Question 1

10.5 Chapter Figures
   
The figure above shows a firm's total product curve.
-Which of the points show efficient production points?

Accepted Answer

A) All points above the TP curve 
B) All points on the TP curve 
C) All the darkened points below the TP curve 
D) All the points above and on the TP curve 
E) All the darkened points below and on the TP curve 
A) All points above the TP curve 
B) All points on the TP curve 
C) All the darkened points below the TP curve 
D) All the points above and on the TP curve 
E) All the darkened points below and on the TP curve

Question 2

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Output } \
\text { (gallons of ice } \
\text { cream per hour) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 1 \
1 & 2 \
2 & 3 \
3 & 5 \
4 & 8 \
5 & 11 \
\hline
\end{array}$$
-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, the marginal cost of producing the fourth gallon of ice cream is

Accepted Answer

A) $2. 
B) $3. 
C) $5. 
D) $8. 
E) $32. 
A) $2. 
B) $3. 
C) $5. 
D) $8. 
E) $32.

Question 3

The average total cost curve is U-shaped. At the quantity of output where average total cost is at its minimum, is the marginal cost curve above the average total cost curve, below the average total cost curve, or intersecting the average total cost curve?

Accepted Answer

When the average total cost is at its mi

Question 4

Which of the following is an example of an implicit cost?

Accepted Answer

A) rent on a building 
B) the cost of fertilizer for a farmer 
C) the economic depreciation of capital equipment the business owns 
D) the cost of fuel and materials 
E) wages paid to workers 
A) rent on a building 
B) the cost of fertilizer for a farmer 
C) the economic depreciation of capital equipment the business owns 
D) the cost of fuel and materials 
E) wages paid to workers

Question 5

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 6

Which of the following is true in the long run?

Accepted Answer

A) Total cost equals fixed cost. 
B) Total cost is constant. 
C) All costs are variable. 
D) Marginal cost equals zero. 
E) None of the above are true in the long run. 
A) Total cost equals fixed cost. 
B) Total cost is constant. 
C) All costs are variable. 
D) Marginal cost equals zero. 
E) None of the above are true in the long run.

Question 7

In the long run,

Accepted Answer

A) all inputs can be varied. 
B) all inputs are fixed. 
C) some inputs are variable and other inputs are fixed. 
D) output is fixed. 
E) total variable cost cannot be changed. 
A) all inputs can be varied. 
B) all inputs are fixed. 
C) some inputs are variable and other inputs are fixed. 
D) output is fixed. 
E) total variable cost cannot be changed.

Question 8

At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is

Accepted Answer

A) 18 cakes and the average product for three workers is 6 cakes. 
B) 9 cakes and is equal to the average product. 
C) 4 cakes and the average product for three workers is 6 cakes. 
D) 32 cakes and the average product for three workers is 9 cakes. 
E) 6 cakes and the average product for three workers is also 6 cakes. 
A) 18 cakes and the average product for three workers is 6 cakes. 
B) 9 cakes and is equal to the average product. 
C) 4 cakes and the average product for three workers is 6 cakes. 
D) 32 cakes and the average product for three workers is 9 cakes. 
E) 6 cakes and the average product for three workers is also 6 cakes.

Question 9

If marginal cost increases when output increases, then

Accepted Answer

A) marginal product must decrease when output increases. 
B) average fixed cost is constant. 
C) total cost is constant. 
D) average variable cost must increase when output increases. 
E) average total cost must decrease when output increases. 
A) marginal product must decrease when output increases. 
B) average fixed cost is constant. 
C) total cost is constant. 
D) average variable cost must increase when output increases. 
E) average total cost must decrease when output increases.

Question 10

When an economist uses the term "cost" referring to a firm, the economist refers to the

Accepted Answer

A) price of the good to the consumer. 
B) explicit cost of producing a good or service but not the implicit cost of producing a good or service. 
C) implicit cost of producing a good or service but not the explicit cost of producing a good or service. 
D) opportunity cost of producing a good or service, which includes both implicit and explicit cost. 
E) cost that can be actually verified and measured. 
A) price of the good to the consumer. 
B) explicit cost of producing a good or service but not the implicit cost of producing a good or service. 
C) implicit cost of producing a good or service but not the explicit cost of producing a good or service. 
D) opportunity cost of producing a good or service, which includes both implicit and explicit cost. 
E) cost that can be actually verified and measured.

Question 11

Ayanna grows herbs. Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker. This year she doubled her land to 500 square feet, doubled her workers to 2, and grew 4,500 pounds of herbs. She sells her rare, organic herbs for $50 a pound. She pays her a worker $25,000 a year and rents her land for $100 per square foot for a year. These are her only costs.
a. What was Ayanna's total cost last year and this year?
b. What was Ayanna's average total cost last year and this year?
c. Did Ayanna experience economies or diseconomies of scale?

Accepted Answer

a. Ayanna's total cost last year was $50

Question 12

Ajax Manufacturing has a fixed scale of plant with the levels of total product given in the table for different levels of labor. Complete the table by calculating the average product and marginal product.
 $\begin{array}{l}
\text { Quantity of labor Total Average Marginal }\
\begin{array}{cccc}
\text { (workers) } & \text { product } & \text { product } & \text { product } \
\hline 0 & 0 & \times \mathrm{x} & - \
1 & 24 & - & - \
2 & 50 & - & - \
3 & 74 & - & - \
4 & 94 & - & - \
5 & 110 & - & - \
6 & 122 & - & - \
7 & 130 & - & - \
8 & 134 & - & - \
9 & 134 & - & -
\end{array}
\end{array}$

Accepted Answer

\[\begin{array}{l}
\text { Quantity of l

Question 13

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 14

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 15

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Labor } \
\text { (workers) }
\end{array} & \text { Output } \
\hline 0 & 0 \
1 & 20 \
2 & 50 \
3 & 70 \
4 & 80 \
5 & 85
\end{array}$$
-The table above shows a total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. The total cost of producing 80 units equals

Accepted Answer

A) less than $5. 
B) more than $5 and less than $110. 
C) more than $110 and less than $120. 
D) more than $120 and less than $150. 
E) more than $150. 
A) less than $5. 
B) more than $5 and less than $110. 
C) more than $110 and less than $120. 
D) more than $120 and less than $150. 
E) more than $150.

Question 16

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is incorrect. When output

Question 17

What is the long-run average cost curve?
 What are the three ranges of output and in what order do they occur?
 Briefly define each of the three ranges.

Accepted Answer

The long-run average cost curve shows th

Question 18

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (dogs groomed per week) }
\end{array} \
\hline 0 & 0 \
1 & 40 \
2 & 100 \
3 & 150 \
4 & 190 \
5 & 220 \
6 & 240
\end{array}$$
-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 19

Average total cost equals

Accepted Answer

A) marginal cost divided by output. 
B) average fixed cost plus average variable cost. 
C) total fixed cost plus total variable cost. 
D) marginal cost plus opportunity cost. 
E) marginal cost multiplied by the quantity of output. 
A) marginal cost divided by output. 
B) average fixed cost plus average variable cost. 
C) total fixed cost plus total variable cost. 
D) marginal cost plus opportunity cost. 
E) marginal cost multiplied by the quantity of output.

Question 20

Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and other variable costs were $20,000. Lauren could have worked as a biologist and earned $50,000 per year. An economist calculates her implicit costs as

Accepted Answer

A) $150,000. 
B) $63,000. 
C) $50,000. 
D) $110,000. 
E) $0 because Lauren did not work as a biologist. 
A) $150,000. 
B) $63,000. 
C) $50,000. 
D) $110,000. 
E) $0 because Lauren did not work as a biologist.

10.5 Chapter Figures The figure above shows a firm's total product curve. -Which of the points show efficient production points?

Output (gallons of ice cream per hour) Total cost (dollars) 0 1 1 2 2 3 3 5 4 8 5 11 -The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, the marginal cost of producing the fourth gallon of ice cream is

The average total cost curve is U-shaped. At the quantity of output where average total cost is at its minimum, is the marginal cost curve above the average total cost curve, below the average total cost curve, or intersecting the average total cost curve?

Which of the following is an example of an implicit cost?

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.

Which of the following is true in the long run?

In the long run,

At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is

If marginal cost increases when output increases, then

When an economist uses the term "cost" referring to a firm, the economist refers to the

The U-shaped average total cost curve is

Labor (workers) Output 0 0 1 20 2 50 3 70 4 80 5 85 -The table above shows a total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. The total cost of producing 80 units equals

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Average total cost equals

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 10: Production and Cost

10.5 Chapter Figures The figure above shows a firm's total product curve. -Which of the points show efficient production points?

Output (gallons of ice cream per hour) Total cost (dollars) 0 1 1 2 2 3 3 5 4 8 5 11 -The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, the marginal cost of producing the fourth gallon of ice cream is

The average total cost curve is U-shaped. At the quantity of output where average total cost is at its minimum, is the marginal cost curve above the average total cost curve, below the average total cost curve, or intersecting the average total cost curve?

Which of the following is an example of an implicit cost?

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.

Which of the following is true in the long run?

In the long run,

At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is

If marginal cost increases when output increases, then

When an economist uses the term "cost" referring to a firm, the economist refers to the

The U-shaped average total cost curve is

Labor (workers) Output 0 0 1 20 2 50 3 70 4 80 5 85 -The table above shows a total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. The total cost of producing 80 units equals

"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

What is the long-run average cost curve? What are the three ranges of output and in what order do they occur? Briefly define each of the three ranges.

Average total cost equals

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters