Question 1

-Refer to Figure 8.3.The vertical distance AB represents

Accepted Answer

A)  total fixed costs. 
B)  marginal costs. 
C)  average fixed costs. 
D)  average total costs. 
A)  total fixed costs. 
B)  marginal costs. 
C)  average fixed costs. 
D)  average total costs.

Question 2

If the fixed cost of producing a good is very high,but the marginal cost is low and constant,then the average total cost will

Accepted Answer

A)  increase as more units are produced. 
B)  decrease as more units are produced. 
C)  first decrease and then increase as more units are produced. 
D)  not change as more units are produced. 
A)  increase as more units are produced. 
B)  decrease as more units are produced. 
C)  first decrease and then increase as more units are produced. 
D)  not change as more units are produced.

Question 3

The law of diminishing returns applies only in the long run when the fixed cost can be flexible.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Greg's Carpet Factory experiences economies of scale up to a certain point and constant returns of scale beyond that point.Its long-run average cost curve is most likely to be

Accepted Answer

A)  upward sloping to the right. 
B)  downward sloping to the right. 
C)  horizontal. 
D)  L-shaped. 
A)  upward sloping to the right. 
B)  downward sloping to the right. 
C)  horizontal. 
D)  L-shaped.

Question 5

The difference between the short run and long run is a firm's flexibility in choosing inputs.

Accepted Answer

A) True 
 B)False

Question 6

Both large and small wind turbines have similar installation,operating,and maintenance costs.However,a large turbine has four times the generating capacity but costs less than three times as much as a small turbine.The average cost of generating electricity with wind is

Accepted Answer

A)  constant at each output. 
B)  increasing as output increases. 
C)  decreasing as output increases. 
D)  at first increasing and then decreasing as output rises. 
A)  constant at each output. 
B)  increasing as output increases. 
C)  decreasing as output increases. 
D)  at first increasing and then decreasing as output rises.

Question 7

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  e 
A)  a 
B)  b 
C)  c 
D)  e

Question 8

An informational good,such as a music video,has a ________ first-copy cost and a_______ marginal cost.

Accepted Answer

A)  large; large 
B)  large; small 
C)  small; large 
D)  small; small 
A)  large; large 
B)  large; small 
C)  small; large 
D)  small; small

Question 9

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

Accepted Answer

If the firm decides to produce

Question 10

Table 8.5
-Refer to Table 8.5.If Sherry produces four pair of earrings,her average fixed costs are

Accepted Answer

A)  $4. 
B)  $20. 
C)  $25. 
D)  $100. 
A)  $4. 
B)  $20. 
C)  $25. 
D)  $100.

Question 11

Explain why the production of electricity from wind power experiences economies of scale.

Accepted Answer

The reason is because a large wind turbi

Question 12

What are economies of scale? What are diseconomies of scale? What are constant returns to scale?

Accepted Answer

Economies of scale occur when average pr

Question 13

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Accepted Answer

The vertical distanc

Question 14

Table 8.5
-Refer to Table 8.5.If Sherry produces zero earrings,her total fixed costs are

Accepted Answer

A)  $0. 
B)  $50. 
C)  $100. 
D)  indeterminate from this information. 
A)  $0. 
B)  $50. 
C)  $100. 
D)  indeterminate from this information.

Question 15

Table 8.2
-Mitzi's Pet Salon hires you to determine the company's status.The data in Table 8.2 provides information on the company's annual costs and revenues.Mitzi spends at least 40 hours a week at her place of business.If she closed the salon,she could work for her competitor and earn $15,000 per year.She also owns the building that houses the salon and could rent it out for $18,000 per year if she closes her business.Calculate the economic cost and economic profit for Mitzi's Pet Salon.Would an accountant come to the same conclusion about the profitability of this firm? Explain.

Accepted Answer

Economic cost is equal to all costs of p

Question 16

At Carolina's Bakery,the marginal products of the first,second,third,and fourth workers are 15,11,8,and 6 cakes produced,respectively.The total product of the first three workers is

Accepted Answer

A)  8. 
B)  15. 
C)  34. 
D)  42. 
A)  8. 
B)  15. 
C)  34. 
D)  42.

Question 17

Sarah has a savings account with a $1,000 balance that earns an annual percentage yield of 3%.If she decides to withdraw the entire balance to buy a laptop computer,what will be her opportunity cost of buying the laptop?

Accepted Answer

A)  the cost of the laptop 
B)  the forgone interest 
C)  the forgone interest and the cost of the laptop 
D)  the cost of the laptop minus the forgone interest 
A)  the cost of the laptop 
B)  the forgone interest 
C)  the forgone interest and the cost of the laptop 
D)  the cost of the laptop minus the forgone interest

Question 18

Total economic costs include

Accepted Answer

A)  a normal rate of return. 
B)  out-of-pocket costs. 
C)  opportunity costs of all inputs. 
D)  all of the above 
A)  a normal rate of return. 
B)  out-of-pocket costs. 
C)  opportunity costs of all inputs. 
D)  all of the above

Question 19

Economic costs include only the implicit costs to a firm.

Accepted Answer

A) True 
 B)False

Question 20

Table 8.1
-Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.Mr.B's implicit cost equals

Accepted Answer

A)  $100,000. 
B)  $90,000. 
C)  $50,000. 
D)  $45,000. 
A)  $100,000. 
B)  $90,000. 
C)  $50,000. 
D)  $45,000.

-Refer to Figure 8.3.The vertical distance AB represents

If the fixed cost of producing a good is very high,but the marginal cost is low and constant,then the average total cost will

The law of diminishing returns applies only in the long run when the fixed cost can be flexible.

Suppose Greg's Carpet Factory experiences economies of scale up to a certain point and constant returns of scale beyond that point.Its long-run average cost curve is most likely to be

The difference between the short run and long run is a firm's flexibility in choosing inputs.

Both large and small wind turbines have similar installation,operating,and maintenance costs.However,a large turbine has four times the generating capacity but costs less than three times as much as a small turbine.The average cost of generating electricity with wind is

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

An informational good,such as a music video,has a __ first-copy cost and a_ marginal cost.

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

Table 8.5 -Refer to Table 8.5.If Sherry produces four pair of earrings,her average fixed costs are

Explain why the production of electricity from wind power experiences economies of scale.

What are economies of scale? What are diseconomies of scale? What are constant returns to scale?

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Table 8.5 -Refer to Table 8.5.If Sherry produces zero earrings,her total fixed costs are

At Carolina's Bakery,the marginal products of the first,second,third,and fourth workers are 15,11,8,and 6 cakes produced,respectively.The total product of the first three workers is

Sarah has a savings account with a $1,000 balance that earns an annual percentage yield of 3%.If she decides to withdraw the entire balance to buy a laptop computer,what will be her opportunity cost of buying the laptop?

Total economic costs include

Economic costs include only the implicit costs to a firm.

Table 8.1 -Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.Mr.B's implicit cost equals

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 8: Production Technology and Cost

-Refer to Figure 8.3.The vertical distance AB represents

If the fixed cost of producing a good is very high,but the marginal cost is low and constant,then the average total cost will

The law of diminishing returns applies only in the long run when the fixed cost can be flexible.

Suppose Greg's Carpet Factory experiences economies of scale up to a certain point and constant returns of scale beyond that point.Its long-run average cost curve is most likely to be

The difference between the short run and long run is a firm's flexibility in choosing inputs.

Both large and small wind turbines have similar installation,operating,and maintenance costs.However,a large turbine has four times the generating capacity but costs less than three times as much as a small turbine.The average cost of generating electricity with wind is

-Refer to Figure 8.9.Which point of the LAC represents economies of scale?

An informational good,such as a music video,has a ________ first-copy cost and a_______ marginal cost.

When XYZ Corporation produces 35 units of output,its average variable cost is $5.The marginal cost of the 36th unit of output is $7.If the firm choose to produce the 36th unit of output,what will happen to average variable cost? Explain.

Table 8.5 -Refer to Table 8.5.If Sherry produces four pair of earrings,her average fixed costs are

Explain why the production of electricity from wind power experiences economies of scale.

What are economies of scale? What are diseconomies of scale? What are constant returns to scale?

Why does the vertical distance between the ATC curve and the AVC curve decrease as output increases?

Table 8.5 -Refer to Table 8.5.If Sherry produces zero earrings,her total fixed costs are

At Carolina's Bakery,the marginal products of the first,second,third,and fourth workers are 15,11,8,and 6 cakes produced,respectively.The total product of the first three workers is

Sarah has a savings account with a $1,000 balance that earns an annual percentage yield of 3%.If she decides to withdraw the entire balance to buy a laptop computer,what will be her opportunity cost of buying the laptop?

Total economic costs include

Economic costs include only the implicit costs to a firm.

Table 8.1 -Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.Mr.B's implicit cost equals

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

An informational good,such as a music video,has a __ first-copy cost and a_ marginal cost.