Question 1

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 first unit of output is:

Accepted Answer

A)  200. 
B)  700. 
C)  900. 
D)  1,000. 
E)  3,000. 
A)  200. 
B)  700. 
C)  900. 
D)  1,000. 
E)  3,000.

Question 2

Which of the following best describes marginal cost?

Accepted Answer

A)  The change in total cost when one additional unit of output is produced. 
B)  Total cost divided by the quantity of output produced. 
C)  Total variable cost divided by the quantity of output produced. 
D)  Total fixed cost divided by the quantity of output produced. 
E)  Costs that do not vary as output varies, and that must be paid even if output is zero. 
A)  The change in total cost when one additional unit of output is produced. 
B)  Total cost divided by the quantity of output produced. 
C)  Total variable cost divided by the quantity of output produced. 
D)  Total fixed cost divided by the quantity of output produced. 
E)  Costs that do not vary as output varies, and that must be paid even if output is zero.

Question 3

Which of the following statements is true?

Accepted Answer

A)  TC = TFC - TVC. 
B)  AVC = TC/Q. 
C)  TFC = TC - TVC. 
D)  MC equals the change in ATC divided by the change in Q. 
A)  TC = TFC - TVC. 
B)  AVC = TC/Q. 
C)  TFC = TC - TVC. 
D)  MC equals the change in ATC divided by the change in Q.

Question 4

The marginal product curve rises when the marginal cost curve rises.

Accepted Answer

A) True 
 B)False

Question 5

A downward-sloping portion of a long-run average total cost curve is the result of:

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing returns. 
D)  the existence of fixed resources. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing returns. 
D)  the existence of fixed resources.

Question 6

Exhibit 6-14 Cost curves
  
-In Exhibit 6-14,the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4,000?

Accepted Answer

A)  Diseconomies of scale; constant returns to scale; economies of scale. 
B)  Constant returns to scale; economies of scale; diseconomies of scale. 
C)  Economies of scale; constant returns to scale; diseconomies of scale. 
D)  Diseconomies of scale; economies of scale; constant returns to scale. 
E)  Economies of scale; diseconomies of scale; constant returns to scale. 
A)  Diseconomies of scale; constant returns to scale; economies of scale. 
B)  Constant returns to scale; economies of scale; diseconomies of scale. 
C)  Economies of scale; constant returns to scale; diseconomies of scale. 
D)  Diseconomies of scale; economies of scale; constant returns to scale. 
E)  Economies of scale; diseconomies of scale; constant returns to scale.

Question 7

In the long run,all costs are considered variable.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 6-9 Cost schedule for firm X
  
-As shown in Exhibit 6-9,the marginal cost of producing the third unit is:

Accepted Answer

A)  $50. 
B)  $16. 
C)  $24. 
D)  $23. 
A)  $50. 
B)  $16. 
C)  $24. 
D)  $23.

Question 9

Suppose that when output is 20,marginal cost is $20,and average total cost is $30.Then which of the following is most likely to be true.

Accepted Answer

A)  Average total cost is declining. 
B)  Average total cost is constant. 
C)  Average total cost is rising. 
D)  Average total cost is less than average fixed cost. 
A)  Average total cost is declining. 
B)  Average total cost is constant. 
C)  Average total cost is rising. 
D)  Average total cost is less than average fixed cost.

Question 10

Which of the following is true at the point where diminishing returns set in?

Accepted Answer

A)  Both marginal product and marginal cost are at a maximum. 
B)  Both marginal product and marginal cost are at a minimum. 
C)  Marginal product is at a maximum and marginal cost at a minimum. 
D)  Marginal product is at a minimum and marginal cost at a maximum. 
A)  Both marginal product and marginal cost are at a maximum. 
B)  Both marginal product and marginal cost are at a minimum. 
C)  Marginal product is at a maximum and marginal cost at a minimum. 
D)  Marginal product is at a minimum and marginal cost at a maximum.

Question 11

A large aircraft manufacturer,like Boeing,may have a cost advantage over a new smaller manufacturer because of:

Accepted Answer

A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing returns to a fixed factor of production. 
D)  the principal agent problem is generally less severe for larger firms. 
A)  diseconomies of scale. 
B)  economies of scale. 
C)  diminishing returns to a fixed factor of production. 
D)  the principal agent problem is generally less severe for larger firms.

Question 12

Which of the following is an implicit cost of going to college?

Accepted Answer

A)  Tuition. 
B)  Books. 
C)  Lost income. 
D)  Future income. 
E)  Room and board. 
A)  Tuition. 
B)  Books. 
C)  Lost income. 
D)  Future income. 
E)  Room and board.

Question 13

The opportunity costs associated with the use of resources owned by a firm are:

Accepted Answer

A)  externalities. 
B)  implicit costs. 
C)  explicit costs. 
D)  sunk costs. 
A)  externalities. 
B)  implicit costs. 
C)  explicit costs. 
D)  sunk costs.

Question 14

An economist left her $100,000-a-year teaching position to work full-time in her own consulting business.In the first year,she had total revenue of $200,000 and business expenses of $100,000.She made a(n):

Accepted Answer

A)  economic profit. 
B)  economic loss. 
C)  implicit profit. 
D)  accounting loss but not an economic loss. 
E)  zero economic profit. 
A)  economic profit. 
B)  economic loss. 
C)  implicit profit. 
D)  accounting loss but not an economic loss. 
E)  zero economic profit.

Question 15

The average fixed cost of a firm equal:

Accepted Answer

A)  implicit costs divided by output. 
B)  explicit costs divided by output. 
C)  total cost minus variable cost. 
D)  total cost minus total variable cost divided by output. 
A)  implicit costs divided by output. 
B)  explicit costs divided by output. 
C)  total cost minus variable cost. 
D)  total cost minus total variable cost divided by output.

Question 16

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

Accepted Answer

A)  0. 
B)  700. 
C)  1,000. 
D)  1,200. 
E)  1,800. 
A)  0. 
B)  700. 
C)  1,000. 
D)  1,200. 
E)  1,800.

Question 17

The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of:

Accepted Answer

A)  negative response. 
B)  inverse return to labor. 
C)  diminishing returns. 
D)  demand. 
A)  negative response. 
B)  inverse return to labor. 
C)  diminishing returns. 
D)  demand.

Question 18

Which of the following is an example of a fixed input?

Accepted Answer

A)  The acreage of a farmer's land. 
B)  Machinery. 
C)  The size of a firm's plant. 
D)  All of the above. 
A)  The acreage of a farmer's land. 
B)  Machinery. 
C)  The size of a firm's plant. 
D)  All of the above.

Question 19

Exhibit 6-2 Cost schedule for pizza production
  
-Exhibit 6-2 shows the labor,energy,and materials cost of making various quantities of pizzas.The table shows that the labor cost of making pizzas will:

Accepted Answer

A)  increase at a decreasing rate. 
B)  decrease at a decreasing rate. 
C)  decrease at an increasing rate. 
D)  increase at an increasing rate. 
E)  increase at a constant rate. 
A)  increase at a decreasing rate. 
B)  decrease at a decreasing rate. 
C)  decrease at an increasing rate. 
D)  increase at an increasing rate. 
E)  increase at a constant rate.

Question 20

Which of the following is true if the total cost curve is rising?

Accepted Answer

A)  Total fixed cost is decreasing. 
B)  Total fixed cost is increasing. 
C)  Marginal cost is decreasing. 
D)  Marginal cost is increasing. 
A)  Total fixed cost is decreasing. 
B)  Total fixed cost is increasing. 
C)  Marginal cost is decreasing. 
D)  Marginal cost is increasing.

Exam 6: Production Costs

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 first unit of output is:

Which of the following best describes marginal cost?

Which of the following statements is true?

The marginal product curve rises when the marginal cost curve rises.

A downward-sloping portion of a long-run average total cost curve is the result of:

Exhibit 6-14 Cost curves -In Exhibit 6-14,the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4,000?

In the long run,all costs are considered variable.

Exhibit 6-9 Cost schedule for firm X -As shown in Exhibit 6-9,the marginal cost of producing the third unit is:

Suppose that when output is 20,marginal cost is $20,and average total cost is $30.Then which of the following is most likely to be true.

Which of the following is true at the point where diminishing returns set in?

A large aircraft manufacturer,like Boeing,may have a cost advantage over a new smaller manufacturer because of:

Which of the following is an implicit cost of going to college?

The opportunity costs associated with the use of resources owned by a firm are:

An economist left her $100,000-a-year teaching position to work full-time in her own consulting business.In the first year,she had total revenue of $200,000 and business expenses of $100,000.She made a(n):

The average fixed cost of a firm equal:

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

The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of:

Which of the following is an example of a fixed input?

Exhibit 6-2 Cost schedule for pizza production -Exhibit 6-2 shows the labor,energy,and materials cost of making various quantities of pizzas.The table shows that the labor cost of making pizzas will:

Which of the following is true if the total cost curve is rising?

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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