Question 1

Table 8.5
-Refer to Table 8.5.If Sherry produces two pair of earrings,her marginal cost is

Accepted Answer

A)  $40.00. 
B)  $45.00. 
C)  $72.50. 
D)  $122.50. 
A)  $40.00. 
B)  $45.00. 
C)  $72.50. 
D)  $122.50.

Question 2

Table 8.4
-Refer to Table 8.4.There are diminishing returns to labor for

Accepted Answer

A)  all workers. 
B)  workers 1 and 2 only. 
C)  workers 4 through 5 only. 
D)  worker 1 only. 
A)  all workers. 
B)  workers 1 and 2 only. 
C)  workers 4 through 5 only. 
D)  worker 1 only.

Question 3

Marginal costs typically

Accepted Answer

A)  increase as output increases. 
B)  decrease as output increases. 
C)  first increase then decrease as output increases. 
D)  first decrease then increase as output increases. 
A)  increase as output increases. 
B)  decrease as output increases. 
C)  first increase then decrease as output increases. 
D)  first decrease then increase as output increases.

Question 4

When El Guapo's Mexican Restaurant hires one waiter,5 tables can be served in an hour.When El Guapo's Mexican Restaurant hires two waiters,12 tables can be served in an hour.The marginal product of labor of the second waiter is ________ tables served per hour.

Accepted Answer

A)  5 
B)  7 
C)  12 
D)  17 
A)  5 
B)  7 
C)  12 
D)  17

Question 5

Dan is an entrepreneur who invests in commercial and residential real estate.He has a savings account with $100,000 that earns an annual percentage yield of 1%.Dan wants to buy a house that will give him a monthly cash inflow of $200.What will be the opportunity cost of investing in the house?

Accepted Answer

A)  $1,200 
B)  $1,000 
C)  $800 
D)  $200 
A)  $1,200 
B)  $1,000 
C)  $800 
D)  $200

Question 6

Table 8.3
-Refer to Table 8.3.If the firm hires seven workers,then

Accepted Answer

A)  marginal product is negative. 
B)  marginal product is less than one. 
C)  total product is negative. 
D)  marginal product is equal to three. 
A)  marginal product is negative. 
B)  marginal product is less than one. 
C)  total product is negative. 
D)  marginal product is equal to three.

Question 7

-Refer to Figure 8.2.Diminishing marginal returns set in after the ________ worker is hired.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fifth 
A)  first 
B)  second 
C)  third 
D)  fifth

Question 8

Table 8.4
-Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to

Accepted Answer

A)  $2. 
B)  $3. 
C)  $6. 
D)  $50. 
A)  $2. 
B)  $3. 
C)  $6. 
D)  $50.

Question 9

Table 8.3
-Refer to Table 8.3.The firm will experience diminishing marginal returns to labor as long it hires more than

Accepted Answer

A)  0 units of labor. 
B)  1 unit of labor. 
C)  2 units of labor. 
D)  3 units of labor. 
A)  0 units of labor. 
B)  1 unit of labor. 
C)  2 units of labor. 
D)  3 units of labor.

Question 10

If the price of a fixed factor of production increases,then

Accepted Answer

A)  total costs are unchanged. 
B)  marginal costs will increase. 
C)  variable costs are unchanged. 
D)  variable costs will increase. 
A)  total costs are unchanged. 
B)  marginal costs will increase. 
C)  variable costs are unchanged. 
D)  variable costs will increase.

Question 11

Scenario 8.1: Ana used to work for an advertising agency where she earned a yearly salary of $60,000. She got tired of working for another company and therefore opened her own advertising company. Ana now pays her designer $40,000 per year and spends $25,000 for rent and utilities. She earns $120,000 in annual revenue.
-Refer to Scenario 8.1.Ana's accounting profit is

Accepted Answer

A)  $5,000. 
B)  $55,000. 
C)  $65,000. 
D)  $120,000. 
A)  $5,000. 
B)  $55,000. 
C)  $65,000. 
D)  $120,000.

Question 12

Suppose that at the Pollo Loco Restaurant,5 cooks can make 70 meals.Assuming that there are diminishing returns to labor,it will require ________ to make 70 more meals.

Accepted Answer

A)  an additional 5 cooks 
B)  more than an additional 5 cooks 
C)  less than an additional 5 cooks 
D)  a total of 10 cooks 
A)  an additional 5 cooks 
B)  more than an additional 5 cooks 
C)  less than an additional 5 cooks 
D)  a total of 10 cooks

Question 13

Economic costs are measured by all monetary payments.

Accepted Answer

A) True 
 B)False

Question 14

Average variable cost and average total costs get closer together as output increases because

Accepted Answer

A)  diminishing returns set in. 
B)  average fixed costs decrease as output increases. 
C)  marginal costs decrease as output increases. 
D)  economies of scale become apparent. 
A)  diminishing returns set in. 
B)  average fixed costs decrease as output increases. 
C)  marginal costs decrease as output increases. 
D)  economies of scale become apparent.

Question 15

If a firm spends $200 to produce 20 units of output and spends $440 to produce 40 units of output,then the marginal cost of this increase in output is

Accepted Answer

A)  $10. 
B)  $12. 
C)  $20. 
D)  $22. 
A)  $10. 
B)  $12. 
C)  $20. 
D)  $22.

Question 16

Comment on the following statement: "In the short run,a firm's total costs will be zero if the firm chooses to produce nothing."

Accepted Answer

The statement is likely to be

Question 17

Recent innovations in photovoltaic technology have reduced the unit cost of solar power.

Accepted Answer

A) True 
 B)False

Question 18

Your friend Harry has quit his $20,000-a-year job to start a business that rents fishing boats.He asks you to lend him $50,000 and agrees to pay you a 10% return on your $50,000 if he earns a profit.During the first year Harry's total revenue is $120,000 and his total cost for equipment and supplies are $100,000.Harry tells you that he cannot pay you any interest this year because he did not earn a profit.Is your friend Harry trying to cheat you?

Accepted Answer

Harry has made an accounting profit of $

Question 19

Accounting costs include explicit and implicit costs.

Accepted Answer

A) True 
 B)False

Question 20

A fixed cost can be thought of as

Accepted Answer

A)  a cost that changes as output increases. 
B)  a cost that must be paid even if output equals zero. 
C)  a cost that is paid only when output equals zero. 
D)  total costs ignoring opportunity costs. 
A)  a cost that changes as output increases. 
B)  a cost that must be paid even if output equals zero. 
C)  a cost that is paid only when output equals zero. 
D)  total costs ignoring opportunity costs.

Table 8.5 -Refer to Table 8.5.If Sherry produces two pair of earrings,her marginal cost is

Table 8.4 -Refer to Table 8.4.There are diminishing returns to labor for

Marginal costs typically

When El Guapo's Mexican Restaurant hires one waiter,5 tables can be served in an hour.When El Guapo's Mexican Restaurant hires two waiters,12 tables can be served in an hour.The marginal product of labor of the second waiter is ________ tables served per hour.

Dan is an entrepreneur who invests in commercial and residential real estate.He has a savings account with $100,000 that earns an annual percentage yield of 1%.Dan wants to buy a house that will give him a monthly cash inflow of $200.What will be the opportunity cost of investing in the house?

Table 8.3 -Refer to Table 8.3.If the firm hires seven workers,then

-Refer to Figure 8.2.Diminishing marginal returns set in after the ________ worker is hired.

Table 8.4 -Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to

Table 8.3 -Refer to Table 8.3.The firm will experience diminishing marginal returns to labor as long it hires more than

If the price of a fixed factor of production increases,then

Suppose that at the Pollo Loco Restaurant,5 cooks can make 70 meals.Assuming that there are diminishing returns to labor,it will require ________ to make 70 more meals.

Economic costs are measured by all monetary payments.

Average variable cost and average total costs get closer together as output increases because

If a firm spends $200 to produce 20 units of output and spends $440 to produce 40 units of output,then the marginal cost of this increase in output is

Comment on the following statement: "In the short run,a firm's total costs will be zero if the firm chooses to produce nothing."

Recent innovations in photovoltaic technology have reduced the unit cost of solar power.

Accounting costs include explicit and implicit costs.

A fixed cost can be thought of as

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

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Exam 8: Production Technology and Cost

Table 8.5 -Refer to Table 8.5.If Sherry produces two pair of earrings,her marginal cost is

Table 8.4 -Refer to Table 8.4.There are diminishing returns to labor for

Marginal costs typically

When El Guapo's Mexican Restaurant hires one waiter,5 tables can be served in an hour.When El Guapo's Mexican Restaurant hires two waiters,12 tables can be served in an hour.The marginal product of labor of the second waiter is ________ tables served per hour.

Dan is an entrepreneur who invests in commercial and residential real estate.He has a savings account with $100,000 that earns an annual percentage yield of 1%.Dan wants to buy a house that will give him a monthly cash inflow of $200.What will be the opportunity cost of investing in the house?

Table 8.3 -Refer to Table 8.3.If the firm hires seven workers,then

-Refer to Figure 8.2.Diminishing marginal returns set in after the ________ worker is hired.

Table 8.4 -Refer to Table 8.4.When the second worker is hired,the marginal cost is equal to

Table 8.3 -Refer to Table 8.3.The firm will experience diminishing marginal returns to labor as long it hires more than

If the price of a fixed factor of production increases,then

Suppose that at the Pollo Loco Restaurant,5 cooks can make 70 meals.Assuming that there are diminishing returns to labor,it will require ________ to make 70 more meals.

Economic costs are measured by all monetary payments.

Average variable cost and average total costs get closer together as output increases because

If a firm spends $200 to produce 20 units of output and spends $440 to produce 40 units of output,then the marginal cost of this increase in output is

Comment on the following statement: "In the short run,a firm's total costs will be zero if the firm chooses to produce nothing."

Recent innovations in photovoltaic technology have reduced the unit cost of solar power.

Accounting costs include explicit and implicit costs.

A fixed cost can be thought of as

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