Question 1

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the marginal cost of the 2nd gigaplot at Jimmy's Gigaplot factory?

Accepted Answer

A)  $14 
B)  $15 
C)  $28 
D)  $34 
A)  $14 
B)  $15 
C)  $28 
D)  $34

Question 2

As Al's Radiator Company adds workers while keeping the same amount of machinery,some workers may be underutilized because they have little work to do while waiting in line to use the machinery.When this occurs,Al's Radiator Company encounters

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  increasing marginal returns. 
D)  diminishing marginal returns. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  increasing marginal returns. 
D)  diminishing marginal returns.

Question 3

In the long run,a factory is usually considered a fixed input.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following expressions is correct?

Accepted Answer

A)  marginal cost = (change in quantity of output)/(change in total cost) 
B)  average total cost = (total cost)/(quantity of output) 
C)  total cost = variable cost + marginal cost 
D)  average variable cost = (quantity of output)/(total variable cost) 
A)  marginal cost = (change in quantity of output)/(change in total cost) 
B)  average total cost = (total cost)/(quantity of output) 
C)  total cost = variable cost + marginal cost 
D)  average variable cost = (quantity of output)/(total variable cost)

Question 5

An entrepreneur's motivation to start a business arises from

Accepted Answer

A)  an innate love for the type of business that he or she starts. 
B)  a desire to earn a profit. 
C)  an altruistic desire to provide the world with a good product. 
D)  All of the above could be correct. 
A)  an innate love for the type of business that he or she starts. 
B)  a desire to earn a profit. 
C)  an altruistic desire to provide the world with a good product. 
D)  All of the above could be correct.

Question 6

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $3,500.When it produces 101 units of output,its total costs are $3,750.What is the marginal cost of producing the 101st unit of output?

Accepted Answer

A)  $250 
B)  $275 
C)  $340.91 
D)  $350 
A)  $250 
B)  $275 
C)  $340.91 
D)  $350

Question 7

When marginal cost is rising,average variable cost

Accepted Answer

A)  must be rising. 
B)  must be falling. 
C)  must be constant. 
D)  could be rising or falling. 
A)  must be rising. 
B)  must be falling. 
C)  must be constant. 
D)  could be rising or falling.

Question 8

When a firm is able to put idle equipment to use by hiring another worker,

Accepted Answer

A)  variable costs will rise. 
B)  variable costs will fall. 
C)  fixed costs will fall. 
D)  fixed costs and variable costs will rise. 
A)  variable costs will rise. 
B)  variable costs will fall. 
C)  fixed costs will fall. 
D)  fixed costs and variable costs will rise.

Question 9

Average variable cost is equal to total variable cost divided by quantity of output.

Accepted Answer

A) True 
 B)False

Question 10

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 11

Economists normally assume that the goal of a firm is to earn

Accepted Answer

A)  (i)and (ii)are true. 
B)  (i)and (iii)are true. 
C)  (ii)and (iii)are true. 
D)  (i),(ii),and (iii)are true. 
A)  (i)and (ii)are true. 
B)  (i)and (iii)are true. 
C)  (ii)and (iii)are true. 
D)  (i),(ii),and (iii)are true.

Question 12

The value of a business owner's time is an example of

Accepted Answer

A)  an opportunity cost. 
B)  a fixed cost. 
C)  an explicit cost. 
D)  total revenue. 
A)  an opportunity cost. 
B)  a fixed cost. 
C)  an explicit cost. 
D)  total revenue.

Question 13

The cost of producing the typical unit of output is the firm's

Accepted Answer

A)  average total cost. 
B)  opportunity cost. 
C)  variable cost. 
D)  marginal cost. 
A)  average total cost. 
B)  opportunity cost. 
C)  variable cost. 
D)  marginal cost.

Question 14

Marginal cost is equal to

Accepted Answer

A)  TC/Q. 
B)  $\Delta$ATC/Q. 
C)  $\Delta$TC/$\Delta$Q. 
D)  $\Delta$Q/$\Delta$TC. 
A)  TC/Q. 
B)  $\Delta$ATC/Q. 
C)  $\Delta$TC/$\Delta$Q. 
D)  $\Delta$Q/$\Delta$TC.

Question 15

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Accepted Answer

A)  a technological advance resulting in increased productivity 
B)  higher property taxes charged by the municipal government 
C)  increased wages to attract additional computer operators 
D)  a reduction in subsidies from the state government 
A)  a technological advance resulting in increased productivity 
B)  higher property taxes charged by the municipal government 
C)  increased wages to attract additional computer operators 
D)  a reduction in subsidies from the state government

Question 16

Table 13-2
  
-Refer to Table 13-2.If the firm can sell its output for $1 per unit,what is the profit-maximizing level of output?

Accepted Answer

A)  240 units 
B)  230 units 
C)  190 units 
D)  170 units 
A)  240 units 
B)  230 units 
C)  190 units 
D)  170 units

Question 17

The long-run average total cost curve is always

Accepted Answer

A)  flatter than the short-run average total cost curve,but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases. 
A)  flatter than the short-run average total cost curve,but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases.

Question 18

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9.At levels of output less than M,the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems.

Question 19

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the variable cost of producing 5 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $64 
B)  $85 
C)  $90 
D)  $100 
A)  $64 
B)  $85 
C)  $90 
D)  $100

Question 20

Total revenue minus only explicit costs is called

Accepted Answer

A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  None of the above is correct. 
A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  None of the above is correct.

Exam 13: The Costs of Production

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the marginal cost of the 2nd gigaplot at Jimmy's Gigaplot factory?

As Al's Radiator Company adds workers while keeping the same amount of machinery,some workers may be underutilized because they have little work to do while waiting in line to use the machinery.When this occurs,Al's Radiator Company encounters

In the long run,a factory is usually considered a fixed input.

Which of the following expressions is correct?

An entrepreneur's motivation to start a business arises from

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $3,500.When it produces 101 units of output,its total costs are $3,750.What is the marginal cost of producing the 101st unit of output?

When marginal cost is rising,average variable cost

When a firm is able to put idle equipment to use by hiring another worker,

Average variable cost is equal to total variable cost divided by quantity of output.

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Economists normally assume that the goal of a firm is to earn

The value of a business owner's time is an example of

The cost of producing the typical unit of output is the firm's

Marginal cost is equal to

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Table 13-2 -Refer to Table 13-2.If the firm can sell its output for $1 per unit,what is the profit-maximizing level of output?

The long-run average total cost curve is always

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.At levels of output less than M,the firm experiences

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the variable cost of producing 5 gigaplots at Jimmy's Gigaplot factory?

Total revenue minus only explicit costs is called

Ten Principles of 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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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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