Question 1

The long run is a period of time:

Accepted Answer

A)  that is too short to change the size of a firm's plant. 
B)  that is long enough to permit changes in all the firm's inputs, both fixed and variable. 
C)  in which production occurs beyond one year. 
D)  in which production occurs beyond five years. 
A)  that is too short to change the size of a firm's plant. 
B)  that is long enough to permit changes in all the firm's inputs, both fixed and variable. 
C)  in which production occurs beyond one year. 
D)  in which production occurs beyond five years. B

Question 2

Suppose a publisher faces the following costs of producing 10,000 newspapers each month: $5,500 cost of labor; $2,200 monthly mortgage payment; $250 cost of electricity to run the printing presses; $800 for ink and paper; and $200 in city property taxes (based on the value of the building and land).Its total variable costs are:

Accepted Answer

A)  $8,950. 
B)  $8,750. 
C)  $6,550. 
D)  $6,300. 
E)  $5,500. 
A)  $8,950. 
B)  $8,750. 
C)  $6,550. 
D)  $6,300. 
E)  $5,500. C

Question 3

Exhibit 6-4 A marginal product curve
  
-As shown in Exhibit 6-4,which of the following conclusions can you draw about the firm's total output curve?

Accepted Answer

A)  It slopes downward throughout the range of 0-10 units of input. 
B)  It reaches a maximum at 5 units of output. 
C)  It has an inflection point at 5 units of input. 
D)  It has zero slope at 5 units of input. 
A)  It slopes downward throughout the range of 0-10 units of input. 
B)  It reaches a maximum at 5 units of output. 
C)  It has an inflection point at 5 units of input. 
D)  It has zero slope at 5 units of input. C

Question 4

Which of the following is not a source of economies of scale?

Accepted Answer

A)  Division and specialization of labor. 
B)  Increase in output. 
C)  More efficient use of capital. 
D)  All of the above. 
E)  Centralized marketing. 
A)  Division and specialization of labor. 
B)  Increase in output. 
C)  More efficient use of capital. 
D)  All of the above. 
E)  Centralized marketing.

Question 5

Exhibit 6-8 Costs schedules for producing pizza
  
-By filling in the blanks in Exhibit 6-8,the average total cost of producing 5 pizzas is shown to be equal to:

Accepted Answer

A)  $12. 
B)  $15. 
C)  $32. 
D)  $85. 
E)  $160. 
A)  $12. 
B)  $15. 
C)  $32. 
D)  $85. 
E)  $160.

Question 6

During the short-run period of the production process,a firm will be:

Accepted Answer

A)  unable to vary any of its factors of production. 
B)  able to vary some of its factors of production. 
C)  able to vary all of its factors of production. 
D)  able to vary the size of its plant. 
A)  unable to vary any of its factors of production. 
B)  able to vary some of its factors of production. 
C)  able to vary all of its factors of production. 
D)  able to vary the size of its plant.

Question 7

Marginal cost is defined as the increase in total cost resulting from an increase in:

Accepted Answer

A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labor. 
A)  one unit of output. 
B)  output of 100 units. 
C)  a firm's plant size. 
D)  one unit of labor.

Question 8

Exhibit 6-12 Cost schedule for producing pizza
  
-By filling in the blanks in Exhibit 6-12,the marginal cost of the third pizza is shown to be equal to:

Accepted Answer

A)  $10. 
B)  $11. 
C)  $12. 
D)  $13. 
E)  $14. 
A)  $10. 
B)  $11. 
C)  $12. 
D)  $13. 
E)  $14.

Question 9

A farm is able to produce 9,000 pints of strawberries per season on 10 acres.It adds one more acre and is able to produce 12,000 pints per season.The marginal product of land for this farm is:

Accepted Answer

A)  900 pints per acre per year. 
B)  1,000 pints per acre per year. 
C)  3,000 pints per acre per year. 
D)  12,000 pints per acre per year. 
A)  900 pints per acre per year. 
B)  1,000 pints per acre per year. 
C)  3,000 pints per acre per year. 
D)  12,000 pints per acre per year.

Question 10

Bill is an accountant for a small machine shop.His boss has asked him to calculate the shop's total fixed cost.Which method will get Bill the correct answer?

Accepted Answer

A) c and d. 
B) Calculating the product of average total cost and quantity 
C) Determining what the shop would pay for if they produced zero output 
D) Subtracting the total variable costs from the total costs 
E) Subtracting total variable costs from total revenue 
A) c and d. 
B) Calculating the product of average total cost and quantity 
C) Determining what the shop would pay for if they produced zero output 
D) Subtracting the total variable costs from the total costs 
E) Subtracting total variable costs from total revenue

Question 11

Which of the following statements is true?

Accepted Answer

A)  Economic profit equals accounting profit minus implicit costs. 
B)  The short run is any period of time in which there is at least one fixed input. 
C)  A fixed input is any resource for which the quantity cannot change during the period under consideration. 
D)  In the long run there are no fixed costs. 
E)  All of the above. 
A)  Economic profit equals accounting profit minus implicit costs. 
B)  The short run is any period of time in which there is at least one fixed input. 
C)  A fixed input is any resource for which the quantity cannot change during the period under consideration. 
D)  In the long run there are no fixed costs. 
E)  All of the above.

Question 12

Diseconomies of scale occur when high levels of output are produced in a short period of time.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following will become smaller and smaller as the firm expands output?

Accepted Answer

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

Question 14

The law of diminishing returns causes a firm's short-run marginal cost curve to be s-shaped.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an implication of the law of diminishing returns?

Accepted Answer

A)  Total output will decline as more workers are hired. 
B)  In the long run, average total cost will eventually decline as output is expanded. 
C)  In the short run, expansion of output will eventually lead to increases in marginal cost and average total cost. 
D)  A doubling of all inputs will lead to more than a doubling of output. 
A)  Total output will decline as more workers are hired. 
B)  In the long run, average total cost will eventually decline as output is expanded. 
C)  In the short run, expansion of output will eventually lead to increases in marginal cost and average total cost. 
D)  A doubling of all inputs will lead to more than a doubling of output.

Question 16

Exhibit 6-15 Long-run average cost
  
-Given the short-run average total cost curves in Exhibit 6-15,what level of output per week minimizes average total cost?

Accepted Answer

A)  500 units. 
B)  1,000 units. 
C)  1,500 units. 
D)  2,000 units. 
A)  500 units. 
B)  1,000 units. 
C)  1,500 units. 
D)  2,000 units.

Question 17

Exhibit 6-15 Long-run average cost
  
-In Exhibit 6-15,short-run average total cost,short-run marginal cost,and long-run average cost are all equal at which level of output per week?

Accepted Answer

A)  500 units. 
B)  1,000 units. 
C)  1,500 units. 
D)  2,000 units. 
A)  500 units. 
B)  1,000 units. 
C)  1,500 units. 
D)  2,000 units.

Question 18

Exhibit 6-7 Cost schedule for a firm
  
-In Exhibit 6-7,by filling in the blanks,it can be determined that the marginal cost of the third unit of output is:

Accepted Answer

A)  0. 
B)  200. 
C)  700. 
D)  1,200. 
E)  2,000. 
A)  0. 
B)  200. 
C)  700. 
D)  1,200. 
E)  2,000.

Question 19

Normal profit is defined as a(n):

Accepted Answer

A)  foregone percent rate of return. 
B)  opportunity profit. 
C)  implicit profit. 
D)  minimum necessary to keep a firm in operation. 
A)  foregone percent rate of return. 
B)  opportunity profit. 
C)  implicit profit. 
D)  minimum necessary to keep a firm in operation.

Question 20

Which of the following is most likely to be a fixed cost for a business?

Accepted Answer

A)  expenditures on low-skill labor. 
B)  shipping charges for the delivery of products. 
C)  managerial salaries. 
D)  property taxes on the firm's buildings. 
A)  expenditures on low-skill labor. 
B)  shipping charges for the delivery of products. 
C)  managerial salaries. 
D)  property taxes on the firm's buildings.

Exam 6: Production Costs

The long run is a period of time:

Exhibit 6-4 A marginal product curve -As shown in Exhibit 6-4,which of the following conclusions can you draw about the firm's total output curve?

Which of the following is not a source of economies of scale?

Exhibit 6-8 Costs schedules for producing pizza -By filling in the blanks in Exhibit 6-8,the average total cost of producing 5 pizzas is shown to be equal to:

During the short-run period of the production process,a firm will be:

Marginal cost is defined as the increase in total cost resulting from an increase in:

Exhibit 6-12 Cost schedule for producing pizza -By filling in the blanks in Exhibit 6-12,the marginal cost of the third pizza is shown to be equal to:

A farm is able to produce 9,000 pints of strawberries per season on 10 acres.It adds one more acre and is able to produce 12,000 pints per season.The marginal product of land for this farm is:

Bill is an accountant for a small machine shop.His boss has asked him to calculate the shop's total fixed cost.Which method will get Bill the correct answer?

Which of the following statements is true?

Diseconomies of scale occur when high levels of output are produced in a short period of time.

Which of the following will become smaller and smaller as the firm expands output?

The law of diminishing returns causes a firm's short-run marginal cost curve to be s-shaped.

Which of the following is an implication of the law of diminishing returns?

Exhibit 6-15 Long-run average cost -Given the short-run average total cost curves in Exhibit 6-15,what level of output per week minimizes average total cost?

Exhibit 6-15 Long-run average cost -In Exhibit 6-15,short-run average total cost,short-run marginal cost,and long-run average cost are all equal at which level of output per week?

Exhibit 6-7 Cost schedule for a firm -In Exhibit 6-7,by filling in the blanks,it can be determined that the marginal cost of the third unit of output is:

Normal profit is defined as a(n):

Which of the following is most likely to be a fixed cost for a business?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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