Question 1

Table 13-6
  
-Refer to Table 13-6.What is the average variable cost of producing 5 units of output?

Accepted Answer

A)  $4 
B)  $5 
C)  $40 
D)  $44 
A)  $4 
B)  $5 
C)  $40 
D)  $44

Question 2

The marginal product of any input is the

Accepted Answer

A)  increase in total cost associated with a one-unit increase in production. 
B)  change in total output associated with a $1.00 increase in total cost. 
C)  increase in total cost resulting from the hiring of an additional worker. 
D)  increase in total output obtained from one additional unit of that input. 
A)  increase in total cost associated with a one-unit increase in production. 
B)  change in total output associated with a $1.00 increase in total cost. 
C)  increase in total cost resulting from the hiring of an additional worker. 
D)  increase in total output obtained from one additional unit of that input.

Question 3

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Accepted Answer

A) True 
 B)False

Question 4

The fundamental reason that marginal cost eventually rises as output increases is because of

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing marginal product. 
D)  rising average fixed cost. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  diminishing marginal product. 
D)  rising average fixed cost.

Question 5

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Accepted Answer

A) True 
 B)False

Question 6

Suppose Jan started up a small lemonade stand business last month.Variable costs for Jan's lemonade stand now include the cost of

Accepted Answer

A)  building the lemonade stand. 
B)  hiring an artist to design a logo for her sign. 
C)  lemons and sugar. 
D)  All of the above are correct. 
A)  building the lemonade stand. 
B)  hiring an artist to design a logo for her sign. 
C)  lemons and sugar. 
D)  All of the above are correct.

Question 7

Bob Edwards owns a bagel shop.Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC)curve as a function of the number of bagels produced.The results indicate a U-shaped average total cost curve.Bob's economist explains that ATC is U-shaped for two reasons.The first is the existence of diminishing marginal product,which causes it to rise.What would be the second reason? Assume that the marginal cost curve is linear.(Hint: The second reason relates to average fixed cost)

Accepted Answer

Average fixed cost always decl

Question 8

Gordon is a senior majoring in computer network development at Smart State University.While he has been attending college,Gordon started a computer consulting business to help senior citizens set up their network connections and teach them how to use e-mail.Gordon charges $25 per hour for his consulting services.Gordon also works 5 hours a week for the Economics Department to maintain that department's Web page.The Economics Department pays Gordon $20 per hour.From this information we can conclude:

Accepted Answer

A)  Gordon should increase the number of hours he works for the Economics Department to make it comparable to his consulting business income. 
B)  Gordon is obviously not maximizing his well-being if he continues to work for the Economics Department. 
C)  If Gordon chooses one hour at the beach with his friends rather than spend one more hour with a consulting client,the forgone income of $25 is considered a cost of the choice to go to the beach. 
D)  Both b and c are correct 
A)  Gordon should increase the number of hours he works for the Economics Department to make it comparable to his consulting business income. 
B)  Gordon is obviously not maximizing his well-being if he continues to work for the Economics Department. 
C)  If Gordon chooses one hour at the beach with his friends rather than spend one more hour with a consulting client,the forgone income of $25 is considered a cost of the choice to go to the beach. 
D)  Both b and c are correct

Question 9

Table 13-4
Gallo Cork Factory
  
-Refer to Table 13-4.Each worker at Gallo's cork factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of corks produced.If Gallo's produces at a rate of 35 corks per hour,what is the total labor cost per hour?

Accepted Answer

A)  $40 
B)  $48 
C)  $384 
D)  $424 
A)  $40 
B)  $48 
C)  $384 
D)  $424

Question 10

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 $4,500.The marginal cost of producing the 101st unit of output is $300.What is the total cost of producing 101 units?

Accepted Answer

A)  $46.53 
B)  $800 
C)  $4,800 
D)  $5,300 
A)  $46.53 
B)  $800 
C)  $4,800 
D)  $5,300

Question 11

Which of the following is not a property of a firm's cost curves?

Accepted Answer

A)  Marginal cost must eventually rise as a result of diminishing marginal product. 
B)  Average total cost is U-shaped. 
C)  Economies of scale will exist when average total cost falls as output rises. 
D)  Average total cost will cross marginal cost at the minimum of marginal cost. 
A)  Marginal cost must eventually rise as a result of diminishing marginal product. 
B)  Average total cost is U-shaped. 
C)  Economies of scale will exist when average total cost falls as output rises. 
D)  Average total cost will cross marginal cost at the minimum of marginal cost.

Question 12

A local potato chip company plans to operate out of its current factory,which is estimated to last 25 years.All cost decisions it makes during the 25-year period

Accepted Answer

A)  are short-run decisions. 
B)  are long-run decisions. 
C)  involve only maintenance of the factory. 
D)  are zero,since the cost decisions were made at the beginning of the business. 
A)  are short-run decisions. 
B)  are long-run decisions. 
C)  involve only maintenance of the factory. 
D)  are zero,since the cost decisions were made at the beginning of the business.

Question 13

Economists normally assume that the goal of a firm is to

Accepted Answer

A)  maximize its total revenue. 
B)  maximize its profit. 
C)  minimize its explicit costs. 
D)  minimize its total cost. 
A)  maximize its total revenue. 
B)  maximize its profit. 
C)  minimize its explicit costs. 
D)  minimize its total cost.

Question 14

When comparing short-run average total cost with long-run average total cost at a given level of output,

Accepted Answer

A)  short-run average total cost is typically above long-run average total cost. 
B)  short-run average total cost is typically the same as long-run average total cost. 
C)  short-run average total cost is typically below long-run average total cost. 
D)  the relationship between short-run and long-run average total cost follows no clear pattern. 
A)  short-run average total cost is typically above long-run average total cost. 
B)  short-run average total cost is typically the same as long-run average total cost. 
C)  short-run average total cost is typically below long-run average total cost. 
D)  the relationship between short-run and long-run average total cost follows no clear pattern.

Question 15

Implicit costs

Accepted Answer

A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost. 
A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost.

Question 16

Figure 13-6  
-Refer to Figure 13-6.Which of the figures represents the total cost curve 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 17

Figure 13-4  
-Refer to Figure 13-4.Curve A represents which type of cost curve?

Accepted Answer

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

Question 18

Table 13-6
  
-Refer to Table 13-6.What is the average fixed cost of producing 5 units of output?

Accepted Answer

A)  $4 
B)  $5 
C)  $40 
D)  $44 
A)  $4 
B)  $5 
C)  $40 
D)  $44

Question 19

Jennifer is a junior in college.Her current cumulative grade point average (GPA)is 3.5 out of a 4.0 scale.Jennifer is hoping that by the time she graduates,she can raise her cumulative GPA to a 3.7.Which of the following statements is correct?

Accepted Answer

A)  If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year,she will be able to raise her cumulative GPA to a 3.7. 
B)  If Jennifer earns a 3.7 GPA in her senior year,she will be able to raise her cumulative GPA to a 3.7. 
C)  Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. 
D)  Either b or c could be correct. 
A)  If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year,she will be able to raise her cumulative GPA to a 3.7. 
B)  If Jennifer earns a 3.7 GPA in her senior year,she will be able to raise her cumulative GPA to a 3.7. 
C)  Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. 
D)  Either b or c could be correct.

Question 20

Scenario 13-6
A certain firm produces and sells staplers.Last year,it produced 7,000 staplers and sold each stapler for $6.In producing the 7,000 staplers,it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 13-6.In producing the 7,000 staplers,the firm's average variable cost was

Accepted Answer

A)  $2.43. 
B)  $4.00. 
C)  $6.00. 
D)  $6.43. 
A)  $2.43. 
B)  $4.00. 
C)  $6.00. 
D)  $6.43.

Exam 13: The Costs of Production

Table 13-6 -Refer to Table 13-6.What is the average variable cost of producing 5 units of output?

The marginal product of any input is the

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

The fundamental reason that marginal cost eventually rises as output increases is because of

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Suppose Jan started up a small lemonade stand business last month.Variable costs for Jan's lemonade stand now include the cost of

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Each worker at Gallo's cork factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of corks produced.If Gallo's produces at a rate of 35 corks per hour,what is the total labor cost per hour?

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 $4,500.The marginal cost of producing the 101st unit of output is $300.What is the total cost of producing 101 units?

Which of the following is not a property of a firm's cost curves?

A local potato chip company plans to operate out of its current factory,which is estimated to last 25 years.All cost decisions it makes during the 25-year period

Economists normally assume that the goal of a firm is to

When comparing short-run average total cost with long-run average total cost at a given level of output,

Implicit costs

Figure 13-6 -Refer to Figure 13-6.Which of the figures represents the total cost curve for a firm?

Figure 13-4 -Refer to Figure 13-4.Curve A represents which type of cost curve?

Table 13-6 -Refer to Table 13-6.What is the average fixed cost of producing 5 units of output?

Jennifer is a junior in college.Her current cumulative grade point average (GPA)is 3.5 out of a 4.0 scale.Jennifer is hoping that by the time she graduates,she can raise her cumulative GPA to a 3.7.Which of the following statements is correct?

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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