Question 1

Whenever the marginal product of a firm's only variable input was positive,but falling:

Accepted Answer

A)  its total product is growing at a decreasing rate. 
B)  it will use more of the variable input until its marginal product is negative. 
C)  it would reduce its use of the variable input. 
D)  its total product is beyond its maximum. 
A)  its total product is growing at a decreasing rate. 
B)  it will use more of the variable input until its marginal product is negative. 
C)  it would reduce its use of the variable input. 
D)  its total product is beyond its maximum.

Question 2

An example of an explicit cost of production is:

Accepted Answer

A)  the cost of foregone labor earnings for an entrepreneur. 
B)  the cost of flour for a baker. 
C)  the foregone rent that could have been earned if land owned by a firm was not used as its parking lot. 
D)  provided by none of the above. 
A)  the cost of foregone labor earnings for an entrepreneur. 
B)  the cost of flour for a baker. 
C)  the foregone rent that could have been earned if land owned by a firm was not used as its parking lot. 
D)  provided by none of the above.

Question 3

Assuming fixed costs are positive,over a range of output in which average total costs were constant,

Accepted Answer

A)  average variable costs would be constant as output increases. 
B)  average variable costs would be falling as output increases. 
C)  average variable costs would be rising as output increases. 
D)  marginal cost would be less than average variable cost. 
A)  average variable costs would be constant as output increases. 
B)  average variable costs would be falling as output increases. 
C)  average variable costs would be rising as output increases. 
D)  marginal cost would be less than average variable cost.

Question 4

Exhibit 11-5   Refer to Exhibit 11-5.At a quantity of five units of output,____ represents total cost,____ represents total fixed cost,and ____ represents total variable cost.

Accepted Answer

A)  X; Y; Z 
B)  Y; Z; X 
C)  X; Z; Y 
D)  Z; Y; X 
A)  X; Y; Z 
B)  Y; Z; X 
C)  X; Z; Y 
D)  Z; Y; X

Question 5

A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents.The firm's total fixed costs equal $700.The total cost of producing 1,000 units of output equals:

Accepted Answer

A)  $700. 
B)  $500. 
C)  $1,000. 
D)  $1,200. 
A)  $700. 
B)  $500. 
C)  $1,000. 
D)  $1,200.

Question 6

When economies of scale exist,a decrease in the level of output will lead to:

Accepted Answer

A)  a decrease in cost per unit. 
B)  an increase in cost per unit. 
C)  no change in cost per unit. 
D)  an increase in total cost. 
A)  a decrease in cost per unit. 
B)  an increase in cost per unit. 
C)  no change in cost per unit. 
D)  an increase in total cost.

Question 7

Exhibit 11-7   Refer to Exhibit 11-7.At output level 0Q,average fixed cost equals:

Accepted Answer

A)  QF. 
B)  ED. 
C)  QD. 
D)  both (a) and (b) 
A)  QF. 
B)  ED. 
C)  QD. 
D)  both (a) and (b)

Question 8

If Rocco's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:

Accepted Answer

A)  it is clear that Rocco made an economic profit of $3,500. 
B)  Rocco really didn't make any economic profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. 
C)  it is not clear whether Rocco earned any economic profit last week because it depends on the magnitude of the implicit costs. 
D)  Rocco clearly did not earn an economic profit. 
A)  it is clear that Rocco made an economic profit of $3,500. 
B)  Rocco really didn't make any economic profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. 
C)  it is not clear whether Rocco earned any economic profit last week because it depends on the magnitude of the implicit costs. 
D)  Rocco clearly did not earn an economic profit.

Question 9

The R&J Ice Cream Company makes gallons of ice cream using the technology described below.Fill in the Marginal Product columns of these tables.When six ice cream makers are utilized each hour,at what point does diminishing marginal product set in? When eight ice cream makers are utilized? Why is the point of diminishing marginal product different in each case?

Accepted Answer

Diminishing marginal product sets in wit

Question 10

If marginal cost is increasing then:

Accepted Answer

A)  marginal product must be increasing. 
B)  average variable cost must be increasing. 
C)  average total cost must be increasing. 
D)  none of the above must necessarily be true. 
A)  marginal product must be increasing. 
B)  average variable cost must be increasing. 
C)  average total cost must be increasing. 
D)  none of the above must necessarily be true.

Question 11

The marginal product of labor can be defined as:

Accepted Answer

A)  the change in profit divided by the change in labor, other factors of production held constant. 
B)  the change in total output divided by a one unit change in labor, other factors of production held constant. 
C)  the total output divided by the total labor utilized. 
D)  the change in labor utilized divided by the change in total output, other factors of production held constant. 
A)  the change in profit divided by the change in labor, other factors of production held constant. 
B)  the change in total output divided by a one unit change in labor, other factors of production held constant. 
C)  the total output divided by the total labor utilized. 
D)  the change in labor utilized divided by the change in total output, other factors of production held constant.

Question 12

A firm's total fixed cost equals $2,500.The firm's average fixed cost at 1,5,and 10 units of output,respectively,will be:

Accepted Answer

A)  $2,500, $2,500, and $2,500. 
B)  $2,500, $500, and $250. 
C)  $2,500, $12,500, and $25,000. 
D)  $2,500, $1,250, and $250. 
A)  $2,500, $2,500, and $2,500. 
B)  $2,500, $500, and $250. 
C)  $2,500, $12,500, and $25,000. 
D)  $2,500, $1,250, and $250.

Question 13

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company,his accounting profit as a contractor was ____ and his economic profit was ____.

Accepted Answer

A)  $50,000; -$30,000 
B)  $10,000; $50,000 
C)  $40,000; $50,000 
D)  $50,000; $40,000 
A)  $50,000; -$30,000 
B)  $10,000; $50,000 
C)  $40,000; $50,000 
D)  $50,000; $40,000

Question 14

Exhibit 11-2   Refer to Exhibit 11-2.How much are average fixed costs (in dollars)at 4 units of output?

Accepted Answer

A)  10 
B)  20 
C)  30 
D)  40 
A)  10 
B)  20 
C)  30 
D)  40

Question 15

In the long run,firms can vary all inputs in the production process.

Accepted Answer

A) True 
 B)False

Question 16

As quantity increases,which of the following must be true if average total costs are rising?

Accepted Answer

A)  Marginal cost must be greater than average total cost. 
B)  Marginal cost must be less than average total cost. 
C)  Average fixed cost must be increasing. 
D)  Average fixed cost must be less than average variable cost. 
A)  Marginal cost must be greater than average total cost. 
B)  Marginal cost must be less than average total cost. 
C)  Average fixed cost must be increasing. 
D)  Average fixed cost must be less than average variable cost.

Question 17

Interest paid on a bank loan by a local ice cream producer is:

Accepted Answer

A)  an implicit cost for the ice cream producer. 
B)  considered by an accountant when calculating the cost of running the ice cream business. 
C)  an explicit cost for the ice cream producer. 
D)  both b. and c. 
A)  an implicit cost for the ice cream producer. 
B)  considered by an accountant when calculating the cost of running the ice cream business. 
C)  an explicit cost for the ice cream producer. 
D)  both b. and c.

Question 18

If the marginal cost is less than average total cost,average total cost will decrease.

Accepted Answer

The answer of If the marginal cost is less than...

Question 19

You operate a factory that produces beach towels.Your current level of output equals 2,000 towels per week.Your weekly variable cost equals $8,000.If your total cost each week equals $9,000,it follows that:

Accepted Answer

A)  the average variable cost of production equals $2 per towel. 
B)  the average total cost of production equals $4 per towel. 
C)  the average total cost of production equals $4.50 per towel. 
D)  the average total cost of production equals $8 per towel. 
A)  the average variable cost of production equals $2 per towel. 
B)  the average total cost of production equals $4 per towel. 
C)  the average total cost of production equals $4.50 per towel. 
D)  the average total cost of production equals $8 per towel.

Question 20

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches:
  Refer to Exhibit 11-8.If the output equals five watches per week,the average fixed cost and average variable cost of production equal ____ and ____,respectively.

Accepted Answer

A)  $9; $10 
B)  $10; $9 
C)  $45; $50 
D)  $50; $45 
A)  $9; $10 
B)  $10; $9 
C)  $45; $50 
D)  $50; $45

Exam 11: The Firm: Production and Costs

Whenever the marginal product of a firm's only variable input was positive,but falling:

An example of an explicit cost of production is:

Assuming fixed costs are positive,over a range of output in which average total costs were constant,

Exhibit 11-5 Refer to Exhibit 11-5.At a quantity of five units of output,____ represents total cost,____ represents total fixed cost,and ____ represents total variable cost.

A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents.The firm's total fixed costs equal $700.The total cost of producing 1,000 units of output equals:

When economies of scale exist,a decrease in the level of output will lead to:

Exhibit 11-7 Refer to Exhibit 11-7.At output level 0Q,average fixed cost equals:

If Rocco's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:

If marginal cost is increasing then:

The marginal product of labor can be defined as:

A firm's total fixed cost equals $2,500.The firm's average fixed cost at 1,5,and 10 units of output,respectively,will be:

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company,his accounting profit as a contractor was ____ and his economic profit was ____.

Exhibit 11-2 Refer to Exhibit 11-2.How much are average fixed costs (in dollars)at 4 units of output?

In the long run,firms can vary all inputs in the production process.

As quantity increases,which of the following must be true if average total costs are rising?

Interest paid on a bank loan by a local ice cream producer is:

If the marginal cost is less than average total cost,average total cost will decrease.

You operate a factory that produces beach towels.Your current level of output equals 2,000 towels per week.Your weekly variable cost equals $8,000.If your total cost each week equals $9,000,it follows that:

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches: Refer to Exhibit 11-8.If the output equals five watches per week,the average fixed cost and average variable cost of production equal ____ and ____,respectively.

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

Exhibit 11-5 Refer to Exhibit 11-5.At a quantity of five units of output, represents total cost, represents total fixed cost,and represents total variable cost.

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company,his accounting profit as a contractor was and his economic profit was .

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches: Refer to Exhibit 11-8.If the output equals five watches per week,the average fixed cost and average variable cost of production equal and ,respectively.