Question 1

In setting the production level, a firm's cost curves

Accepted Answer

A)  by themselves do not tell us what decisions the firm will make. 
B)  dictate what decisions the firm will make. 
C)  have no bearing on what decisions the firm will make. 
D)  None of the above is correct. 
A)  by themselves do not tell us what decisions the firm will make. 
B)  dictate what decisions the firm will make. 
C)  have no bearing on what decisions the firm will make. 
D)  None of the above is correct.

Question 2

Figure 13-10  
-Refer to Figure 13-10. The firm experiences diseconomies 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 3

The most likely explanation for economies of scale is

Accepted Answer

A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost. 
A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost.

Question 4

The average-fixed-cost curve is constant.

Accepted Answer

A) True 
 B)False

Question 5

The amount of money that a firm receives from the sale of its output is called

Accepted Answer

A)  total gross profit. 
B)  total net profit. 
C)  total revenue. 
D)  net revenue. 
A)  total gross profit. 
B)  total net profit. 
C)  total revenue. 
D)  net revenue.

Question 6

In the long run, a firm that produces and sells textbooks gets to choose

Accepted Answer

A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct. 
A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct.

Question 7

Diminishing marginal productivity implies decreasing total product.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. 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. Ellie 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 13-9. According to Ellie's accountant, which of the following revenue totals will yield her business $50,000 in profits?

Accepted Answer

A)  $55,200 
B)  $105,200 
C)  $132,500 
D)  $185,700 
A)  $55,200 
B)  $105,200 
C)  $132,500 
D)  $185,700

Question 9

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

Accepted Answer

A)  total revenue was $3.5 million. 
B)  economic profit was $3.5 million. 
C)  accounting profit was $3.5 million. 
D)  explicit costs were $3.5 million. 
A)  total revenue was $3.5 million. 
B)  economic profit was $3.5 million. 
C)  accounting profit was $3.5 million. 
D)  explicit costs were $3.5 million.

Question 10

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

Accepted Answer

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

Question 11

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 12

Total cost is the

Accepted Answer

A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good. 
A)  amount a firm receives for the sale of its output. 
B)  fixed cost less variable cost. 
C)  market value of the inputs a firm uses in production. 
D)  quantity of output minus the quantity of inputs used to make a good.

Question 13

Table 13-18
  
-Refer to Table 13-18. What is the average fixed cost of producing 450 units of output?

Accepted Answer

AFC = FC/Q

Question 14

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's explicit costs per glass?

Accepted Answer

A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02 
A)  $0.18 
B)  $0.10 
C)  $0.08 
D)  $0.02

Question 15

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. Assume the number of machines does not change. If the factory produces at a rate of 78 chairs per hour, what is the total machine cost per day?

Accepted Answer

A)  $20 
B)  $40 
C)  $240 
D)  We are unable to determine total machine costs from the information given. 
A)  $20 
B)  $40 
C)  $240 
D)  We are unable to determine total machine costs from the information given.

Question 16

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 13-10
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each.
-Refer to Scenario 13-10. An economist would calculate the total profit for one photo frame to be

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 18

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Accepted Answer

A)  diminishing labor. 
B)  diminishing output. 
C)  diminishing marginal product. 
D)  negative marginal product. 
A)  diminishing labor. 
B)  diminishing output. 
C)  diminishing marginal product. 
D)  negative marginal product.

Question 19

Implicit costs

Accepted Answer

A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost. 
A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost.

Question 20

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

In setting the production level, a firm's cost curves

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

The most likely explanation for economies of scale is

The average-fixed-cost curve is constant.

The amount of money that a firm receives from the sale of its output is called

In the long run, a firm that produces and sells textbooks gets to choose

Diminishing marginal productivity implies decreasing total product.

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

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

For a firm, the production function represents the relationship between

Total cost is the

Table 13-18 -Refer to Table 13-18. What is the average fixed cost of producing 450 units of output?

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Implicit costs

Variable costs usually change as the firm alters the quantity of output produced.

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

In setting the production level, a firm's cost curves

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

The most likely explanation for economies of scale is

The average-fixed-cost curve is constant.

The amount of money that a firm receives from the sale of its output is called

In the long run, a firm that produces and sells textbooks gets to choose

Diminishing marginal productivity implies decreasing total product.

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

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

For a firm, the production function represents the relationship between

Total cost is the

Table 13-18 -Refer to Table 13-18. What is the average fixed cost of producing 450 units of output?

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Implicit costs

Variable costs usually change as the firm alters the quantity of output produced.

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