Question 1

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the average variable cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $14 
B)  $15 
C)  $16 
D)  $17 
A)  $14 
B)  $15 
C)  $16 
D)  $17

Question 2

Consider the following information about baseball production at Bob's Baseball Factory:
 
Bob pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bob's average variable cost decreases

Accepted Answer

A)  as output rises from 0 to 10,but rises after that. 
B)  as output rises from 0 to 26,but rises after that. 
C)  as output rises from 0 to 33,but increases after that. 
D)  continually as output rises. 
A)  as output rises from 0 to 10,but rises after that. 
B)  as output rises from 0 to 26,but rises after that. 
C)  as output rises from 0 to 33,but increases after that. 
D)  continually as output rises.

Question 3

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 accounting 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.

Question 4

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

Accepted Answer

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

Question 5

Constant returns to scale occur when the firm's

Accepted Answer

A)  long-run total costs are constant as output increases. 
B)  long-run average total costs are constant as output increases. 
C)  long-run average cost curve is falling as output increases. 
D)  long-run average cost curve is rising as output increases. 
A)  long-run total costs are constant as output increases. 
B)  long-run average total costs are constant as output increases. 
C)  long-run average cost curve is falling as output increases. 
D)  long-run average cost curve is rising as output increases.

Question 6

Figure 13-6  
-The marginal cost curve crosses the average total cost curve at

Accepted Answer

A)  the efficient scale. 
B)  the minimum point on the average total cost curve. 
C)  a point where the marginal cost curve is rising. 
D)  All of the above are correct. 
A)  the efficient scale. 
B)  the minimum point on the average total cost curve. 
C)  a point where the marginal cost curve is rising. 
D)  All of the above are correct.

Question 7

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 total 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.

Question 8

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

Accepted Answer

Diminishing marginal

Question 9

For a firm,the relationship between the quantity of inputs and quantity of output is called the

Accepted Answer

A)  profit function. 
B)  production function. 
C)  total-cost function. 
D)  quantity function. 
A)  profit function. 
B)  production function. 
C)  total-cost function. 
D)  quantity function.

Question 10

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 variable 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 11

Kevin quit his $65,000 a year corporate lawyer job to open up his own law practice.In Kevin's first year in business his total revenue equaled $150,000.Kevin's explicit cost during the year totaled $85,000.Using the information from Kevin's first year in business,what is his economic profit?

Accepted Answer

A)  $0 
B)  $20,000 
C)  $65,000 
D)  $85,000 
A)  $0 
B)  $20,000 
C)  $65,000 
D)  $85,000

Question 12

Explicit costs

Accepted Answer

A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include income that is forgone by the firm's owners. 
D)  Both b and c are correct. 
A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include income that is forgone by the firm's owners. 
D)  Both b and c are correct.

Question 13

Average total cost reveals how much total cost will change as the firm alters its level of production.

Accepted Answer

A) True 
 B)False

Question 14

The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Accepted Answer

A) True 
 B)False

Question 15

Accountants often ignore implicit costs.

Accepted Answer

A) True 
 B)False

Question 16

For a firm,the production function represents the relationship between

Accepted Answer

A)  implicit costs and explicit costs. 
B)  quantity of inputs and total cost. 
C)  quantity of inputs and quantity of output. 
D)  quantity of output and total cost. 
A)  implicit costs and explicit costs. 
B)  quantity of inputs and total cost. 
C)  quantity of inputs and quantity of output. 
D)  quantity of output and total cost.

Question 17

The average fixed cost curve is constant.

Accepted Answer

A) True 
 B)False

Question 18

Table 13-10
Jimmy's Gigaplots Factory
  
-Refer to Table 13-10.What is the average total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A)  $14.00 
B)  $18.50 
C)  $22.50 
D)  $26.50 
A)  $14.00 
B)  $18.50 
C)  $22.50 
D)  $26.50

Question 19

Total revenue minus both explicit and implicit 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.

Question 20

Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Accepted Answer

A)  $2. 
B)  $4. 
C)  $1,000. 
D)  $2,000. 
A)  $2. 
B)  $4. 
C)  $1,000. 
D)  $2,000.

Exam 13: The Costs of Production

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the average variable cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

Consider the following information about baseball production at Bob's Baseball Factory: Bob pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bob's average variable cost decreases

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

Constant returns to scale occur when the firm's

Figure 13-6 -The marginal cost curve crosses the average total cost curve at

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

For a firm,the relationship between the quantity of inputs and quantity of output is called the

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 variable cost will be

Kevin quit his $65,000 a year corporate lawyer job to open up his own law practice.In Kevin's first year in business his total revenue equaled $150,000.Kevin's explicit cost during the year totaled $85,000.Using the information from Kevin's first year in business,what is his economic profit?

Explicit costs

Average total cost reveals how much total cost will change as the firm alters its level of production.

The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Accountants often ignore implicit costs.

For a firm,the production function represents the relationship between

The average fixed cost curve is constant.

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the average total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

Total revenue minus both explicit and implicit costs is called

Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

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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