Question 1

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following describes a long-run adjustment of a firm to changing business conditions?

Accepted Answer

A)  A restaurant owner leases an empty store next door and expands. 
B)  A dentist changes her hours to see more patients. 
C)  A farmer hires more workers to help bring in the harvest. 
D)  all of the above 
A)  A restaurant owner leases an empty store next door and expands. 
B)  A dentist changes her hours to see more patients. 
C)  A farmer hires more workers to help bring in the harvest. 
D)  all of the above

Question 3

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

Describe the relationship between marginal cost and average cost.

Accepted Answer

If marginal cost is greater than average

Question 6

Recall the Application about the opportunity cost of an entrepreneur to answer the following question(s).
-Recall the Application.All of the following would be included as an opportunity cost of quitting your other job and driving for Uber EXCEPT

Accepted Answer

A)  the salary forgone from your other job. 
B)  the paid sick leave and vacation days that were benefits from your other job. 
C)  the subsidized health insurance offered from your other job. 
D)  the cost of the gasoline you need to purchase for your Uber job. 
A)  the salary forgone from your other job. 
B)  the paid sick leave and vacation days that were benefits from your other job. 
C)  the subsidized health insurance offered from your other job. 
D)  the cost of the gasoline you need to purchase for your Uber job.

Question 7

If The Mayo Law Firm's total costs are $7,000 when 20 clients' cases are worked and $7,600 when 21 clients' cases are worked,the marginal cost of the 21st client's case is

Accepted Answer

A)  $300. 
B)  $400. 
C)  $500. 
D)  $600. 
A)  $300. 
B)  $400. 
C)  $500. 
D)  $600.

Question 8

The opportunity cost of an entrepreneur's time is an explicit cost.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is most likely a variable cost for a firm?

Accepted Answer

A)  the interest payments made on equipment loans 
B)  an annual payment for insurance on the firm's plant 
C)  the monthly rent on office space that it leased for 5 years 
D)  the payments made to match workers' 401K contributions 
A)  the interest payments made on equipment loans 
B)  an annual payment for insurance on the firm's plant 
C)  the monthly rent on office space that it leased for 5 years 
D)  the payments made to match workers' 401K contributions

Question 10

Which of the following situations describes a short-run adjustment of a firm to changing business conditions?

Accepted Answer

A)  A doctor increases the size of his waiting room. 
B)  A manager calls in two part-time workers to prepare for the holiday rush. 
C)  A rancher sells some of his land. 
D)  A manufacturing firm expands its production facility. 
A)  A doctor increases the size of his waiting room. 
B)  A manager calls in two part-time workers to prepare for the holiday rush. 
C)  A rancher sells some of his land. 
D)  A manufacturing firm expands its production facility.

Question 11

Mario has a company that produces plastic freezer bags.His company objective is to maximize

Accepted Answer

A)  his company's revenues. 
B)  his company's total out-of-pocket costs. 
C)  his company's opportunity costs of each factor of production. 
D)  his company's economic profits, the difference between total revenue and total cost. 
A)  his company's revenues. 
B)  his company's total out-of-pocket costs. 
C)  his company's opportunity costs of each factor of production. 
D)  his company's economic profits, the difference between total revenue and total cost.

Question 12

Explain why a firm's short-run marginal cost curve initially decreases and then increases in most cases.

Accepted Answer

Diminishing marginal returns causes the

Question 13

What is the relationship between marginal cost and fixed cost?

Accepted Answer

There is no relationship betwe

Question 14

The gap between average total cost and the average variable cost is always the average fixed cost.

Accepted Answer

A) True 
 B)False

Question 15

Table 8.4
-Refer to Table 8.4.When the fifth worker is employed,the marginal cost is

Accepted Answer

A)  $150. 
B)  $100. 
C)  $15. 
D)  $10. 
A)  $150. 
B)  $100. 
C)  $15. 
D)  $10.

Question 16

The period of time when a firm is unable to change all of inputs,or factors of production,is called the

Accepted Answer

A)  economic term. 
B)  short run. 
C)  accounting term. 
D)  long run. 
A)  economic term. 
B)  short run. 
C)  accounting term. 
D)  long run.

Question 17

Most firms seem to exhibit constant returns to scale after some level of output.

Accepted Answer

A) True 
 B)False

Question 18

A firm's objective is to maximize its economic profit,which is calculated as

Accepted Answer

A)  total revenue minus economic cost. 
B)  total profit minus total cost. 
C)  economic cost minus profit. 
D)  economic cost minus total revenue. 
A)  total revenue minus economic cost. 
B)  total profit minus total cost. 
C)  economic cost minus profit. 
D)  economic cost minus total revenue.

Question 19

You are the owner and only employee of a company that repairs computers.Last year,you earned total revenues of $75,000.Your costs for equipment,rent,and supplies were $10,000.To start this business you quit a job at a computer software firm that paid $40,000 a year.Last year,your economic profits were

Accepted Answer

A)  $100,000. 
B)  $75,000. 
C)  $50,000. 
D)  $25,000. 
A)  $100,000. 
B)  $75,000. 
C)  $50,000. 
D)  $25,000.

Question 20

If marginal cost is above average variable cost,then

Accepted Answer

A)  average variable cost is increasing. 
B)  marginal cost must be decreasing. 
C)  average variable cost is constant. 
D)  average variable cost is decreasing. 
A)  average variable cost is increasing. 
B)  marginal cost must be decreasing. 
C)  average variable cost is constant. 
D)  average variable cost is decreasing.

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Which of the following describes a long-run adjustment of a firm to changing business conditions?

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

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

Describe the relationship between marginal cost and average cost.

Recall the Application about the opportunity cost of an entrepreneur to answer the following question(s). -Recall the Application.All of the following would be included as an opportunity cost of quitting your other job and driving for Uber EXCEPT

If The Mayo Law Firm's total costs are $7,000 when 20 clients' cases are worked and $7,600 when 21 clients' cases are worked,the marginal cost of the 21st client's case is

The opportunity cost of an entrepreneur's time is an explicit cost.

Which of the following is most likely a variable cost for a firm?

Which of the following situations describes a short-run adjustment of a firm to changing business conditions?

Mario has a company that produces plastic freezer bags.His company objective is to maximize

Explain why a firm's short-run marginal cost curve initially decreases and then increases in most cases.

What is the relationship between marginal cost and fixed cost?

The gap between average total cost and the average variable cost is always the average fixed cost.

Table 8.4 -Refer to Table 8.4.When the fifth worker is employed,the marginal cost is

The period of time when a firm is unable to change all of inputs,or factors of production,is called the

Most firms seem to exhibit constant returns to scale after some level of output.

A firm's objective is to maximize its economic profit,which is calculated as

If marginal cost is above average variable cost,then

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

The long-run average-cost curve shows how the average cost of production varies when the firm is perfectly flexible in choosing its inputs.

Which of the following describes a long-run adjustment of a firm to changing business conditions?

Accounting costs include all monetary payments and all the opportunity cost of inputs that do not require an explicit monetary payment.

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

Describe the relationship between marginal cost and average cost.

Recall the Application about the opportunity cost of an entrepreneur to answer the following question(s). -Recall the Application.All of the following would be included as an opportunity cost of quitting your other job and driving for Uber EXCEPT

If The Mayo Law Firm's total costs are $7,000 when 20 clients' cases are worked and $7,600 when 21 clients' cases are worked,the marginal cost of the 21st client's case is

The opportunity cost of an entrepreneur's time is an explicit cost.

Which of the following is most likely a variable cost for a firm?

Which of the following situations describes a short-run adjustment of a firm to changing business conditions?

Mario has a company that produces plastic freezer bags.His company objective is to maximize

Explain why a firm's short-run marginal cost curve initially decreases and then increases in most cases.

What is the relationship between marginal cost and fixed cost?

The gap between average total cost and the average variable cost is always the average fixed cost.

Table 8.4 -Refer to Table 8.4.When the fifth worker is employed,the marginal cost is

The period of time when a firm is unable to change all of inputs,or factors of production,is called the

Most firms seem to exhibit constant returns to scale after some level of output.

A firm's objective is to maximize its economic profit,which is calculated as

If marginal cost is above average variable cost,then

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