Question 1

Table 13-1
  
-Refer to Table 13-1. What is total output when 2 workers are hired?

Accepted Answer

A)  15 
B)  45 
C)  75 
D)  120 
A)  15 
B)  45 
C)  75 
D)  120

Question 2

Table 13-18
  
-Refer to Table 13-18. What is the shape of the average-variable-cost curve?

Accepted Answer

AVC = VC/Q, where VC is graphed on the v

Question 3

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's explicit cost of capital is

Accepted Answer

A)  $2,000. 
B)  $4,000. 
C)  $12,000. 
D)  $14,000. 
A)  $2,000. 
B)  $4,000. 
C)  $12,000. 
D)  $14,000.

Question 4

The marginal product of labor can be defined as the change in

Accepted Answer

A)  profit divided by the change in labor. 
B)  output divided by the change in labor. 
C)  labor divided by the change in output. 
D)  labor divided by the change in total cost. 
A)  profit divided by the change in labor. 
B)  output divided by the change in labor. 
C)  labor divided by the change in output. 
D)  labor divided by the change in total cost.

Question 5

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Accepted Answer

The two curves will

Question 6

Figure 13-3  
-Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

Accepted Answer

A)  Output increases at a decreasing rate with additional units of input. 
B)  Output increases at an increasing rate with additional units of input. 
C)  Output decreases at a decreasing rate with additional units of input. 
D)  Output decreases at an increasing rate with additional units of input. 
A)  Output increases at a decreasing rate with additional units of input. 
B)  Output increases at an increasing rate with additional units of input. 
C)  Output decreases at a decreasing rate with additional units of input. 
D)  Output decreases at an increasing rate with additional units of input.

Question 7

Figure 13-10  
-Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Accepted Answer

A)  time horizons. 
B)  products. 
C)  firms. 
D)  factory sizes. 
A)  time horizons. 
B)  products. 
C)  firms. 
D)  factory sizes.

Question 8

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Accepted Answer

A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $32,000. 
A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $32,000.

Question 9

Figure 13-10  
-Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Accepted Answer

A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5. 
A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5.

Question 10

Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-2. Suppose Chelsea purchases the factory using her own money. What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)  $2,000 
B)  $3,000 
C)  $4,500 
D)  $5,000 
A)  $2,000 
B)  $3,000 
C)  $4,500 
D)  $5,000

Question 11

Marginal costs are costs that do not vary with the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 12

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. Ziva's economic profit from farming equals

Accepted Answer

A)  $-130. 
B)  $-80. 
C)  $130. 
D)  $170. 
A)  $-130. 
B)  $-80. 
C)  $130. 
D)  $170.

Question 13

Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average cost of production per rug is $50. She sells each rug for a price of $65. Tsintah's total revenues are

Accepted Answer

A)  $750. 
B)  $2,500. 
C)  $3,250. 
D)  $5,750. 
A)  $750. 
B)  $2,500. 
C)  $3,250. 
D)  $5,750.

Question 14

Economists normally assume that the goal of a firm is to

Accepted Answer

A)  maximize its total revenue. 
B)  maximize its profit. 
C)  minimize its explicit costs. 
D)  minimize its total cost. 
A)  maximize its total revenue. 
B)  maximize its profit. 
C)  minimize its explicit costs. 
D)  minimize its total cost.

Question 15

Profit is defined as total revenue

Accepted Answer

A)  plus total cost. 
B)  times total cost. 
C)  minus total cost. 
D)  divided by total cost. 
A)  plus total cost. 
B)  times total cost. 
C)  minus total cost. 
D)  divided by total cost.

Question 16

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would be an example of an implicit cost? (i) forgone investment opportunities
(ii) wages of workers
(iii) raw materials costs

Accepted Answer

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

Question 18

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

Accepted Answer

A)  both labor and capital to be fixed. 
B)  both labor and capital to be variable. 
C)  labor to be variable and capital to be fixed. 
D)  capital to be variable and labor to be fixed. 
A)  both labor and capital to be fixed. 
B)  both labor and capital to be variable. 
C)  labor to be variable and capital to be fixed. 
D)  capital to be variable and labor to be fixed.

Question 19

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Accepted Answer

A)  output levels less than M 
B)  output levels between M and N 
C)  output levels greater than N 
D)  All of the above are correct as long as the firm is operating in the long run. 
A)  output levels less than M 
B)  output levels between M and N 
C)  output levels greater than N 
D)  All of the above are correct as long as the firm is operating in the long run.

Question 20

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Accepted Answer

A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses 
A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses

Table 13-1 -Refer to Table 13-1. What is total output when 2 workers are hired?

Table 13-18 -Refer to Table 13-18. What is the shape of the average-variable-cost curve?

The marginal product of labor can be defined as the change in

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Figure 13-3 -Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Marginal costs are costs that do not vary with the quantity of output produced.

Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average cost of production per rug is $50. She sells each rug for a price of $65. Tsintah's total revenues are

Economists normally assume that the goal of a firm is to

Profit is defined as total revenue

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

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

Table 13-1 -Refer to Table 13-1. What is total output when 2 workers are hired?

Table 13-18 -Refer to Table 13-18. What is the shape of the average-variable-cost curve?

The marginal product of labor can be defined as the change in

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Figure 13-3 -Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Marginal costs are costs that do not vary with the quantity of output produced.

Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average cost of production per rug is $50. She sells each rug for a price of $65. Tsintah's total revenues are

Economists normally assume that the goal of a firm is to

Profit is defined as total revenue

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

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