Question 1

Which of the following is an example of an implicit cost?

Accepted Answer

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

Question 2

In the short run,if a firm produces nothing,total costs are zero.

Accepted Answer

A) True 
 B)False

Question 3

Figure 13-6  
-Refer to Figure 13-6.Which of the figures represents the production function for a firm?

Accepted Answer

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

Question 4

Table 13-8
Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business.Each pair is shipped in a separate box.She 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.There are no implicit costs.
  
-Refer to Table 13-8.What is the total cost associated with making 890 boxes of earrings per week?

Accepted Answer

A)  $1,250 
B)  $1,325 
C)  $1,400 
D)  $1,575 
A)  $1,250 
B)  $1,325 
C)  $1,400 
D)  $1,575

Question 5

Table 13-6
  
-Refer to Table 13-6.What is the marginal cost of producing the fifth unit of output?

Accepted Answer

A)  $4 
B)  $40 
C)  $50 
D)  $70 
A)  $4 
B)  $40 
C)  $50 
D)  $70

Question 6

Figure 13-4  
-Refer to Figure 13-4.Which curve is most likely to represent average total cost?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 7

Figure 13-7  
-Refer to Figure 13-7.Quantity C represents the output level where the firm

Accepted Answer

A)  maximizes profits. 
B)  minimizes total costs. 
C)  produces at the efficient scale. 
D)  minimizes marginal costs. 
A)  maximizes profits. 
B)  minimizes total costs. 
C)  produces at the efficient scale. 
D)  minimizes marginal costs.

Question 8

Table 13-1
Alyson's Pet Sitting Service
  
-Refer to Table 13-1.What is the marginal product of the third worker?

Accepted Answer

A)  15 
B)  20 
C)  35 
D)  60 
A)  15 
B)  20 
C)  35 
D)  60

Question 9

If marginal cost is below average total cost,then average total cost

Accepted Answer

A)  is constant. 
B)  is falling. 
C)  is rising. 
D)  may rise or fall depending on the size of fixed costs. 
A)  is constant. 
B)  is falling. 
C)  is rising. 
D)  may rise or fall depending on the size of fixed costs.

Question 10

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122)and (L = 13,Q = 132).Then the marginal product of the 13th worker is

Accepted Answer

A)  8 units of output. 
B)  10 units of output. 
C)  122 units of output. 
D)  132 units of output. 
A)  8 units of output. 
B)  10 units of output. 
C)  122 units of output. 
D)  132 units of output.

Question 11

Scenario 13-2
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business.The bank account pays 3 percent interest per year.During the first year of his business,Zach sold 6,000 boxes of cookies for $2.50 per box.Also during the first year,the cookie business made monetary outlays of $9,000.You may assume that there is no opportunity cost to Zach's time.
-Refer to Scenario 13-2.Zach's economic profit for the year was

Accepted Answer

A)  $-506,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000. 
A)  $-506,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000.

Question 12

Which of the following costs of publishing a book is a fixed cost?

Accepted Answer

A)  author royalties of 5% per book 
B)  the costs of paper and binding 
C)  shipping and postage expenses 
D)  composition,typesetting,and jacket design for the book 
A)  author royalties of 5% per book 
B)  the costs of paper and binding 
C)  shipping and postage expenses 
D)  composition,typesetting,and jacket design for the book

Question 13

Scenario 13-7
Farmer Jack is a watermelon farmer.If Jack plants no seeds on his farm,he gets no harvest.If he plants 1 bag of seeds,he gets 30 watermelons.If he plants 2 bags of seeds,he gets 50 watermelons.If he plants 3 bags of seeds he gets 60 watermelons.A bag of seeds costs $100,and the costs of seeds are his only costs.
-Refer to Scenario 13-7.What is the shape of Farmer Jack's marginal cost curve?

Accepted Answer

A)  upward sloping 
B)  downward sloping 
C)  first upward sloping,then downward sloping 
D)  constant 
A)  upward sloping 
B)  downward sloping 
C)  first upward sloping,then downward sloping 
D)  constant

Question 14

Which of the following would be an example of an implicit cost?

Accepted Answer

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

Question 15

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

Accepted Answer

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

Question 16

The average total cost curve is unaffected by diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 17

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

Accepted Answer

A)  output levels less than M 
B)  output levels between M and N 
C)  output levels greater than N 
D)  All of the above are correct as long as the firm is operating in the long run. 
A)  output levels less than M 
B)  output levels between M and N 
C)  output levels greater than N 
D)  All of the above are correct as long as the firm is operating in the long run.

Question 18

Table 13-4
Gallo Cork Factory
  
-Refer to Table 13-4.Assume Gallo's currently employs 2 workers.What is the marginal product of labor when Gallo's adds a 3rd worker?

Accepted Answer

A)  5 corks per hour 
B)  10 corks per hour 
C)  20 corks per hour 
D)  25 corks per hour 
A)  5 corks per hour 
B)  10 corks per hour 
C)  20 corks per hour 
D)  25 corks per hour

Question 19

If marginal cost is equal to average total cost,then

Accepted Answer

A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average variable cost is minimized. 
D)  marginal cost is zero. 
A)  marginal cost is minimized. 
B)  average total cost is minimized. 
C)  average variable cost is minimized. 
D)  marginal cost is zero.

Question 20

Scenario 13-5
Samantha has been working for a law firm and earning an annual salary of $80,000.She decides to open her own practice.Her annual expenses will include $15,000 for office rent,$3,000 for equipment rental,$1,000 for supplies,$1,200 for utilities,and a $35,000 salary for a secretary/bookkeeper.Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-5.Samantha's annual implicit costs will equal

Accepted Answer

A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700. 
A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700.

Exam 13: The Costs of Production

Which of the following is an example of an implicit cost?

In the short run,if a firm produces nothing,total costs are zero.

Figure 13-6 -Refer to Figure 13-6.Which of the figures represents the production function for a firm?

Table 13-6 -Refer to Table 13-6.What is the marginal cost of producing the fifth unit of output?

Figure 13-4 -Refer to Figure 13-4.Which curve is most likely to represent average total cost?

Figure 13-7 -Refer to Figure 13-7.Quantity C represents the output level where the firm

Table 13-1 Alyson's Pet Sitting Service -Refer to Table 13-1.What is the marginal product of the third worker?

If marginal cost is below average total cost,then average total cost

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122)and (L = 13,Q = 132).Then the marginal product of the 13th worker is

Which of the following costs of publishing a book is a fixed cost?

Which of the following would be an example of an implicit cost?

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

The average total cost curve is unaffected by diminishing marginal product.

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Assume Gallo's currently employs 2 workers.What is the marginal product of labor when Gallo's adds a 3rd worker?

If marginal cost is equal to average total cost,then

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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