Question 1

In the short run, a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

Accepted Answer

A) short-run cost. 
B) variable cost. 
C) productivity cost. 
D) fixed cost. 
E) marginal cost. 
A) short-run cost. 
B) variable cost. 
C) productivity cost. 
D) fixed cost. 
E) marginal cost.

Question 2

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.What is the total fixed cost of producing 4,500 frijoles?

Accepted Answer

A) $1000 
B) $8000 
C) $9000 
D) $2,000 
E) More information is needed to determine the answer. 
A) $1000 
B) $8000 
C) $9000 
D) $2,000 
E) More information is needed to determine the answer.

Question 3

What is a normal profit? Is it part of the firm's opportunity costs, total revenue, or neither?

Accepted Answer

The normal profit is

Question 4

-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 total cost equals

Accepted Answer

A) $1,200. 
B) $300. 
C) $10.00. 
D) $12.00. 
E) $600. 
A) $1,200. 
B) $300. 
C) $10.00. 
D) $12.00. 
E) $600.

Question 5

As we observe the cost curves graph, we see that the

Accepted Answer

A) MC curve intersects the ATC curve at its maximum. 
B) MC curve can not be U-shaped. 
C) ATC curve always has a negative slope. 
D) MC curve intersects the AVC curve and ATC curve at their minimums. 
E) MC constantly falls as output increases. 
A) MC curve intersects the ATC curve at its maximum. 
B) MC curve can not be U-shaped. 
C) ATC curve always has a negative slope. 
D) MC curve intersects the AVC curve and ATC curve at their minimums. 
E) MC constantly falls as output increases.

Question 6

The average fixed cost curve

Accepted Answer

A) is always positively sloped. 
B) is U-shaped. 
C) has an upside-down U shape. 
D) is always negatively sloped. 
E) is horizontal. 
A) is always positively sloped. 
B) is U-shaped. 
C) has an upside-down U shape. 
D) is always negatively sloped. 
E) is horizontal.

Question 7

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

Accepted Answer

A) Total product increases as more labor is hired. 
B) The marginal product is equal to the average product. 
C) The marginal product is positive. 
D) The marginal product is greater than the average product. 
E) The marginal product is less than the average product. 
A) Total product increases as more labor is hired. 
B) The marginal product is equal to the average product. 
C) The marginal product is positive. 
D) The marginal product is greater than the average product. 
E) The marginal product is less than the average product.

Question 8

The return to entrepreneurship is known as

Accepted Answer

A) economic profit. 
B) normal profit. 
C) opportunity revenue. 
D) normal revenue. 
E) explicit profit. 
A) economic profit. 
B) normal profit. 
C) opportunity revenue. 
D) normal revenue. 
E) explicit profit.

Question 9

In a figure showing the average total cost curve and the average variable cost curve, the vertical distance between the two curves is equal to the

Accepted Answer

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

Question 10

Jones Production started business with a small scale plant.Fortunately for Smith, the owner of Jones Production, the business grew rapidly.The table below gives the total costs and the associated output for each year.
a∙Complete the table by finding the average cost for each scale.
   
b∙Over what range of total product (output)did Jones Production experience economies of scale, constant returns to scale, and diseconomies of scale?

Accepted Answer

@#IMG-DLM& 
a∙The completed table is above.
b∙Ther

Question 11

When plotted against the total output, what does the total fixed cost curve look like?

Accepted Answer

The total fixed cost curve is

Question 12

-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 total cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $10.00. 
D) $12.00. 
E) $1,200. 
A) $2,400. 
B) $300. 
C) $10.00. 
D) $12.00. 
E) $1,200.

Question 13

When the long-run average cost curve is downward sloping,

Accepted Answer

A) economies of scale are present. 
B) diseconomies of scale are present. 
C) the firm experiences constant returns to scale. 
D) the average fixed cost curve must be upward sloping. 
E) The premise of the question is wrong because long-run average cost curves never slope downward. 
A) economies of scale are present. 
B) diseconomies of scale are present. 
C) the firm experiences constant returns to scale. 
D) the average fixed cost curve must be upward sloping. 
E) The premise of the question is wrong because long-run average cost curves never slope downward.

Question 14

The main sources of economies of scale are

Accepted Answer

A) increasing marginal cost and decreasing marginal product. 
B) specialization of resources such as labor and capital. 
C) caused by the difficulty of coordinating and controlling large enterprises. 
D) decreasing marginal cost and increasing marginal product. 
E) an increase in a firm's bargaining power to lower the wage rate and the cost of capital as the firm's output increases. 
A) increasing marginal cost and decreasing marginal product. 
B) specialization of resources such as labor and capital. 
C) caused by the difficulty of coordinating and controlling large enterprises. 
D) decreasing marginal cost and increasing marginal product. 
E) an increase in a firm's bargaining power to lower the wage rate and the cost of capital as the firm's output increases.

Question 15

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

Accepted Answer

A) Labor's marginal product has increased. 
B) Diseconomies of scale were absent in the larger plant. 
C) The firm's scale initially was so large that it experienced diseconomies of scale. 
D) The firm's scale initially was too small to experience economies of scale. 
E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant. 
A) Labor's marginal product has increased. 
B) Diseconomies of scale were absent in the larger plant. 
C) The firm's scale initially was so large that it experienced diseconomies of scale. 
D) The firm's scale initially was too small to experience economies of scale. 
E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant.

Question 16

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.Between what two levels of output does the marginal cost of producing Fiery Frijoles first begin to rise?

Accepted Answer

A) 0 and 1000 
B) 1000 and 3000 
C) 3000 and 4000 
D) 4000 and 4500 
E) None of the above answers are correct. 
A) 0 and 1000 
B) 1000 and 3000 
C) 3000 and 4000 
D) 4000 and 4500 
E) None of the above answers are correct.

Question 17

The average product is the greatest in the short run when the

Accepted Answer

A) total product is maximized. 
B) marginal product is equal to zero. 
C) marginal product is maximized. 
D) marginal product is equal to the average product. 
E) marginal product is greater than the average product. 
A) total product is maximized. 
B) marginal product is equal to zero. 
C) marginal product is maximized. 
D) marginal product is equal to the average product. 
E) marginal product is greater than the average product.

Question 18

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

Accepted Answer

Yes, downsizing by laying off workers ca

Question 19

The U-shaped average total cost curve is

Accepted Answer

A) a result of firms' wanting to find the output level where cost is at its minimum. 
B) unrealistic because average total cost always increases as output increases. 
C) the result of average fixed cost falling and decreasing marginal returns as output increases. 
D) a result of constant marginal returns. 
E) a result of increasing marginal returns. 
A) a result of firms' wanting to find the output level where cost is at its minimum. 
B) unrealistic because average total cost always increases as output increases. 
C) the result of average fixed cost falling and decreasing marginal returns as output increases. 
D) a result of constant marginal returns. 
E) a result of increasing marginal returns.

Question 20

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

Accepted Answer

Average fixed cost is calculated by divi

In the short run, a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.What is the total fixed cost of producing 4,500 frijoles?

What is a normal profit? Is it part of the firm's opportunity costs, total revenue, or neither?

-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 total cost equals

As we observe the cost curves graph, we see that the

The average fixed cost curve

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

The return to entrepreneurship is known as

In a figure showing the average total cost curve and the average variable cost curve, the vertical distance between the two curves is equal to the

When plotted against the total output, what does the total fixed cost curve look like?

-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 total cost equals

When the long-run average cost curve is downward sloping,

The main sources of economies of scale are

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.Between what two levels of output does the marginal cost of producing Fiery Frijoles first begin to rise?

The average product is the greatest in the short run when the

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

The U-shaped average total cost curve is

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

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

Exam 14: Production and Cost

In the short run, a firm cannot change the amount of capital it uses.Therefore the cost of capital is a

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.What is the total fixed cost of producing 4,500 frijoles?

What is a normal profit? Is it part of the firm's opportunity costs, total revenue, or neither?

-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 total cost equals

As we observe the cost curves graph, we see that the

The average fixed cost curve

Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?

The return to entrepreneurship is known as

In a figure showing the average total cost curve and the average variable cost curve, the vertical distance between the two curves is equal to the

When plotted against the total output, what does the total fixed cost curve look like?

-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 total cost equals

When the long-run average cost curve is downward sloping,

The main sources of economies of scale are

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.Between what two levels of output does the marginal cost of producing Fiery Frijoles first begin to rise?

The average product is the greatest in the short run when the

Downsizing is the practice of laying off workers in an attempt to decrease average total cost.Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

The U-shaped average total cost curve is

How do we calculate average fixed cost and why does average fixed cost fall as output increases?

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