Question 1

When trying to understand the decision making process of different firms, economists assume that people think at the margin.

Accepted Answer

A) True 
 B)False

Question 2

The marginal product of a firm's workers is revealed by the shape of the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 3

Table 13-3
Consider the following firm which makes high-performance racing bicycles. All costs are given in dollars. Output is shown on a monthly basis. The firm's fixed costs include a rent of $800 and a lease cost of $400 per month.
  
-Refer to Table 13-3. What is the average fixed cost for the month if ten bicycles are produced?

Accepted Answer

A)  $120 
B)  $284.40 
C)  $404.40 
D)  $1200 
A)  $120 
B)  $284.40 
C)  $404.40 
D)  $1200

Question 4

Table 13-2
Adrienne's Premium Boxing Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail order catalogue business. Adrienne rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. Costs are in dollars per week.
  
-Refer to Table 13-2. During the week of 25 April, Adrienne doesn't box any chocolates. What are her costs during the week?

Accepted Answer

A)  $0 
B)  $75 
C)  $150 
D)  $425 
A)  $0 
B)  $75 
C)  $150 
D)  $425

Question 5

If a firm wants to capitalise on economies of scale, it may be able to do so by:

Accepted Answer

A)  giving its employees a limited task that they can master 
B)  employing a larger number of workers 
C)  producing a larger quantity of output 
D)  doing all of the above 
A)  giving its employees a limited task that they can master 
B)  employing a larger number of workers 
C)  producing a larger quantity of output 
D)  doing all of the above

Question 6

Industrial organisation is the study of how:

Accepted Answer

A)  industries organise for political advantage 
B)  firms' decisions regarding prices and quantities depend on the market conditions they face 
C)  labour unions organise workers in industries 
D)  profitable firms are in organised industries 
A)  industries organise for political advantage 
B)  firms' decisions regarding prices and quantities depend on the market conditions they face 
C)  labour unions organise workers in industries 
D)  profitable firms are in organised industries

Question 7

The marginal cost curve intersects the minimum value of the:

Accepted Answer

A)  average total cost curve 
B)  average variable cost curve 
C)  average fixed cost curve 
D)  average revenue curve 
A)  average total cost curve 
B)  average variable cost curve 
C)  average fixed cost curve 
D)  average revenue curve

Question 8

The amount of money that an orchardist could have earned if he had planted orange trees rather than apple trees is termed:

Accepted Answer

A)  explicit cost 
B)  accounting cost 
C)  implicit cost 
D)  total sales 
A)  explicit cost 
B)  accounting cost 
C)  implicit cost 
D)  total sales

Question 9

A sawmill processes logs into timber. Identify the costs below that are an example of a fixed cost. (i) rent paid on the factory
(ii) maintenance of the trucks used for transport of logs
(iii) wages of the workers

Accepted Answer

A)  (i) only 
B)  (i) and (ii) 
C)  (ii) and (iii) 
D)  (i), (ii) and (iii) 
A)  (i) only 
B)  (i) and (ii) 
C)  (ii) and (iii) 
D)  (i), (ii) and (iii)

Question 10

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants one bag of seeds, he gets 30 watermelons. If he plants two bags of seeds, he gets 50 watermelons. If he plants three bags of seeds he gets 60 watermelons. A bag of seeds costs $100 and seeds are his only costs.
-Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a small quantity of lemonade, she has few workers and her equipment is not being fully utilised. Because she can easily put her idle resources to use:

Accepted Answer

A)  the marginal cost of an extra worker is large 
B)  the marginal product of an extra worker is small 
C)  the marginal cost of one more glass of lemonade is small 
D)  her lemonade stand is likely to be crowded with workers 
A)  the marginal cost of an extra worker is large 
B)  the marginal product of an extra worker is small 
C)  the marginal cost of one more glass of lemonade is small 
D)  her lemonade stand is likely to be crowded with workers

Question 11

Examination of the costs of production is unnecessary to the field of industrial organisation.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

When trying to understand the decision making process of different firms, economists assume that people think at the margin.

The marginal product of a firm's workers is revealed by the shape of the marginal cost curve.

If a firm wants to capitalise on economies of scale, it may be able to do so by:

Industrial organisation is the study of how:

The marginal cost curve intersects the minimum value of the:

The amount of money that an orchardist could have earned if he had planted orange trees rather than apple trees is termed:

A sawmill processes logs into timber. Identify the costs below that are an example of a fixed cost. (i) rent paid on the factory (ii) maintenance of the trucks used for transport of logs (iii) wages of the workers

Examination of the costs of production is unnecessary to the field of industrial organisation.

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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