Question 1

Accounting profit is greater than or equal to economic profit.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following can be added to profit to obtain total revenue?

Accepted Answer

A)  net profit 
B)  capital profit 
C)  operational profit 
D)  total cost 
A)  net profit 
B)  capital profit 
C)  operational profit 
D)  total cost

Question 3

Table 13-4
Charles's Math Tutoring
  
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Accepted Answer

A)  increases but gets flatter. 
B)  increases and gets steeper. 
C)  decreases and gets flatter. 
D)  decreases but gets steeper. 
A)  increases but gets flatter. 
B)  increases and gets steeper. 
C)  decreases and gets flatter. 
D)  decreases but gets steeper.

Question 4

Diseconomies of scale occur when

Accepted Answer

A)  average fixed costs are falling. 
B)  average fixed costs are constant. 
C)  long-run average total costs rise as output increases. 
D)  long-run average total costs fall as output increases. 
A)  average fixed costs are falling. 
B)  average fixed costs are constant. 
C)  long-run average total costs rise as output increases. 
D)  long-run average total costs fall as output increases.

Question 5

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Accepted Answer

A)  gets flatter as output increases. 
B)  gets steeper as output increases. 
C)  is constant for all ranges of output. 
D)  is unrelated to the production function. 
A)  gets flatter as output increases. 
B)  gets steeper as output increases. 
C)  is constant for all ranges of output. 
D)  is unrelated to the production function.

Question 6

Table 13-19
  
-Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

Accepted Answer

AFC is always declining as out

Question 7

There is general agreement among economists that the long-run time period exceeds one year.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-3
  
-Refer to Table 13-3. If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output?

Accepted Answer

A)  240 units 
B)  230 units 
C)  190 units 
D)  170 units 
A)  240 units 
B)  230 units 
C)  190 units 
D)  170 units

Question 9

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Accepted Answer

A) True 
 B)False

Question 10

Table 13-17
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

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 11

Variable costs equal fixed costs when nothing is produced.

Accepted Answer

A) True 
 B)False

Question 12

Scenario 13-22
Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $50,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $50,000 working at another salon.
-Refer to Scenario 13-22. What is the accounting profit for the hair styling salon?

Accepted Answer

Accounting profit = Total reve

Question 13

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 14

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.
-Refer to Scenario 13-4. Abdul's explicit cost of capital is

Accepted Answer

A)  $8,000. 
B)  $4,000. 
C)  $2,000. 
D)  $1,000. 
A)  $8,000. 
B)  $4,000. 
C)  $2,000. 
D)  $1,000.

Question 16

Describe the difference between the short run and the long run.

Accepted Answer

In the short run, the firm con

Question 17

A production function describes

Accepted Answer

A)  how a firm maximizes profits. 
B)  how a firm turns inputs into output. 
C)  the minimal cost of producing a given level of output. 
D)  the relationship between cost and output. 
A)  how a firm maximizes profits. 
B)  how a firm turns inputs into output. 
C)  the minimal cost of producing a given level of output. 
D)  the relationship between cost and output.

Question 18

A student might describe information about the costs of production as

Accepted Answer

A)  dry and technical. 
B)  boring. 
C)  crucial to understanding firms and market structures. 
D)  All of the above could be correct. 
A)  dry and technical. 
B)  boring. 
C)  crucial to understanding firms and market structures. 
D)  All of the above could be correct.

Question 19

In the long run,

Accepted Answer

A)  inputs that were fixed in the short run remain fixed. 
B)  inputs that were fixed in the short run become variable. 
C)  inputs that were variable in the short run become fixed. 
D)  variable inputs are rarely used. 
A)  inputs that were fixed in the short run remain fixed. 
B)  inputs that were fixed in the short run become variable. 
C)  inputs that were variable in the short run become fixed. 
D)  variable inputs are rarely used.

Question 20

Total revenue equals

Accepted Answer

A)  price x quantity. 
B)  price/quantity. 
C)  (price x quantity) - total cost. 
D)  output - input. 
A)  price x quantity. 
B)  price/quantity. 
C)  (price x quantity) - total cost. 
D)  output - input.

Accounting profit is greater than or equal to economic profit.

Which of the following can be added to profit to obtain total revenue?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Diseconomies of scale occur when

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Table 13-19 -Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

There is general agreement among economists that the long-run time period exceeds one year.

Table 13-3 -Refer to Table 13-3. If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output?

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Variable costs equal fixed costs when nothing is produced.

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

Several related measures of cost can be derived from a firm's total cost.

Describe the difference between the short run and the long run.

A production function describes

A student might describe information about the costs of production as

In the long run,

Total revenue equals

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

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Exam 13: The Costs of Production

Accounting profit is greater than or equal to economic profit.

Which of the following can be added to profit to obtain total revenue?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Diseconomies of scale occur when

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Table 13-19 -Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

There is general agreement among economists that the long-run time period exceeds one year.

Table 13-3 -Refer to Table 13-3. If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output?

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Variable costs equal fixed costs when nothing is produced.

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

Several related measures of cost can be derived from a firm's total cost.

Describe the difference between the short run and the long run.

A production function describes

A student might describe information about the costs of production as

In the long run,

Total revenue equals

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