Question 1

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 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, which of the following is correct?

Accepted Answer

A) The total fixed cost is $1. 
B) The average fixed cost of 1 gallon is $1.00. 
C) The average variable cost of 2 gallons of ice cream is $1.00 per gallon. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct. 
A) The total fixed cost is $1. 
B) The average fixed cost of 1 gallon is $1.00. 
C) The average variable cost of 2 gallons of ice cream is $1.00 per gallon. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct.

Question 3

In the long run, constant returns to scale necessarily occur when the firm increases its production and the firm's

Accepted Answer

A) total cost increases. 
B) total cost does not change. 
C) average total cost increases . 
D) average total cost does not change. 
E) production increases by more than does the firm's total cost. 
A) total cost increases. 
B) total cost does not change. 
C) average total cost increases . 
D) average total cost does not change. 
E) production increases by more than does the firm's total cost.

Question 4

Which of the following is an implicit cost?
I. wages paid to workers
Ii. the normal profit
Iii. the electric bill

Accepted Answer

A) i only 
B) ii only 
C) i and ii 
D) ii and iii 
E) Neither i, ii, nor iii 
A) i only 
B) ii only 
C) i and ii 
D) ii and iii 
E) Neither i, ii, nor iii

Question 5

The long run is a time period that is

Accepted Answer

A) five years or longer. 
B) long enough to change the amount of labor employed. 
C) long enough to change the size of the firm's plant and all other inputs. 
D) long enough to change the amount of labor employed but not to change the size of the plant. 
E) None of the above answers describe the long run. 
A) five years or longer. 
B) long enough to change the amount of labor employed. 
C) long enough to change the size of the firm's plant and all other inputs. 
D) long enough to change the amount of labor employed but not to change the size of the plant. 
E) None of the above answers describe the long run.

Question 6

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed } \
\text { per day) }
\end{array} \
\hline 0 & 0 \
1 & 3 \
2 & 8 \
3 & 15 \
4 & 20 \
5 & 21
\end{array}$$
-The above table has the total product schedule for Jesse's Lawn Service.
a. In the figure, label the axes and then graph the total product curve.
   
b. Find the average product for the different amounts of employment.

Accepted Answer

@#IMG-DLM& 
a. The figure graphs the total product

Question 7

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

Accepted Answer

A) $0.75 
B) $1.00 
C) $1.75 
D) $20 
E) $0.25 
A) $0.75 
B) $1.00 
C) $1.75 
D) $20 
E) $0.25

Question 8

The vertical distance between the total cost curve and the total variable cost curve ________ as output increases and the vertical distance between the average total cost curve and average variable cost curve ________ as output increases.

Accepted Answer

A) is constant; decreases 
B) decreases; is constant 
C) increases; decreases 
D) decreases; increases 
E) decreases; decreases 
A) is constant; decreases 
B) decreases; is constant 
C) increases; decreases 
D) decreases; increases 
E) decreases; decreases

Question 9

Which of the following is an explicit cost of production?

Accepted Answer

A) wages paid to workers 
B) the electric bill 
C) purchases of raw material 
D) Only answers A and B are explicit costs because the purchases of raw material is only an opportunity cost. 
E) Answers A, B, and C are all correct. 
A) wages paid to workers 
B) the electric bill 
C) purchases of raw material 
D) Only answers A and B are explicit costs because the purchases of raw material is only an opportunity cost. 
E) Answers A, B, and C are all correct.

Question 10

When the marginal product is increasing as the quantity increases, then as the quantity increases the

Accepted Answer

A) average product is decreasing. 
B) marginal cost is decreasing. 
C) total cost is decreasing. 
D) total product is decreasing. 
E) fixed cost is increasing. 
A) average product is decreasing. 
B) marginal cost is decreasing. 
C) total cost is decreasing. 
D) total product is decreasing. 
E) fixed cost is increasing.

Question 11

The short run is a time period during which

Accepted Answer

A) some of the firm's resources are fixed. 
B) all of the firm's resources are fixed. 
C) all of the firm's resources are variable. 
D) the fixed cost equals zero. 
E) the firm cannot increase its output. 
A) some of the firm's resources are fixed. 
B) all of the firm's resources are fixed. 
C) all of the firm's resources are variable. 
D) the fixed cost equals zero. 
E) the firm cannot increase its output.

Question 12

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 28
\end{array}$$
-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 13

$$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (workers) }
\end{array} & \text { Output (bikes) } & \begin{array} { c } 
\text { Total fixed } \
\text { costs (dollars) }
\end{array} & \begin{array} { c } 
\text { Total variable } \
\text { cost (dollars) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 200 & & \
\hline 1 & 20 & & 100 & \
\hline 2 & 50 & & & \
\hline 3 & 60 & & & \
\hline 4 & 64 & & & \
\hline
\end{array}$$
-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total fixed cost of producing 64 bikes?

Accepted Answer

A) $200 
B) $300 
C) $400 
D) $500 
E) $600 
A) $200 
B) $300 
C) $400 
D) $500 
E) $600

Question 14

Jessica is a young doctor who has just started her own practice. Her previous position paid her $80,000 a year. For office space, she uses a building which she owns and which she has rented in the past for $40,000 a year. Her total revenue from her new practice is $250,000. She pays $50,000 to other firms for materials and supplies, and she pays $40,000 in wages to her office nurse. Assume that Jessica's building and equipment do not depreciate and that her normal profit is $20,000.
a. Which of Jessica's costs are explicit costs and what is their total?
b. Which of Jessica's costs are implicit costs and what is their total?
c. What is the opportunity cost of all factors of production employed by Jessica?
d. What is Jessica's economic profit?

Accepted Answer

a. Jessica's explicit costs are the wage

Question 15

In economics, a "normal profit" is the return to

Accepted Answer

A) labor. 
B) capital. 
C) land. 
D) entrepreneurship. 
E) Answers B and D are correct. 
A) labor. 
B) capital. 
C) land. 
D) entrepreneurship. 
E) Answers B and D are correct.

Question 16

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70 \
\hline
\end{array}$$
-The above table shows the total product schedule for Hair Today, a hair styling salon. Based on the table, the marginal product for Hair Today

Accepted Answer

A) never reaches a maximum. 
B) decreases after the 1st worker. 
C) reaches a maximum with the 4th worker. 
D) reaches a maximum with the 3rd worker. 
E) reaches a maximum with the 5th worker. 
A) never reaches a maximum. 
B) decreases after the 1st worker. 
C) reaches a maximum with the 4th worker. 
D) reaches a maximum with the 3rd worker. 
E) reaches a maximum with the 5th worker.

Question 17

In a graph of a typical firm's AFC, ATC, and AVC curves, the

Accepted Answer

A) AVC curve lies above the ATC curve. 
B) ATC curve lies below the AFC curve. 
C) distance between the ATC curve and the AVC curve equals the AFC. 
D) distance between the AVC curve and the AFC curve equals the ATC. 
E) AVC curve crosses the MC curve at the point where the MC is at its minimum. 
A) AVC curve lies above the ATC curve. 
B) ATC curve lies below the AFC curve. 
C) distance between the ATC curve and the AVC curve equals the AFC. 
D) distance between the AVC curve and the AFC curve equals the ATC. 
E) AVC curve crosses the MC curve at the point where the MC is at its minimum.

Question 18

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (frijoles) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 0 & 1,000 \
\hline 5 & 1,000 & 3,000 \
\hline 10 & 3,000 & 5,000 \
\hline 15 & 4,000 & 7,000 \
\hline 20 & 4,500 & 9,000 \
\hline
\end{array}$$
-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the average total cost of producing 4,500 frijoles?

Accepted Answer

A) $2 
B) $225 
C) $9,000 
D) $8,000 
E) More information is needed to determine the answer. 
A) $2 
B) $225 
C) $9,000 
D) $8,000 
E) More information is needed to determine the answer.

Question 19

John fishes for a living. Last year, he sold $100,000 of fish. Bait, nets and other fishing supplies cost John $10,000 and he paid $40,000 in salaries to his helpers. Depreciation on his boat and other equipment, as calculated using IRS rules, was $15,000. What was John's profit as would be calculated by an accountant?

Accepted Answer

A) $165,000 
B) $100,000 
C) $65,000 
D) $35,000 
E) None of the above answers is correct. 
A) $165,000 
B) $100,000 
C) $65,000 
D) $35,000 
E) None of the above answers is correct.

Question 20

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Output } \
\text { (pizzas per hour) }
\end{array} & \begin{array} { c } 
\text { Total cost } \
\text { (dollars) }
\end{array} \
\hline 0 & 20 \
1 & 35 \
2 & 49 \
3 & 61 \
4 & 71 \
5 & 79 \
6 & 85
\end{array}$$
-Paulette owns a pizza parlor. Her total cost schedule is in the above table. Her marginal cost of producing the fifth pizza is

Accepted Answer

A) $8. 
B) between $8.01 and $10.00. 
C) between $10.01 and $14.00. 
D) between $14.01 and $78.00. 
E) more than $78.01. 
A) $8. 
B) between $8.01 and $10.00. 
C) between $10.01 and $14.00. 
D) between $14.01 and $78.00. 
E) more than $78.01.

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

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, which of the following is correct?

In the long run, constant returns to scale necessarily occur when the firm increases its production and the firm's

Which of the following is an implicit cost? I. wages paid to workers Ii. the normal profit Iii. the electric bill

The long run is a time period that 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 average variable cost of producing 80 units equals ________ per unit.

The vertical distance between the total cost curve and the total variable cost curve as output increases and the vertical distance between the average total cost curve and average variable cost curve as output increases.

Which of the following is an explicit cost of production?

When the marginal product is increasing as the quantity increases, then as the quantity increases the

The short run is a time period during which

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -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.

In economics, a "normal profit" is the return to

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The above table shows the total product schedule for Hair Today, a hair styling salon. Based on the table, the marginal product for Hair Today

In a graph of a typical firm's AFC, ATC, and AVC curves, the

Output (pizzas per hour) Total cost (dollars) 0 20 1 35 2 49 3 61 4 71 5 79 6 85 -Paulette owns a pizza parlor. Her total cost schedule is in the above table. Her marginal cost of producing the fifth pizza is

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

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

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, which of the following is correct?

In the long run, constant returns to scale necessarily occur when the firm increases its production and the firm's

Which of the following is an implicit cost? I. wages paid to workers Ii. the normal profit Iii. the electric bill

The long run is a time period that 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 average variable cost of producing 80 units equals ________ per unit.

The vertical distance between the total cost curve and the total variable cost curve ________ as output increases and the vertical distance between the average total cost curve and average variable cost curve ________ as output increases.

Which of the following is an explicit cost of production?

When the marginal product is increasing as the quantity increases, then as the quantity increases the

The short run is a time period during which

Quantity of labor (workers) Total product (lawns mowed per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 28 -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.

In economics, a "normal profit" is the return to

Quantity of labor (workers) Total product (hair stylings per day) 0 0 1 10 2 25 3 45 4 60 5 70 -The above table shows the total product schedule for Hair Today, a hair styling salon. Based on the table, the marginal product for Hair Today

In a graph of a typical firm's AFC, ATC, and AVC curves, the

Output (pizzas per hour) Total cost (dollars) 0 20 1 35 2 49 3 61 4 71 5 79 6 85 -Paulette owns a pizza parlor. Her total cost schedule is in the above table. Her marginal cost of producing the fifth pizza is

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

The vertical distance between the total cost curve and the total variable cost curve as output increases and the vertical distance between the average total cost curve and average variable cost curve as output increases.