Question 1

If a firm increases its output and its average cost decreases, the firm is experiencing which of the following?

Accepted Answer

A) increasing marginal returns 
B) diseconomies of scale 
C) economies of scale 
D) random luck 
E) decreasing cost of marginal returns 
A) increasing marginal returns 
B) diseconomies of scale 
C) economies of scale 
D) random luck 
E) decreasing cost of marginal returns

Question 2

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

Question 3

The opportunity cost of owning and using a firm's capital is defined as the capital's

Accepted Answer

A) variable cost. 
B) fixed cost. 
C) economic depreciation. 
D) nonpayment depreciation. 
E) explicit cost. 
A) variable cost. 
B) fixed cost. 
C) economic depreciation. 
D) nonpayment depreciation. 
E) explicit cost.

Question 4

Rufus runs a skunk-skinning service in West Virginia. He employs skinners at a wage rate of $240 a week for each one. He leases the shack where his workers work for $200 per week. The rent is fixed for the next two years. Last week his 10 employees managed to skin a total of 300 skunks.
a. What is the average product of labor for Rufus's company?
b. What is Rufus' total variable cost per week?
c. What is the average variable cost for Rufus's company?
d. If Rufus adds his brother Jethro to his staff, at a wage rate of $240 a week, and his company can now skin 310 skunks per week, what is Rufus's new average variable cost?

Accepted Answer

a. The average product of labor is 30 sk

Question 5

What do economists mean when they say that a firm's plant is fixed?

Accepted Answer

The phrase that a "firm's plant is fixed

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

Accountants calculate

Accepted Answer

A) economic depreciation as part of the firm's cost. 
B) depreciation using Internal Revenue Service rules. 
C) the opportunity cost of all the resources the firm uses. 
D) all the firm's implicit costs but only a few of its explicit costs. 
E) All of the above answers are correct. 
A) economic depreciation as part of the firm's cost. 
B) depreciation using Internal Revenue Service rules. 
C) the opportunity cost of all the resources the firm uses. 
D) all the firm's implicit costs but only a few of its explicit costs. 
E) All of the above answers are correct.

Question 8

The vertical distance between total cost curve and total variable cost curve is equal to

Accepted Answer

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

Question 9

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

Accepted Answer

A) a minimized 
B) a maximized 
C) an explicit 
D) an implicit 
E) a total 
A) a minimized 
B) a maximized 
C) an explicit 
D) an implicit 
E) a total

Question 10

When the slope of the total product curve is steep, the marginal product is

Accepted Answer

A) zero. 
B) negative. 
C) high. 
D) low. 
E) not defined. 
A) zero. 
B) negative. 
C) high. 
D) low. 
E) not defined.

Question 11

A firm's total revenue minus its total opportunity cost is called its

Accepted Answer

A) accounting profit. 
B) normal profit. 
C) economic profit. 
D) abnormal profit. 
E) entrepreneur's profit. 
A) accounting profit. 
B) normal profit. 
C) economic profit. 
D) abnormal profit. 
E) entrepreneur's profit.

Question 12

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year. She started her own landscaping business. She rents machines and tools for $50,000 and pays $10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000.

Accepted Answer

A) Her accountant calculates her profit as $40,000. 
B) She has an economic loss. 
C) Her explicit cost is $105,000. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) Her accountant calculates her profit as $40,000. 
B) She has an economic loss. 
C) Her explicit cost is $105,000. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 13

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 14

The paramount goal of a firm is to

Accepted Answer

A) maximize profit. 
B) maximize sales. 
C) maximize total revenue. 
D) minimize costs. 
E) force its competitors into bankruptcy. 
A) maximize profit. 
B) maximize sales. 
C) maximize total revenue. 
D) minimize costs. 
E) force its competitors into bankruptcy.

Question 15

10.6 Integrative Questions
 $$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total product } \
\text { (rolls of paper produced per hour) }
\end{array} \
\hline 0 & 0 \
1 & 2 \
2 & 5 \
3 & 8 \
4 & 15 \
5 & 22 \
6 & 26 \
7 & 27 \
\hline
\end{array}$$
-The table above table shows

Accepted Answer

A) a total product schedule. 
B) the market for labor. 
C) a production possibility frontier. 
D) a supply schedule. 
E) a demand for labor schedule. 
A) a total product schedule. 
B) the market for labor. 
C) a production possibility frontier. 
D) a supply schedule. 
E) a demand for labor schedule.

Question 16

To produce more output in the short run, a firm must employ more of

Accepted Answer

A) all its resources. 
B) its fixed resources. 
C) its variable resources. 
D) the least costly resources regardless of whether they are fixed or variable. 
E) Firms cannot produce more output in the short run. 
A) all its resources. 
B) its fixed resources. 
C) its variable resources. 
D) the least costly resources regardless of whether they are fixed or variable. 
E) Firms cannot produce more output in the short run.

Question 17

As output increases, economies of scale occur when the

Accepted Answer

A) long-run average cost increases. 
B) long-run average cost decreases. 
C) short-run average total cost decreases. 
D) long-run average cost stays constant. 
E) long-run fixed cost decreases. 
A) long-run average cost increases. 
B) long-run average cost decreases. 
C) short-run average total cost decreases. 
D) long-run average cost stays constant. 
E) long-run fixed cost decreases.

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 6 workers, her average fixed cost equals

Accepted Answer

A) $600. 
B) $2.50. 
C) $7.50. 
D) $10.00. 
E) $6.00. 
A) $600. 
B) $2.50. 
C) $7.50. 
D) $10.00. 
E) $6.00.

Question 19

Moving along the total product curve, which of the following is held constant?

Accepted Answer

A) Quantity of labor 
B) Total product 
C) Technology 
D) Total cost 
E) None of the above answers is correct. 
A) Quantity of labor 
B) Total product 
C) Technology 
D) Total cost 
E) None of the above answers is correct.

Question 20

A firm increases its output and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

Accepted Answer

The firm is experien

If a firm increases its output and its average cost decreases, the firm is experiencing which of the following?

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

The opportunity cost of owning and using a firm's capital is defined as the capital's

What do economists mean when they say that a firm's plant is fixed?

A cost paid in money is

Accountants calculate

The vertical distance between total cost curve and total variable cost curve is equal to

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

When the slope of the total product curve is steep, the marginal product is

A firm's total revenue minus its total opportunity cost is called its

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year. She started her own landscaping business. She rents machines and tools for $50,000 and pays $10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000.

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 paramount goal of a firm is to

10.6 Integrative Questions Quantity of labor (workers) Total product (rolls of paper produced per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 27 -The table above table shows

To produce more output in the short run, a firm must employ more of

As output increases, economies of scale occur when the

Moving along the total product curve, which of the following is held constant?

A firm increases its output and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

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

If a firm increases its output and its average cost decreases, the firm is experiencing which of the following?

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

The opportunity cost of owning and using a firm's capital is defined as the capital's

What do economists mean when they say that a firm's plant is fixed?

A cost paid in money is

Accountants calculate

The vertical distance between total cost curve and total variable cost curve is equal to

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

When the slope of the total product curve is steep, the marginal product is

A firm's total revenue minus its total opportunity cost is called its

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year. She started her own landscaping business. She rents machines and tools for $50,000 and pays $10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000.

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 paramount goal of a firm is to

10.6 Integrative Questions Quantity of labor (workers) Total product (rolls of paper produced per hour) 0 0 1 2 2 5 3 8 4 15 5 22 6 26 7 27 -The table above table shows

To produce more output in the short run, a firm must employ more of

As output increases, economies of scale occur when the

Moving along the total product curve, which of the following is held constant?

A firm increases its output and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

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