Question 1

Marginal cost is equal to

Accepted Answer

A) the total cost of a firm's production. 
B) total cost minus fixed cost. 
C) a cost that is not related to the quantity produced. 
D) the change in total cost that results from a one-unit increase in output. 
E) the change in fixed cost that results from a one-unit increase in output. 
A) the total cost of a firm's production. 
B) total cost minus fixed cost. 
C) a cost that is not related to the quantity produced. 
D) the change in total cost that results from a one-unit increase in output. 
E) the change in fixed cost that results from a one-unit increase in output.

Question 2

-The table above shows the total product schedule for Rick's Lawn Service, a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

Accepted Answer

A) first 
B) fourth 
C) fifth 
D) sixth 
E) third 
A) first 
B) fourth 
C) fifth 
D) sixth 
E) third

Question 3

The total product is 10 units.The average total cost is $30 and the average fixed cost is $10.What is the amount of the total variable cost?

Accepted Answer

A) $20 
B) $200 
C) $300 
D) $10 
E) It is impossible to determine with the information given. 
A) $20 
B) $200 
C) $300 
D) $10 
E) It is impossible to determine with the information given.

Question 4

What resources can a firm change in the short run? In the long run?

Accepted Answer

In the short run, the firm can change it

Question 5

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 2 workers, her average variable cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $6.00. 
D) $10.00. 
E) $600. 
A) $2,400. 
B) $300. 
C) $6.00. 
D) $10.00. 
E) $600.

Question 6

A cost paid in money is

Accepted Answer

A) not an opportunity cost. 
B) an implicit cost and an opportunity cost. 
C) an explicit cost and an opportunity cost. 
D) not an accounting cost. 
E) an explicit cost but not an opportunity cost. 
A) not an opportunity cost. 
B) an implicit cost and an opportunity cost. 
C) an explicit cost and an opportunity cost. 
D) not an accounting cost. 
E) an explicit cost but not an opportunity cost.

Question 7

A firm's rent is a fixed cost.If the rent increases, then in the figure above ________ upward.

Accepted Answer

A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift 
A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift

Question 8

Which of the following are correct statements about implicit and explicit costs?
I∙Normal profit is an implicit cost.
Ii∙Economic depreciation is an explicit cost.
Iii∙Wages are an explicit cost.

Accepted Answer

A) ii and iii 
B) i and iii 
C) iii only 
D) i, ii, and iii 
E) i only 
A) ii and iii 
B) i and iii 
C) iii only 
D) i, ii, and iii 
E) i only

Question 9

Professor Rush decided to quit teaching economics and opens a shoe store out at the mall.He gave up an annual income of $50,000 to open the store.A year after opening the shoe store, the total revenue for the year was $200,000.Rush's expenses were $30,000 for labor, rent was $18,000, and utilities were $1,200.He also had to purchase new shoes from manufacturers, at a cost of $60,000, which was financed by cashing in his savings of $60,000 that had been in a bank earning 8 percent per year.The normal profit from operating a shoe store in the mall is $20,000.Determine Professor Rush's explicit costs, implicit costs, and economic profit.

Accepted Answer

The explicit costs are the cost of labor

Question 10

The marginal product of labor is the change in

Accepted Answer

A) total cost from employing one more worker. 
B) total revenue from employing one more worker. 
C) average product from employing one more worker. 
D) total output from employing one more worker. 
E) total output divided by the change in cost from employing one more worker. 
A) total cost from employing one more worker. 
B) total revenue from employing one more worker. 
C) average product from employing one more worker. 
D) total output from employing one more worker. 
E) total output divided by the change in cost from employing one more worker.

Question 11

In the short run, firms increase output

Accepted Answer

A) only by increasing the size of their plant. 
B) only by decreasing the size of their plant. 
C) only by increasing the amount of labor used. 
D) only by decreasing the amount of labor used. 
E) either increasing the amount of labor used or increasing the size of their plant. 
A) only by increasing the size of their plant. 
B) only by decreasing the size of their plant. 
C) only by increasing the amount of labor used. 
D) only by decreasing the amount of labor used. 
E) either increasing the amount of labor used or increasing the size of their plant.

Question 12

Average product is equal to

Accepted Answer

A) marginal product + total product. 
B) total product ÷ marginal product. 
C) total product ÷ quantity of labor. 
D) total product × quantity of labor. 
E) marginal product × quantity of labor. 
A) marginal product + total product. 
B) total product ÷ marginal product. 
C) total product ÷ quantity of labor. 
D) total product × quantity of labor. 
E) marginal product × quantity of labor.

Question 13

Which of the following curves are U-shaped?
i. average variable cost curve
ii. average fixed cost curve
iii. average total cost curve

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) Only ii 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) Only ii

Question 14

Because the amount of labor a firm employs can be changed, the cost of labor is known as

Accepted Answer

A) minimum cost. 
B) variable cost. 
C) maximum cost. 
D) fixed cost. 
E) an unavoidable cost. 
A) minimum cost. 
B) variable cost. 
C) maximum cost. 
D) fixed cost. 
E) an unavoidable cost.

Question 15

A firm's fundamental goal is

Accepted Answer

A) different for each firm. 
B) to make a quality product. 
C) to maximize profit. 
D) to gain market share. 
E) to decrease its employment of workers in order to cut its costs. 
A) different for each firm. 
B) to make a quality product. 
C) to maximize profit. 
D) to gain market share. 
E) to decrease its employment of workers in order to cut its costs.

Question 16

Jay set up his hot dog stand near the business district.His total variable cost includes the

Accepted Answer

A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day. 
A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day.

Question 17

The main source of economies of scale is

Accepted Answer

A) better management. 
B) constant returns to plant size. 
C) specialization. 
D) long-run cost curves eventually sloping downward. 
E) increases in the labor force not matched by increases in the plant size. 
A) better management. 
B) constant returns to plant size. 
C) specialization. 
D) long-run cost curves eventually sloping downward. 
E) increases in the labor force not matched by increases in the plant size.

Question 18

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

Accepted Answer

A) less efficient and less productive workers are hired. 
B) adding more workers exhausts the possible gains from specialization. 
C) the entrepreneur does not know how to manage more workers. 
D) each worker will produce more than the worker previously hired. 
E) the plant becomes less specialized. 
A) less efficient and less productive workers are hired. 
B) adding more workers exhausts the possible gains from specialization. 
C) the entrepreneur does not know how to manage more workers. 
D) each worker will produce more than the worker previously hired. 
E) the plant becomes less specialized.

Question 19

-The above table shows the total product schedule for Hair Today, a hair styling salon.The average product when four workers are hired is

Accepted Answer

A) 10 hair stylings. 
B) 15 hair stylings. 
C) 20 hair stylings. 
D) 240 hair stylings. 
E) the same as when five workers are hired. 
A) 10 hair stylings. 
B) 15 hair stylings. 
C) 20 hair stylings. 
D) 240 hair stylings. 
E) the same as when five workers are hired.

Question 20

If average variable costs increase as output increases, then

Accepted Answer

A) total fixed cost must be increasing also. 
B) marginal cost must be greater than average variable cost. 
C) total cost must be constant. 
D) output must be zero. 
E) average total cost must be increasing also. 
A) total fixed cost must be increasing also. 
B) marginal cost must be greater than average variable cost. 
C) total cost must be constant. 
D) output must be zero. 
E) average total cost must be increasing also.

Marginal cost is equal to

-The table above shows the total product schedule for Rick's Lawn Service, a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

The total product is 10 units.The average total cost is $30 and the average fixed cost is $10.What is the amount of the total variable cost?

What resources can a firm change in the short run? In the long run?

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 2 workers, her average variable cost equals

A cost paid in money is

A firm's rent is a fixed cost.If the rent increases, then in the figure above ________ upward.

Which of the following are correct statements about implicit and explicit costs? I∙Normal profit is an implicit cost. Ii∙Economic depreciation is an explicit cost. Iii∙Wages are an explicit cost.

The marginal product of labor is the change in

In the short run, firms increase output

Average product is equal to

Which of the following curves are U-shaped? i. average variable cost curve ii. average fixed cost curve iii. average total cost curve

Because the amount of labor a firm employs can be changed, the cost of labor is known as

A firm's fundamental goal is

Jay set up his hot dog stand near the business district.His total variable cost includes the

The main source of economies of scale is

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

-The above table shows the total product schedule for Hair Today, a hair styling salon.The average product when four workers are hired is

If average variable costs increase as output increases, then

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

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Consumer Choice and Demand

Perfect Competition

Monopoly

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Exam 14: Production and Cost

Marginal cost is equal to

-The table above shows the total product schedule for Rick's Lawn Service, a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

The total product is 10 units.The average total cost is $30 and the average fixed cost is $10.What is the amount of the total variable cost?

What resources can a firm change in the short run? In the long run?

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 2 workers, her average variable cost equals

A cost paid in money is

A firm's rent is a fixed cost.If the rent increases, then in the figure above ________ upward.

Which of the following are correct statements about implicit and explicit costs? I∙Normal profit is an implicit cost. Ii∙Economic depreciation is an explicit cost. Iii∙Wages are an explicit cost.

The marginal product of labor is the change in

In the short run, firms increase output

Average product is equal to

Which of the following curves are U-shaped? i. average variable cost curve ii. average fixed cost curve iii. average total cost curve

Because the amount of labor a firm employs can be changed, the cost of labor is known as

A firm's fundamental goal is

Jay set up his hot dog stand near the business district.His total variable cost includes the

The main source of economies of scale is

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

-The above table shows the total product schedule for Hair Today, a hair styling salon.The average product when four workers are hired is

If average variable costs increase as output increases, then

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters