Question 1

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

Accepted Answer

A) True 
 B)False  True

Question 2

Scenario 13-21
Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations.
-Refer to Scenario 13-21. What is the accounting profit for the family farm?

Accepted Answer

Accounting profit = Total revenue - explicit costs = $100,000 - ($25,000 + $40,000 +$25,000) = $100,000 - $90,000 = $10,000.

Question 3

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Accepted Answer

A)  $100. 
B)  $199.50. 
C)  $200. 
D)  $400. 
A)  $100. 
B)  $199.50. 
C)  $200. 
D)  $400. A

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. At levels of output less than M, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems.

Question 5

If the marginal-cost curve is rising, then so is the average-total-cost curve.

Accepted Answer

A) True 
 B)False

Question 6

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  negative profits. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  negative profits.

Question 7

The value of a business owner's time is an example of

Accepted Answer

A)  an opportunity cost. 
B)  a fixed cost. 
C)  an explicit cost. 
D)  total revenue. 
A)  an opportunity cost. 
B)  a fixed cost. 
C)  an explicit cost. 
D)  total revenue.

Question 8

Figure 13-1  
-Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Accepted Answer

A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share. 
A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share.

Question 9

Table 13-19
  
-Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Accepted Answer

ATC = TC/Q

Question 10

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

Accepted Answer

A)  7,000 pounds 
B)  3,500 pounds 
C)  3,000 pounds 
D)  1,000 pounds 
A)  7,000 pounds 
B)  3,500 pounds 
C)  3,000 pounds 
D)  1,000 pounds

Question 11

The long-run average total cost curve is always

Accepted Answer

A)  flatter than the short-run average total cost curve, but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases. 
A)  flatter than the short-run average total cost curve, but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases.

Question 12

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish
(ii) rent on the shoe stand
(iii) wages Pete could earn delivering newspapers
(iv) interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Accepted Answer

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

Question 13

Table 13-6
Wooden Chair Factory
  
-Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day, what is the factory's total labor cost per day?

Accepted Answer

A)  $72 
B)  $112 
C)  $576 
D)  $616 
A)  $72 
B)  $112 
C)  $576 
D)  $616

Question 14

Figure 13-1  
-Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP2 to TP1?

Accepted Answer

A)  There is additional capital equipment available to the firm. 
B)  Labor skills have become rusty and outdated in the firm. 
C)  The firm has developed improved production technology. 
D)  The firm is now receiving a higher price for its product. 
A)  There is additional capital equipment available to the firm. 
B)  Labor skills have become rusty and outdated in the firm. 
C)  The firm has developed improved production technology. 
D)  The firm is now receiving a higher price for its product.

Question 15

Economic profit is equal to total revenue minus the

Accepted Answer

A)  explicit cost of producing goods and services. 
B)  opportunity cost of producing goods and services. 
C)  accounting cost of producing goods and services. 
D)  implicit cost of producing goods and services. 
A)  explicit cost of producing goods and services. 
B)  opportunity cost of producing goods and services. 
C)  accounting cost of producing goods and services. 
D)  implicit cost of producing goods and services.

Question 16

Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.
-Refer to Scenario 13-13. Christine could earn $6,000 per year preparing taxes. In calculating the economic profit of her cookie jar business, the $6,000 that Christine gives up is counted as part of her business's

Accepted Answer

A)  total revenue. 
B)  explicit costs. 
C)  implicit costs. 
D)  marginal costs. 
A)  total revenue. 
B)  explicit costs. 
C)  implicit costs. 
D)  marginal costs.

Question 17

Table 13-18
  
-Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Accepted Answer

AVC = VC/Q

Question 18

Table 13-6
Wooden Chair Factory
  
-Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Accepted Answer

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

Question 19

Explicit costs

Accepted Answer

A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include the value of the business owner's time. 
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 the value of the business owner's time. 
D)  Both b and c are correct.

Question 20

Table 13-1
  
-Refer to Table 13-1. What is total output when 4 workers are hired?

Accepted Answer

A)  -10 
C)  50 
C)  135 
D)  185 
A)  -10 
C)  50 
C)  135 
D)  185

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

If the marginal-cost curve is rising, then so is the average-total-cost curve.

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

The value of a business owner's time is an example of

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

The long-run average total cost curve is always

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business

Figure 13-1 -Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP2 to TP1?

Economic profit is equal to total revenue minus the

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Explicit costs

Table 13-1 -Refer to Table 13-1. What is total output when 4 workers are hired?

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

Filters

Exam 13: The Costs of Production

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

If the marginal-cost curve is rising, then so is the average-total-cost curve.

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

The value of a business owner's time is an example of

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

The long-run average total cost curve is always

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Figure 13-1 -Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP2 to TP1?

Economic profit is equal to total revenue minus the

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Explicit costs

Table 13-1 -Refer to Table 13-1. What is total output when 4 workers are hired?

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

Filters

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business