Question 1

Constant returns to scale occur when a firm's

Accepted Answer

A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  long-run average total costs do not vary as output increases. 
A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  long-run average total costs do not vary as output increases.

Question 2

Figure 13-4  
-Refer to Figure 13-4.Curve D intersects curve C

Accepted Answer

A)  where the firm maximizes profit. 
B)  at the minimum of average fixed cost. 
C)  at the efficient scale. 
D)  where fixed costs equal variable costs. 
A)  where the firm maximizes profit. 
B)  at the minimum of average fixed cost. 
C)  at the efficient scale. 
D)  where fixed costs equal variable costs.

Question 3

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the total cost of producing 7 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $140 
B)  $150 
C)  $153 
D)  $158 
A)  $140 
B)  $150 
C)  $153 
D)  $158

Question 4

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.According to an economist,which of the following revenue totals will yield her business $50,000 in economic profits?

Accepted Answer

A)  $55,200. 
B)  $100,200. 
C)  $132,500. 
D)  $185,700. 
A)  $55,200. 
B)  $100,200. 
C)  $132,500. 
D)  $185,700.

Question 5

Table 13-7
  
-Refer to Table 13-7.What is the variable cost of producing zero widgets?

Accepted Answer

A)  $0.00 
B)  $1.00. 
C)  $10.00. 
D)  $10.00 
A)  $0.00 
B)  $1.00. 
C)  $10.00. 
D)  $10.00

Question 6

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Accepted Answer

A) True 
 B)False

Question 7

Table 13-4
Gallo Cork Factory
  
-Refer to Table 13-4.Assume Gallo's currently employs 5 workers.What is the marginal product of labor when Gallo's adds a 6th worker?

Accepted Answer

A)  5 corks per hour 
B)  15 corks per hour 
C)  25 corks per hour 
D)  70 corks per hour 
A)  5 corks per hour 
B)  15 corks per hour 
C)  25 corks per hour 
D)  70 corks per hour

Question 8

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

Accepted Answer

A)  macro economics 
B)  industrial organization 
C)  labor economics 
D)  monetary economics 
A)  macro economics 
B)  industrial organization 
C)  labor economics 
D)  monetary economics

Question 9

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 10

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

Accepted Answer

A)  an explicit cost. 
B)  an accounting cost 
C)  an implicit cost. 
D)  forgone accounting profit. 
A)  an explicit cost. 
B)  an accounting cost 
C)  an implicit cost. 
D)  forgone accounting profit.

Question 11

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the marginal cost of the 4th gigaplot at Jimmy's Gigaplot factory?

Accepted Answer

A)  $13 
B)  $15 
C)  $19 
D)  $64 
A)  $13 
B)  $15 
C)  $19 
D)  $64

Question 12

When a firm is experiencing diseconomies of scale,

Accepted Answer

A)  long-run average total cost is minimized. 
B)  long-run average total cost is greater than long-run marginal cost. 
C)  long-run average total cost is less than long-run marginal cost. 
D)  long-run marginal cost is minimized. 
A)  long-run average total cost is minimized. 
B)  long-run average total cost is greater than long-run marginal cost. 
C)  long-run average total cost is less than long-run marginal cost. 
D)  long-run marginal cost is minimized.

Question 13

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Accepted Answer

A)  The production function depicts the relationship between the quantity of labor and the quantity of output. 
B)  The slope of the production function measures marginal product. 
C)  The slopes of the production function and the total cost curve are inversely related;if one is increasing,the other is decreasing. 
D)  All of the above are correct. 
A)  The production function depicts the relationship between the quantity of labor and the quantity of output. 
B)  The slope of the production function measures marginal product. 
C)  The slopes of the production function and the total cost curve are inversely related;if one is increasing,the other is decreasing. 
D)  All of the above are correct.

Question 14

Table 13-13
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-13.Which firm has constant returns to 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 15

Figure 13-3  
-Refer to Figure 13-3.The graph illustrates a typical total cost curve.Based on its shape,what does the corresponding production function look like?

Accepted Answer

A)  an upward-sloping curve that increases at an increasing rate 
B)  an upward-sloping curve that increases at a decreasing rate 
C)  a downward-sloping curve 
D)  a horizontal straight line 
A)  an upward-sloping curve that increases at an increasing rate 
B)  an upward-sloping curve that increases at a decreasing rate 
C)  a downward-sloping curve 
D)  a horizontal straight line

Question 16

The marginal product of an input in the production process is the increase in

Accepted Answer

A)  total revenue obtained from an additional unit of that input. 
B)  profit obtained from an additional unit of that input. 
C)  total revenue obtained from an additional unit of that input . 
D)  quantity of output obtained from an additional unit of that input. 
A)  total revenue obtained from an additional unit of that input. 
B)  profit obtained from an additional unit of that input. 
C)  total revenue obtained from an additional unit of that input . 
D)  quantity of output obtained from an additional unit of that input.

Question 17

One of the most important properties of cost curves is that

Accepted Answer

A)  for most producers,the average total cost curve never crosses the marginal cost curve. 
B)  the average fixed cost curve must eventually rise. 
C)  the average total cost curve first rises,then falls with increased output. 
D)  the marginal cost curve eventually rises with the quantity of output. 
A)  for most producers,the average total cost curve never crosses the marginal cost curve. 
B)  the average fixed cost curve must eventually rise. 
C)  the average total cost curve first rises,then falls with increased output. 
D)  the marginal cost curve eventually rises with the quantity of output.

Question 18

The total cost to the firm of producing zero units of output is

Accepted Answer

A)  zero in both the short run and the long run. 
B)  its fixed cost in the short run and zero in the long run. 
C)  its fixed cost in both the short run and the long run. 
D)  its variable cost in both the short run and the long run. 
A)  zero in both the short run and the long run. 
B)  its fixed cost in the short run and zero in the long run. 
C)  its fixed cost in both the short run and the long run. 
D)  its variable cost in both the short run and the long run.

Question 19

Diminishing marginal product suggests that

Accepted Answer

A)  additional units of output become less costly as more output is produced. 
B)  marginal cost is upward sloping. 
C)  the firm is at full capacity. 
D)  adding additional workers will lower total cost. 
A)  additional units of output become less costly as more output is produced. 
B)  marginal cost is upward sloping. 
C)  the firm is at full capacity. 
D)  adding additional workers will lower total cost.

Question 20

A firm's opportunity costs of production are equal to its

Accepted Answer

A)  explicit costs only. 
B)  implicit costs only. 
C)  explicit costs + implicit costs. 
D)  explicit costs + implicit costs + total revenue. 
A)  explicit costs only. 
B)  implicit costs only. 
C)  explicit costs + implicit costs. 
D)  explicit costs + implicit costs + total revenue.

Exam 13: The Costs of Production

Constant returns to scale occur when a firm's

Figure 13-4 -Refer to Figure 13-4.Curve D intersects curve C

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the total cost of producing 7 gigaplots at Jimmy's Gigaplot factory?

Table 13-7 -Refer to Table 13-7.What is the variable cost of producing zero widgets?

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Assume Gallo's currently employs 5 workers.What is the marginal product of labor when Gallo's adds a 6th worker?

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the marginal cost of the 4th gigaplot at Jimmy's Gigaplot factory?

When a firm is experiencing diseconomies of scale,

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

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

Figure 13-3 -Refer to Figure 13-3.The graph illustrates a typical total cost curve.Based on its shape,what does the corresponding production function look like?

The marginal product of an input in the production process is the increase in

One of the most important properties of cost curves is that

The total cost to the firm of producing zero units of output is

Diminishing marginal product suggests that

A firm's opportunity costs of production are equal to its

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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