) Its total revenue amounted to $40 million. 
D) Its explicit costs amounted to $40 million.

Question 12

What is the relationship between economic profit and accounting profit

Accepted Answer

A) Economic profit will never exceed accounting profit. 
B) Economic profit is most often equal to accounting profit. 
C) Economic profit is always at least as large as accounting profit. 
D) Economic profit is a less complete measure of profitability than accounting profit. 
A) Economic profit will never exceed accounting profit. 
B) Economic profit is most often equal to accounting profit. 
C) Economic profit is always at least as large as accounting profit. 
D) Economic profit is a less complete measure of profitability than accounting profit.

Question 13

What is added to profit to obtain total revenue

Accepted Answer

A) net profit 
B) capital profit 
C) operational cost 
D) total cost 
A) net profit 
B) capital profit 
C) operational cost 
D) total cost

Question 14

Figure 13-2
The figure depicts a total cost function for a firm that produces cookies.
  
-Refer to Figure 13-2.Which statement describes the shape of the total-cost curve

Accepted Answer

A) Producing an additional cookie always costs more that the cost of producing the previous cookie. 
B) Total production of cookies decreases with additional units of input. 
C) Producing additional cookies is equally costly, regardless of how many cookies were previously produced. 
D) Producing additional cookies becomes increasingly costly only when the number of cookies previously produced is large. 
A) Producing an additional cookie always costs more that the cost of producing the previous cookie. 
B) Total production of cookies decreases with additional units of input. 
C) Producing additional cookies is equally costly, regardless of how many cookies were previously produced. 
D) Producing additional cookies becomes increasingly costly only when the number of cookies previously produced is large.

Question 15

Which of the following equations explains the relationship among different cost functions

Accepted Answer

A) Marginal cost = (Change in quantity of output) ÷ (Change in total cost) 
B) Average total cost = Total cost ÷ Quantity of output 
C) Total cost = Variable cost + Marginal cost 
D) Average variable cost = Total cost - Average fixed cost 
A) Marginal cost = (Change in quantity of output) ÷ (Change in total cost) 
B) Average total cost = Total cost ÷ Quantity of output 
C) Total cost = Variable cost + Marginal cost 
D) Average variable cost = Total cost - Average fixed cost

Question 16

Which term refers to the amount of money that a firm pays to buy inputs

Accepted Answer

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

Question 17

If marginal cost is below average total cost,what is happening to average total cost

Accepted Answer

A) It is constant. 
B) It is falling. 
C) It is rising. 
D) It may rise or fall. 
A) It is constant. 
B) It is falling. 
C) It is rising. 
D) It may rise or fall.

Question 18

What is the term for things that must be forgone to acquire a good

Accepted Answer

A) substitutes 
B) opportunity costs 
C) explicit costs 
D) competitors 
A) substitutes 
B) opportunity costs 
C) explicit costs 
D) competitors

Question 19

If the average-total-cost curve is falling, what is necessarily true of the marginal-cost curve? If the average-total-cost curve is rising, what is necessarily true of the marginal-cost curve?

Accepted Answer

When the average-total-cost cu

Question 20

Figure 13-4
The curves in this figure reflect information about the average total cost, average fixed cost, average variable cost, and marginal cost for a firm.
  
-Refer to Figure 13-4.Which of the curves is most likely to represent average total cost

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Exam 13: The Costs of Production

What is the term for the amount of money that a wheat farmer could have earned if he had planted barley instead of wheat

What would be an example of an explicit cost of production

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

If a firm wants to capitalize on economies of scale,how may it be able to do so

When is average total cost increasing

What is one of the most important properties of cost curves

Figure 13-5 This figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-5.At levels of output below M,what does the firm experience

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

The shape of the marginal-cost curve tells a producer something about the marginal product of her workers.

Figure 13-4 The curves in this figure reflect information about the average total cost, average fixed cost, average variable cost, and marginal cost for a firm. -Refer to Figure 13-4.Which of the curves is most likely to represent average variable cost

A certain firm manufactures and sells computer chips.Suppose that last year it sold 4 million chips at a price of $10 per chip.Which of the following terminology correctly accounts for the $40 million to this firm

What is the relationship between economic profit and accounting profit

What is added to profit to obtain total revenue

Figure 13-2 The figure depicts a total cost function for a firm that produces cookies. -Refer to Figure 13-2.Which statement describes the shape of the total-cost curve

Which of the following equations explains the relationship among different cost functions

Which term refers to the amount of money that a firm pays to buy inputs

If marginal cost is below average total cost,what is happening to average total cost

What is the term for things that must be forgone to acquire a good

If the average-total-cost curve is falling, what is necessarily true of the marginal-cost curve? If the average-total-cost curve is rising, what is necessarily true of the marginal-cost curve?

Figure 13-4 The curves in this figure reflect information about the average total cost, average fixed cost, average variable cost, and marginal cost for a firm. -Refer to Figure 13-4.Which of the curves is most likely to represent average total cost

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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