Question 1

Which of the following is an implicit cost of production?

Accepted Answer

A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm 
A)  interest paid on a loan to a bank 
B)  wages paid to labor plus the cost of carrying benefits for workers 
C)  the utility bill paid to water, electricity, and natural gas companies 
D)  rent that could have been earned on a building owned and used by the firm

Question 2

Figure 8-7
   Figure 8-7 shows the cost structure for a firm.
-Refer to Figure 8-7.When output level is 100,what is the total cost of production?

Accepted Answer

A)  $20 
B)  $800 
C)  $1,200 
D)  $2,000 
A)  $20 
B)  $800 
C)  $1,200 
D)  $2,000

Question 3

Costs that change as output changes are called incremental costs.

Accepted Answer

A) True 
 B)False

Question 4

The long run refers to a time period

Accepted Answer

A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs. 
A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs.

Question 5

Marginal cost is equal to the

Accepted Answer

A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output. 
A)  change in total cost divided by the change in output. 
B)  change in average total costs divided by the change in output. 
C)  change in total product divided by the change in output. 
D)  change in average product divided by the change in output.

Question 6

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 7

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 8

In the short run,changes in output can only be brought about by a change in the quantity of variable inputs.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true?

Accepted Answer

A)  Opportunity cost = explicit cost - implicit cost. 
B)  Total cost = fixed cost + implicit cost. 
C)  Total cost = fixed cost + variable cost. 
D)  Variable cost = wages + salaries + benefits. 
A)  Opportunity cost = explicit cost - implicit cost. 
B)  Total cost = fixed cost + implicit cost. 
C)  Total cost = fixed cost + variable cost. 
D)  Variable cost = wages + salaries + benefits.

Question 10

What is the difference between between total costs,variable costs,and fixed costs?

Accepted Answer

Total costs are the costs of all inputs

Question 11

Figure 8-11
   Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc.
-Refer to Figure 8-11.For output rates greater than 20,000 picture frames per month

Accepted Answer

A)  the firm will not make a profit because the average cost of production will be too high. 
B)  the firm will experience diseconomies of scale. 
C)  the firm will experience diminishing returns. 
D)  the short-run average total cost will equal the long-run average total cost of production. 
A)  the firm will not make a profit because the average cost of production will be too high. 
B)  the firm will experience diseconomies of scale. 
C)  the firm will experience diminishing returns. 
D)  the short-run average total cost will equal the long-run average total cost of production.

Question 12

Figure 8-1
  
-Refer to Figure 8-1.The average product of the 4th worker

Accepted Answer

A)  is 68. 
B)  is 17. 
C)  is 11. 
D)  cannot be determined. 
A)  is 68. 
B)  is 17. 
C)  is 11. 
D)  cannot be determined.

Question 13

Economic costs of production differ from accounting costs in that

Accepted Answer

A)  economic costs include expenditures for hired resources while accounting costs do not. 
B)  economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C)  accounting costs include expenditures for hired resources while economic costs do not. 
D)  accounting costs are always larger than economic cost. 
A)  economic costs include expenditures for hired resources while accounting costs do not. 
B)  economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. 
C)  accounting costs include expenditures for hired resources while economic costs do not. 
D)  accounting costs are always larger than economic cost.

Question 14

Figure 8-5
  
-Refer to Figure 8-5.Identify the curves in the diagram.

Accepted Answer

A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve 
A)  E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve 
B)  E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve 
C)  E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve 
D)  E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve

Question 15

Table 8-3
 $\begin{array}{|c|c|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { Workers }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { Boxes }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Product of } \
\text { Labor }
\end{array} & \begin{array}{c}
\text { Average } \
\text { Product of } \
\text { Labor }
\end{array} \
\hline 0 & 0 & \cdots \cdots & \cdots \
\hline 1 & 50 & & \
\hline 2 & 200 & & \
\hline 3 & 240 & & \
\hline 4 & 264 & & \
\hline 5 & 284 & & \
\hline
\end{array}$
-Refer to Table 8-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.The highest value of the average product is labor is ________ when Manny hires ________ workers.

Accepted Answer

A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4 
A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4

Question 16

Which of the following would be categorized as an implicit cost?
A.not being able to spend your $10,000 savings if you sink the money in your business
B.the cost of purchasing supplies for your house-cleaning business
C.the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above 
A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above

Question 17

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

Accepted Answer

A) True 
 B)False

Question 18

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

Accepted Answer

A)  2 chairs. 
B)  3 chairs. 
C)  4 chairs. 
D)  38 chairs. 
A)  2 chairs. 
B)  3 chairs. 
C)  4 chairs. 
D)  38 chairs.

Question 19

Average fixed cost can be calculated using any of the formulas below except

Accepted Answer

A)  TFC/Q. 
B)  (TC - V
C) /Q. 
C)  Δ(TC - V
C) /ΔQ. 
D)  (TC/Q) - AVC. 
A)  TFC/Q. 
B)  (TC - V
C) /Q. 
C)  Δ(TC - V
C) /ΔQ. 
D)  (TC/Q) - AVC.

Question 20

Figure 8-2
  
-Refer to Figure 8-2.Diminishing returns to labor set in

Accepted Answer

A)  after L₁. 
B)  after L₂. 
C)  after L₃. 
D)  immediately. 
A)  after L₁. 
B)  after L₂. 
C)  after L₃. 
D)  immediately.

Which of the following is an implicit cost of production?

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.When output level is 100,what is the total cost of production?

Costs that change as output changes are called incremental costs.

The long run refers to a time period

Marginal cost is equal to the

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

In the short run,changes in output can only be brought about by a change in the quantity of variable inputs.

Which of the following statements is true?

What is the difference between between total costs,variable costs,and fixed costs?

Figure 8-11 Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 8-11.For output rates greater than 20,000 picture frames per month

Figure 8-1 -Refer to Figure 8-1.The average product of the 4th worker

Economic costs of production differ from accounting costs in that

Figure 8-5 -Refer to Figure 8-5.Identify the curves in the diagram.

Which of the following would be categorized as an implicit cost? A.not being able to spend your $10,000 savings if you sink the money in your business B.the cost of purchasing supplies for your house-cleaning business C.the cost of purchasing auto insurance for your dry-cleaning delivery business

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

Average fixed cost can be calculated using any of the formulas below except

Figure 8-2 -Refer to Figure 8-2.Diminishing returns to labor set in

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

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Exam 8: Technology,Production,and Costs

Which of the following is an implicit cost of production?

Figure 8-7 Figure 8-7 shows the cost structure for a firm. -Refer to Figure 8-7.When output level is 100,what is the total cost of production?

Costs that change as output changes are called incremental costs.

The long run refers to a time period

Marginal cost is equal to the

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

In the short run,changes in output can only be brought about by a change in the quantity of variable inputs.

Which of the following statements is true?

What is the difference between between total costs,variable costs,and fixed costs?

Figure 8-11 Figure 8-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 8-11.For output rates greater than 20,000 picture frames per month

Figure 8-1 -Refer to Figure 8-1.The average product of the 4th worker

Economic costs of production differ from accounting costs in that

Figure 8-5 -Refer to Figure 8-5.Identify the curves in the diagram.

Which of the following would be categorized as an implicit cost? A.not being able to spend your $10,000 savings if you sink the money in your business B.the cost of purchasing supplies for your house-cleaning business C.the cost of purchasing auto insurance for your dry-cleaning delivery business

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

If four workers can produce 18 chairs a day and five can produce 20 chairs a day,the marginal product of the fifth worker is

Average fixed cost can be calculated using any of the formulas below except

Figure 8-2 -Refer to Figure 8-2.Diminishing returns to labor set in

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters