Question 1

Fixed costs can be avoided in the short run.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day.If that day the firm sold 8 units at $300 per unit its accounting profits are:

Accepted Answer

A)  $1,500 and its economic profits are $1,700 
B)  $1,500 and its economic profits are $1,300 
C)  $1,300 and its economic profits are $1,700 
D)  $1,300 and its economic profits are $1,300 
A)  $1,500 and its economic profits are $1,700 
B)  $1,500 and its economic profits are $1,300 
C)  $1,300 and its economic profits are $1,700 
D)  $1,300 and its economic profits are $1,300

Question 3

Suppose a firm has the following expenditures per day: $240 for wages,$150 for materials,and $80 for equipment rental.The owner of the firm owns the building in which it operates.If the firm were not operating in the building,he could rent the building for $70 per day.Total daily revenue is $600.
-What are the daily implicit costs for the firm described above?

Accepted Answer

A)  $70 
B)  $80 
C)  $150 
D)  $220 
A)  $70 
B)  $80 
C)  $150 
D)  $220

Question 4

If the first,second,third and forth worker employed by the firm add 15,21,12 and 8 units of total product respectively,we can conclude that:

Accepted Answer

A)  The marginal product of all four workers is 14. 
B)  The total product of two workers is 42. 
C)  That after the second worker marginal product declines. 
D)  That adding a forth worker will cause total product to decline. 
A)  The marginal product of all four workers is 14. 
B)  The total product of two workers is 42. 
C)  That after the second worker marginal product declines. 
D)  That adding a forth worker will cause total product to decline.

Question 5

Table 5.4-Plant costs
This table shows total costs at different output levels for a given plant.  
-In Table 5.4,variable cost,

Accepted Answer

A)  Is equal to $25 at an output of 10 units. 
B)  Is the greatest at an output of zero units. 
C)  Decreases as output increases. 
D)  Is equal to $40 at every output level. 
A)  Is equal to $25 at an output of 10 units. 
B)  Is the greatest at an output of zero units. 
C)  Decreases as output increases. 
D)  Is equal to $40 at every output level.

Question 6

The law of diminishing returns indicates that the marginal physical product of a factor declines as more:

Accepted Answer

A)  Output is produced with the most efficient combination of factors. 
B)  Of the factor is used,holding output constant. 
C)  Of the factor is used,holding other inputs constant. 
D)  Of the good is consumed. 
A)  Output is produced with the most efficient combination of factors. 
B)  Of the factor is used,holding output constant. 
C)  Of the factor is used,holding other inputs constant. 
D)  Of the good is consumed.

Question 7

When the marginal physical product curve shifts upward because of technological advances,the marginal cost curve shifts downward.

Accepted Answer

A) True 
 B)False

Question 8

Ceteris paribus,the law of diminishing returns states that beyond some point the:

Accepted Answer

A)  Return on stocks and bonds diminish as more are purchased. 
B)  Addition to total utility declines as more units are consumed. 
C)  Marginal physical product of a variable input declines as more of it is used. 
D)  Output of any good or service increases as more variable input is used. 
A)  Return on stocks and bonds diminish as more are purchased. 
B)  Addition to total utility declines as more units are consumed. 
C)  Marginal physical product of a variable input declines as more of it is used. 
D)  Output of any good or service increases as more variable input is used.

Question 9

Costs of production that change with the rate of output are:

Accepted Answer

A)  Sunk costs. 
B)  Fixed costs. 
C)  Opportunity costs. 
D)  Variable costs. 
A)  Sunk costs. 
B)  Fixed costs. 
C)  Opportunity costs. 
D)  Variable costs.

Question 10

Suppose a firm has the following expenditures per day: $240 for wages,$150 for materials,and $80 for equipment rental.The owner of the firm owns the building in which it operates.If the firm were not operating in the building,he could rent the building for $70 per day.Total daily revenue is $600.
-What are the daily explicit costs for the firm described above?

Accepted Answer

A)  $320 
B)  $390 
C)  $400 
D)  $470 
A)  $320 
B)  $390 
C)  $400 
D)  $470

Question 11

Which of the following is true about the short run?

Accepted Answer

A)  Some inputs are fixed. 
B)  It is less than one year. 
C)  It is one to two years. 
D)  All inputs are variable. 
A)  Some inputs are fixed. 
B)  It is less than one year. 
C)  It is one to two years. 
D)  All inputs are variable.

Question 12

The market value of all resources used in producing a good or service is expressed by:

Accepted Answer

A)  Implicit costs. 
B)  Total costs. 
C)  Fixed costs. 
D)  Variable costs. 
A)  Implicit costs. 
B)  Total costs. 
C)  Fixed costs. 
D)  Variable costs.

Question 13

Table 5.4-Plant costs
This table shows total costs at different output levels for a given plant.  
-In Table 5.4,the lowest average total cost occurs at a production rate of:

Accepted Answer

A)  10 units per day. 
B)  20 units per day. 
C)  30 units per day. 
D)  40 units per day. 
A)  10 units per day. 
B)  20 units per day. 
C)  30 units per day. 
D)  40 units per day.

Question 14

Table 5.6
Complete the following table,and use the information in the table to answer the question(s)below.  
-In Table 5.6,the total variable cost of 1 unit of output is:

Accepted Answer

A)  $8. 
B)  $12. 
C)  $15. 
D)  $23. 
A)  $8. 
B)  $12. 
C)  $15. 
D)  $23.

Question 15

The decision to build,buy,or lease a plant is known as the:

Accepted Answer

A)  Output decision. 
B)  Profit-maximizing decision. 
C)  Production decision. 
D)  Investment decision. 
A)  Output decision. 
B)  Profit-maximizing decision. 
C)  Production decision. 
D)  Investment decision.

Question 16

Table 5.4-Plant costs
This table shows total costs at different output levels for a given plant.  
-In Table 5.4,the marginal cost is at a minimum when:

Accepted Answer

A)  The first 10 units are produced. 
B)  Output increases from 10 units to 20 units. 
C)  Output increases from 20 units to 30 units. 
D)  Output increases from 30 units to 40 units. 
A)  The first 10 units are produced. 
B)  Output increases from 10 units to 20 units. 
C)  Output increases from 20 units to 30 units. 
D)  Output increases from 30 units to 40 units.

Question 17

If price is greater than marginal cost but not average total cost,then:

Accepted Answer

A)  Total revenues are greater than total costs. 
B)  The firm is earning a profit. 
C)  Eventually the firm will go out of business. 
D)  The firm is experiencing diminishing marginal utility. 
A)  Total revenues are greater than total costs. 
B)  The firm is earning a profit. 
C)  Eventually the firm will go out of business. 
D)  The firm is experiencing diminishing marginal utility.

Question 18

Figure 5.2:  
-In Figure 5.2,what is the total fixed cost?

Accepted Answer

A)  $20.00 
B)  $240.00 
C)  $740.00 
D)  $864.00 
A)  $20.00 
B)  $240.00 
C)  $740.00 
D)  $864.00

Question 19

If a firm increases output,total costs will rise because of a change in:

Accepted Answer

A)  Fixed costs. 
B)  Absolute costs. 
C)  Variable costs. 
D)  Regular costs. 
A)  Fixed costs. 
B)  Absolute costs. 
C)  Variable costs. 
D)  Regular costs.

Question 20

Table 5.2-Jeans Production  
-What is the marginal cost of the 15th pair of jeans in Table 5.2?

Accepted Answer

A)  $8.17 
B)  $20.00 
C)  $1.33 
D)  $4.00 
A)  $8.17 
B)  $20.00 
C)  $1.33 
D)  $4.00

Fixed costs can be avoided in the short run.

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day.If that day the firm sold 8 units at $300 per unit its accounting profits are:

If the first,second,third and forth worker employed by the firm add 15,21,12 and 8 units of total product respectively,we can conclude that:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,variable cost,

The law of diminishing returns indicates that the marginal physical product of a factor declines as more:

When the marginal physical product curve shifts upward because of technological advances,the marginal cost curve shifts downward.

Ceteris paribus,the law of diminishing returns states that beyond some point the:

Costs of production that change with the rate of output are:

Which of the following is true about the short run?

The market value of all resources used in producing a good or service is expressed by:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,the lowest average total cost occurs at a production rate of:

Table 5.6 Complete the following table,and use the information in the table to answer the question(s)below. -In Table 5.6,the total variable cost of 1 unit of output is:

The decision to build,buy,or lease a plant is known as the:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,the marginal cost is at a minimum when:

If price is greater than marginal cost but not average total cost,then:

Figure 5.2: -In Figure 5.2,what is the total fixed cost?

If a firm increases output,total costs will rise because of a change in:

Table 5.2-Jeans Production -What is the marginal cost of the 15^th pair of jeans in Table 5.2?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 5: Supply Decisions

Fixed costs can be avoided in the short run.

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day.If that day the firm sold 8 units at $300 per unit its accounting profits are:

If the first,second,third and forth worker employed by the firm add 15,21,12 and 8 units of total product respectively,we can conclude that:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,variable cost,

The law of diminishing returns indicates that the marginal physical product of a factor declines as more:

When the marginal physical product curve shifts upward because of technological advances,the marginal cost curve shifts downward.

Ceteris paribus,the law of diminishing returns states that beyond some point the:

Costs of production that change with the rate of output are:

Which of the following is true about the short run?

The market value of all resources used in producing a good or service is expressed by:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,the lowest average total cost occurs at a production rate of:

Table 5.6 Complete the following table,and use the information in the table to answer the question(s)below. -In Table 5.6,the total variable cost of 1 unit of output is:

The decision to build,buy,or lease a plant is known as the:

Table 5.4-Plant costs This table shows total costs at different output levels for a given plant. -In Table 5.4,the marginal cost is at a minimum when:

If price is greater than marginal cost but not average total cost,then:

Figure 5.2: -In Figure 5.2,what is the total fixed cost?

If a firm increases output,total costs will rise because of a change in:

Table 5.2-Jeans Production -What is the marginal cost of the 15th pair of jeans in Table 5.2?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Table 5.2-Jeans Production -What is the marginal cost of the 15^th pair of jeans in Table 5.2?