Question 1

Figure 13-10  
-Refer to Figure 13-10.The firm experiences constant returns to scale if it changes its level of output from

Accepted Answer

A)  Q1 to Q2. 
B)  Q2 to Q4. 
C)  Q1 to Q3. 
D)  Q4 to Q5. 
A)  Q1 to Q2. 
B)  Q2 to Q4. 
C)  Q1 to Q3. 
D)  Q4 to Q5.

Question 2

Profit is defined as total revenue

Accepted Answer

A)  plus total cost. 
B)  times total cost. 
C)  minus total cost. 
D)  divided by total cost. 
A)  plus total cost. 
B)  times total cost. 
C)  minus total cost. 
D)  divided by total cost.

Question 3

Scenario 13-8
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-8.Average total cost will be

Accepted Answer

A)  rising at all points. 
B)  falling at all points. 
C)  constant. 
D)  U-shaped. 
A)  rising at all points. 
B)  falling at all points. 
C)  constant. 
D)  U-shaped.

Question 4

Table 13-13
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-13.Which firm has economies of scale over the entire range of output?

Accepted Answer

A)  Firm 1 
B)  Firm 2 
C)  Firm 3 
D)  Firm 4 
A)  Firm 1 
B)  Firm 2 
C)  Firm 3 
D)  Firm 4

Question 5

Katherine gives piano lessons for $20 per hour.She also grows flowers,which she arranges and sells at the local farmer's market.One day she spends 5 hours planting $50 worth of seeds in her garden.Once the seeds have grown into flowers,she can sell them for $150 at the farmer's market.Which of the following statements is correct regarding Katherine's profits from selling flowers?

Accepted Answer

A)  Katherine's accounting profits are $100,and her economic profits are $100. 
B)  Katherine's accounting profits are $100,and her economic profits are $0. 
C)  Katherine's accounting profits are $0,and her economic profits are $100. 
D)  Katherine's accounting profits are $0,and her economic profits are $-100. 
A)  Katherine's accounting profits are $100,and her economic profits are $100. 
B)  Katherine's accounting profits are $100,and her economic profits are $0. 
C)  Katherine's accounting profits are $0,and her economic profits are $100. 
D)  Katherine's accounting profits are $0,and her economic profits are $-100.

Question 6

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the average variable cost of producing 6 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $16 
B)  $17 
C)  $18 
D)  $19 
A)  $16 
B)  $17 
C)  $18 
D)  $19

Question 7

Table 13-3
  
-Refer to Table 13-3.What is total output when 4 workers are hired?

Accepted Answer

A)  40 
B)  70 
C)  120 
D)  160 
A)  40 
B)  70 
C)  120 
D)  160

Question 8

On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A)  The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B)  The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C)  The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D)  Any of the above could be correct. 
A)  The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B)  The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C)  The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D)  Any of the above could be correct.

Question 9

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the marginal cost of the 8th gigaplot at Jimmy's Gigaplot factory?

Accepted Answer

A)  $20 
B)  $27 
C)  $160 
D)  $185 
A)  $20 
B)  $27 
C)  $160 
D)  $185

Question 10

Table 13-1
Alyson's Pet Sitting Service
  
-Refer to Table 13-1.Suppose that Alyson's pet sitting service has a fixed cost of $50 per month for her cell phone.Each worker costs Alyson $60 per day.What is the shape of Alyson's total cost curve as output increases from 0 and 45?

Accepted Answer

A)  Total cost increases but gets flatter. 
B)  Total cost increases and gets steeper. 
C)  Total cost decreases and gets flatter. 
D)  Total cost decreases but gets steeper. 
A)  Total cost increases but gets flatter. 
B)  Total cost increases and gets steeper. 
C)  Total cost decreases and gets flatter. 
D)  Total cost decreases but gets steeper.

Question 11

For a construction company that builds houses,which of the following costs would be a fixed cost?

Accepted Answer

A)  the $50,000 per year salary paid to a construction foreman 
B)  the $30,000 per year salary paid to the company's bookkeeper 
C)  the $10,000 per year premium paid to an insurance company 
D)  All of the above are correct. 
A)  the $50,000 per year salary paid to a construction foreman 
B)  the $30,000 per year salary paid to the company's bookkeeper 
C)  the $10,000 per year premium paid to an insurance company 
D)  All of the above are correct.

Question 12

When average cost is greater than marginal cost,marginal cost must be

Accepted Answer

A)  rising. 
B)  falling. 
C)  constant. 
D)  The direction of change in marginal cost cannot be determined from this information. 
A)  rising. 
B)  falling. 
C)  constant. 
D)  The direction of change in marginal cost cannot be determined from this information.

Question 13

Scenario 13-8
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-8.Marginal cost will be

Accepted Answer

A)  rising at all points. 
B)  falling at all points. 
C)  U-shaped. 
D)  constant. 
A)  rising at all points. 
B)  falling at all points. 
C)  U-shaped. 
D)  constant.

Question 14

Table 13-6
  
-Refer to Table 13-6.What is the shape of the marginal cost curve for this firm?

Accepted Answer

A)  constant 
B)  upward-sloping 
C)  downward-sloping 
D)  U-shaped 
A)  constant 
B)  upward-sloping 
C)  downward-sloping 
D)  U-shaped

Question 15

Total cost is the

Accepted Answer

A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good. 
A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good.

Question 16

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the variable cost of producing 8 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $120 
B)  $140 
C)  $155 
D)  $160 
A)  $120 
B)  $140 
C)  $155 
D)  $160

Question 17

Which of the following statements is not correct?

Accepted Answer

A)  Fixed costs are constant. 
B)  Variable costs change as output changes. 
C)  Average fixed costs are constant. 
D)  Average total costs are typically U-shaped. 
A)  Fixed costs are constant. 
B)  Variable costs change as output changes. 
C)  Average fixed costs are constant. 
D)  Average total costs are typically U-shaped.

Question 18

Table 13-12
Listed in the table are the long-run total costs for three different firms.
  
-Refer to Table 13-12.Which firm is experiencing constant returns to scale?

Accepted Answer

A)  Firm A only 
B)  Firm B only 
C)  Firm C only 
D)  Firm A and Firm B only 
A)  Firm A only 
B)  Firm B only 
C)  Firm C only 
D)  Firm A and Firm B only

Question 19

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Accepted Answer

A) True 
 B)False

Question 20

The amount of money that a firm pays to buy inputs is called

Accepted Answer

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

Exam 13: The Costs of Production

Figure 13-10 -Refer to Figure 13-10.The firm experiences constant returns to scale if it changes its level of output from

Profit is defined as total revenue

Scenario 13-8 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-8.Average total cost will be

Table 13-13 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm has economies of scale over the entire range of output?

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the average variable cost of producing 6 gigaplots at Jimmy's Gigaplot factory?

Table 13-3 -Refer to Table 13-3.What is total output when 4 workers are hired?

On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the marginal cost of the 8th gigaplot at Jimmy's Gigaplot factory?

Table 13-1 Alyson's Pet Sitting Service -Refer to Table 13-1.Suppose that Alyson's pet sitting service has a fixed cost of $50 per month for her cell phone.Each worker costs Alyson $60 per day.What is the shape of Alyson's total cost curve as output increases from 0 and 45?

For a construction company that builds houses,which of the following costs would be a fixed cost?

When average cost is greater than marginal cost,marginal cost must be

Scenario 13-8 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-8.Marginal cost will be

Table 13-6 -Refer to Table 13-6.What is the shape of the marginal cost curve for this firm?

Total cost is the

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the variable cost of producing 8 gigaplots at Jimmy's Gigaplot factory?

Which of the following statements is not correct?

Table 13-12 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-12.Which firm is experiencing constant returns to scale?

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

The amount of money that a firm pays to buy inputs 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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