Question 1

Which of the following is a fixed cost for ACME manufacturing?

Accepted Answer

A) wages paid to labor 
B) the annual fire and theft insurance premiums 
C) the utility bill 
D) raw material costs 
E) the cost of shipping its product to market 
A) wages paid to labor 
B) the annual fire and theft insurance premiums 
C) the utility bill 
D) raw material costs 
E) the cost of shipping its product to market

Question 2

Normal profit is

Accepted Answer

A) part of the firm's opportunity costs. 
B) the same as economic profits. 
C) part of the firm's explicit costs. 
D) Answers A and B are correct. 
E) Answers A and C are correct. 
A) part of the firm's opportunity costs. 
B) the same as economic profits. 
C) part of the firm's explicit costs. 
D) Answers A and B are correct. 
E) Answers A and C are correct.

Question 3

The relationship between the MP and MC curves is

Accepted Answer

A) over the range where the MP curve has a negative slope, the MC curve also has a negative slope. 
B) there is no predictable relationship. 
C) over the range where the MC curve has a positive slope, the MP curve also has a positive slope. 
D) over the range where the MP curve has a positive slope, the MC curve has a negative slope. 
E) that the MP is not defined when the MC curve has a negative slope. 
A) over the range where the MP curve has a negative slope, the MC curve also has a negative slope. 
B) there is no predictable relationship. 
C) over the range where the MC curve has a positive slope, the MP curve also has a positive slope. 
D) over the range where the MP curve has a positive slope, the MC curve has a negative slope. 
E) that the MP is not defined when the MC curve has a negative slope.

Question 4

A normal profit is defined as

Accepted Answer

A) total revenue minus explicit costs. 
B) the same thing as accounting profit. 
C) the return to entrepreneurship. 
D) total revenue minus implicit costs. 
E) the economic profit minus the implicit costs. 
A) total revenue minus explicit costs. 
B) the same thing as accounting profit. 
C) the return to entrepreneurship. 
D) total revenue minus implicit costs. 
E) the economic profit minus the implicit costs.

Question 5

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70 \
\hline
\end{array}$$
-The above table shows the total product schedule for Hair Today, a hair styling salon.
a. What is the first worker's marginal product?
 The second worker?
 The third worker?
 The fourth worker?
 The fifth worker?
b. Over what range of workers is there increasing marginal returns?
 Over what range is there decreasing marginal returns?

Accepted Answer

a. The first worker's marginal product i

Question 6

The difference between a firm's total revenue and its total cost is its ________ profit.

Accepted Answer

A) explicit 
B) normal 
C) economic 
D) accounting 
E) excess 
A) explicit 
B) normal 
C) economic 
D) accounting 
E) excess

Question 7

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 8

To produce 10 shirts, the total cost is $80; to produce 11 shirts, the total cost is $99. The marginal cost of the 11th shirt is equal to

Accepted Answer

A) $8. 
B) $9. 
C) $80. 
D) $99. 
E) $19. 
A) $8. 
B) $9. 
C) $80. 
D) $99. 
E) $19.

Question 9

The primary goal of a business firm is to

Accepted Answer

A) promote fairness. 
B) make a quality product. 
C) promote workforce job satisfaction. 
D) maximize profit. 
E) increase its production. 
A) promote fairness. 
B) make a quality product. 
C) promote workforce job satisfaction. 
D) maximize profit. 
E) increase its production.

Question 10

For a business, opportunity cost measures

Accepted Answer

A) only the cost of labor and materials. 
B) only the implicit costs of the business. 
C) the cost of all the factors of production the firm employs. 
D) only the explicit costs the firm must pay. 
E) all of the firm's costs including its normal profit and its economic profit. 
A) only the cost of labor and materials. 
B) only the implicit costs of the business. 
C) the cost of all the factors of production the firm employs. 
D) only the explicit costs the firm must pay. 
E) all of the firm's costs including its normal profit and its economic profit.

Question 11

Lauren runs a chili restaurant in San Francisco. Her total revenue last year equaled $111,000. The rent on her restaurant totaled $48,000. Her labor costs totaled $43,000. Her materials, food and other variable costs totaled $19,000. To Lauren's accountant, Lauren

Accepted Answer

A) incurred a loss of $1,000. 
B) earned a profit of $1,000. 
C) incurred a loss of $111,000. 
D) earned a profit of $111,000. 
E) had a total cost equal to $91,000. 
A) incurred a loss of $1,000. 
B) earned a profit of $1,000. 
C) incurred a loss of $111,000. 
D) earned a profit of $111,000. 
E) had a total cost equal to $91,000.

Question 12

-In the above figure, curve A is the ________ curve and curve B is the ________ curve.

Accepted Answer

A) total variable cost; total fixed cost 
B) total cost; total fixed cost 
C) total fixed cost; total variable cost 
D) total cost; total variable cost 
E) total variable cost; total cost 
A) total variable cost; total fixed cost 
B) total cost; total fixed cost 
C) total fixed cost; total variable cost 
D) total cost; total variable cost 
E) total variable cost; total cost

Question 13

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

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $3,000 
E) More information is needed to determine the answer. 
A) $1 
B) $2 
C) $3 
D) $3,000 
E) More information is needed to determine the answer.

Question 14

Based on the figure above, curve C is the firm's

Accepted Answer

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

Question 15

Diseconomies of scale is

Accepted Answer

A) a short run phenomenon. 
B) the result of decreasing marginal returns. 
C) a long run phenomenon. 
D) the result of increasing marginal returns. 
E) possible only when the firm's plant size is fixed. 
A) a short run phenomenon. 
B) the result of decreasing marginal returns. 
C) a long run phenomenon. 
D) the result of increasing marginal returns. 
E) possible only when the firm's plant size is fixed.

Question 16

An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's

Accepted Answer

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

Question 17

What does the long-run average cost curve show?

Accepted Answer

A) the interaction between average fixed cost and marginal cost 
B) the lowest average cost to produce each output level in the long run 
C) the distinction between long-run fixed and long-run variable costs 
D) the lowest average marginal cost of producing each output level at any time. 
E) Answers A, B, and C are correct. 
A) the interaction between average fixed cost and marginal cost 
B) the lowest average cost to produce each output level in the long run 
C) the distinction between long-run fixed and long-run variable costs 
D) the lowest average marginal cost of producing each output level at any time. 
E) Answers A, B, and C are correct.

Question 18

Average variable cost equals

Accepted Answer

A) fixed cost divided by output. 
B) total variable cost divided by output. 
C) marginal cost divided by output. 
D) marginal cost plus fixed cost. 
E) marginal cost multiplied by output. 
A) fixed cost divided by output. 
B) total variable cost divided by output. 
C) marginal cost divided by output. 
D) marginal cost plus fixed cost. 
E) marginal cost multiplied by output.

Question 19

Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000.

Accepted Answer

A) His explicit costs are $330,000. 
B) His implicit costs are $170,000. 
C) His economic profit is zero. 
D) Only answers A and C are correct. 
E) Answers A, B, and C are correct. 
A) His explicit costs are $330,000. 
B) His implicit costs are $170,000. 
C) His economic profit is zero. 
D) Only answers A and C are correct. 
E) Answers A, B, and C are correct.

Question 20

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (lawns mowed per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 28
\end{array}$$
-The table above shows the total product schedule for Rick's Lawn Service, a yard care company. The average product of labor ________ when the 7th worker is hired.

Accepted Answer

A) reaches its maximum 
B) equals 1 lawn mowed 
C) equals 28 lawns mowed 
D) equals 4 lawns mowed 
E) equals 2 lawns mowed 
A) reaches its maximum 
B) equals 1 lawn mowed 
C) equals 28 lawns mowed 
D) equals 4 lawns mowed 
E) equals 2 lawns mowed

Which of the following is a fixed cost for ACME manufacturing?

Normal profit is

The relationship between the MP and MC curves is

A normal profit is defined as

The difference between a firm's total revenue and its total cost is its ________ profit.

The average fixed cost curve

To produce 10 shirts, the total cost is $80; to produce 11 shirts, the total cost is $99. The marginal cost of the 11th shirt is equal to

The primary goal of a business firm is to

For a business, opportunity cost measures

Lauren runs a chili restaurant in San Francisco. Her total revenue last year equaled $111,000. The rent on her restaurant totaled $48,000. Her labor costs totaled $43,000. Her materials, food and other variable costs totaled $19,000. To Lauren's accountant, Lauren

-In the above figure, curve A is the curve and curve B is the curve.

Based on the figure above, curve C is the firm's

Diseconomies of scale is

An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's

What does the long-run average cost curve show?

Average variable cost equals

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. The average product of labor ________ when the 7th worker is hired.

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

Which of the following is a fixed cost for ACME manufacturing?

Normal profit is

The relationship between the MP and MC curves is

A normal profit is defined as

The difference between a firm's total revenue and its total cost is its ________ profit.

The average fixed cost curve

To produce 10 shirts, the total cost is $80; to produce 11 shirts, the total cost is $99. The marginal cost of the 11th shirt is equal to

The primary goal of a business firm is to

For a business, opportunity cost measures

Lauren runs a chili restaurant in San Francisco. Her total revenue last year equaled $111,000. The rent on her restaurant totaled $48,000. Her labor costs totaled $43,000. Her materials, food and other variable costs totaled $19,000. To Lauren's accountant, Lauren

-In the above figure, curve A is the ________ curve and curve B is the ________ curve.

Based on the figure above, curve C is the firm's

Diseconomies of scale is

An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's

What does the long-run average cost curve show?

Average variable cost equals

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. The average product of labor ________ when the 7th worker is hired.

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

-In the above figure, curve A is the curve and curve B is the curve.