Question 1

Figure 6-7   Figure 6-7 shows the cost structure for a firm.
-Refer to Figure 6-7.When the output level is 100 units,average fixed cost is

Accepted Answer

A)  $10. 
B)  $8. 
C)  $5. 
D)  This cannot be determined from the diagram. 
A)  $10. 
B)  $8. 
C)  $5. 
D)  This cannot be determined from the diagram. B

Question 2

The explicit cost of production is also called

Accepted Answer

A)  variable cost. 
B)  accounting cost. 
C)  direct cost. 
D)  overhead cost. 
A)  variable cost. 
B)  accounting cost. 
C)  direct cost. 
D)  overhead cost. B

Question 3

Which of the following are implicit costs for a typical firm?

Accepted Answer

A)  Opportunity costs of capital owned and used by the firm 
B)  The cost of labour hired by the firm 
C)  The cost of utilities 
D)  A business licensing fee 
A)  Opportunity costs of capital owned and used by the firm 
B)  The cost of labour hired by the firm 
C)  The cost of utilities 
D)  A business licensing fee A

Question 4

The ABC Company manufactures routers that are used to provide high-speed internet service.ABC sells an average of 1000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3000 routers each month.Therefore,

Accepted Answer

A)  ABC is experiencing diseconomies of scale. 
B)  ABC is experiencing diminishing returns. 
C)  to reach minimum efficient scale, ABC would have to sell at least 3000 routers each month. 
D)  ABC will soon go out of business. 
A)  ABC is experiencing diseconomies of scale. 
B)  ABC is experiencing diminishing returns. 
C)  to reach minimum efficient scale, ABC would have to sell at least 3000 routers each month. 
D)  ABC will soon go out of business.

Question 5

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

Accepted Answer

A)  $100 
B)  $124.40 
C)  $220 
D)  $340 
A)  $100 
B)  $124.40 
C)  $220 
D)  $340

Question 6

If marginal product is equal to average product,then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 7

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a source of technological advancement for a producer?

Accepted Answer

A)  Better trained workers 
B)  More efficient physical capital 
C)  Higher skill level of managers 
D)  Outsourcing some aspect of production 
A)  Better trained workers 
B)  More efficient physical capital 
C)  Higher skill level of managers 
D)  Outsourcing some aspect of production

Question 9

Economies of scale occur when

Accepted Answer

A)  a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B)  the marginal product of labour is greater than the average product of labour. 
C)  short-run marginal cost falls. 
D)  the demand for a firm's output increases. 
A)  a firm's long-run average total costs fall as it increases the quantity of output it produces. 
B)  the marginal product of labour is greater than the average product of labour. 
C)  short-run marginal cost falls. 
D)  the demand for a firm's output increases.

Question 10

If the firm is producing no output in the short run,then its total costs are zero.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is false?

Accepted Answer

A)  Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B)  When marginal cost is less than average total cost, average total cost will fall. 
C)  When marginal cost is greater than average total cost, average total cost will rise. 
D)  Marginal cost will equal average total cost when average total cost is at its lowest point. 
A)  Marginal cost will equal average total cost when marginal cost is at its lowest point. 
B)  When marginal cost is less than average total cost, average total cost will fall. 
C)  When marginal cost is greater than average total cost, average total cost will rise. 
D)  Marginal cost will equal average total cost when average total cost is at its lowest point.

Question 12

When a firm produces 50 000 units of output,its total cost equals $6.5 million.When it increases its production to 70 000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

Accepted Answer

A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145. 
A)  $41.43. 
B)  $134.29. 
C)  $135. 
D)  $145.

Question 13

In the short run,if marginal product is at its maximum,then

Accepted Answer

A)  average cost is at its minimum. 
B)  average variable cost is at its minimum. 
C)  marginal cost is at its minimum. 
D)  total cost is at its maximum. 
A)  average cost is at its minimum. 
B)  average variable cost is at its minimum. 
C)  marginal cost is at its minimum. 
D)  total cost is at its maximum.

Question 14

Suppose the total cost of producing 40 000 flash drives is $120 000,and the fixed cost is $30 000..
a.What is the variable cost?
b.When output is 40 000,what are the average variable cost and the average fixed cost?
c.Assuming the cost curves have the usual shape,is the dollar difference between the average total cost and the average variable cost greater when the output is 40 000 flash drives or when the output is 60 000 flash drives? Explain.

Accepted Answer

a.Variable cost = total cost - fixed cos

Question 15

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

Accepted Answer

A)  The marginal cost curve 
B)  The average fixed cost curve 
C)  The average total cost curve 
D)  The average variable cost curve 
A)  The marginal cost curve 
B)  The average fixed cost curve 
C)  The average total cost curve 
D)  The average variable cost curve

Question 16

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

Accepted Answer

A)  morning and evening. 
B)  6 months or less; 6 months to 1 year; more than 1 year. 
C)  a fixed period and a variable period. 
D)  the short run and the long run. 
A)  morning and evening. 
B)  6 months or less; 6 months to 1 year; more than 1 year. 
C)  a fixed period and a variable period. 
D)  the short run and the long run.

Question 17

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting 
A)  economic; legal 
B)  real; explicit 
C)  total; economic 
D)  explicit; accounting

Question 18

The long run refers to a time period

Accepted Answer

A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs. 
A)  during which a firm is able to purchase all of its inputs, including its plant and equipment. 
B)  long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant. 
C)  long enough for a firm to pay all of its creditors in full. 
D)  long enough for a firm to change the use of its variable inputs.

Question 19

The basic activity of a firm is

Accepted Answer

A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services. 
A)  to set the prices of its products as high as possible. 
B)  to compete with other firms that produce similar products. 
C)  to provide jobs for its employees. 
D)  to use inputs to produce outputs of goods and services.

Question 20

Accounting costs exclude implicit costs.

Accepted Answer

A) True 
 B)False

Figure 6-7 Figure 6-7 shows the cost structure for a firm. -Refer to Figure 6-7.When the output level is 100 units,average fixed cost is

The explicit cost of production is also called

Which of the following are implicit costs for a typical firm?

The ABC Company manufactures routers that are used to provide high-speed internet service.ABC sells an average of 1000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3000 routers each month.Therefore,

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

If marginal product is equal to average product,then total product is at a maximum.

If average product is decreasing,then marginal product must be negative.

Which of the following is not a source of technological advancement for a producer?

Economies of scale occur when

If the firm is producing no output in the short run,then its total costs are zero.

Which of the following statements is false?

When a firm produces 50 000 units of output,its total cost equals $6.5 million.When it increases its production to 70 000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

In the short run,if marginal product is at its maximum,then

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.

The long run refers to a time period

The basic activity of a firm is

Accounting costs exclude implicit costs.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 6: Firms,the Stock Market,and Corporate Governance

Figure 6-7 Figure 6-7 shows the cost structure for a firm. -Refer to Figure 6-7.When the output level is 100 units,average fixed cost is

The explicit cost of production is also called

Which of the following are implicit costs for a typical firm?

The ABC Company manufactures routers that are used to provide high-speed internet service.ABC sells an average of 1000 routers each month,but to exhaust economies of scale in its industry,ABC would have to sell 3000 routers each month.Therefore,

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria's pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's total cost per day when she produces 50 yiros using two workers?

If marginal product is equal to average product,then total product is at a maximum.

If average product is decreasing,then marginal product must be negative.

Which of the following is not a source of technological advancement for a producer?

Economies of scale occur when

If the firm is producing no output in the short run,then its total costs are zero.

Which of the following statements is false?

When a firm produces 50 000 units of output,its total cost equals $6.5 million.When it increases its production to 70 000 units of output,its total cost increases to $9.4 million.Within this range,the marginal cost of an additional unit of output is

In the short run,if marginal product is at its maximum,then

All of the following cost curves are U-shaped except one.Which curve is not U-shaped?

When firms analyse the relationship between their level of production and their costs,they separate the time period involved into

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

The long run refers to a time period

The basic activity of a firm is

Accounting costs exclude implicit costs.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.