Question 1

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 2

The average total cost of production

Accepted Answer

A)  is the extra cost required to produce one more unit. 
B)  equals the explicit cost of production. 
C)  equals total cost of production divided by the level of output. 
D)  equals total cost of production multiplied times the level of output. 
A)  is the extra cost required to produce one more unit. 
B)  equals the explicit cost of production. 
C)  equals total cost of production divided by the level of output. 
D)  equals total cost of production multiplied times the level of output.

Question 3

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

Accepted Answer

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

Question 4

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 5

The marginal product of labor is defined as

Accepted Answer

A)  the change in total revenue that results when an additional unit of a labor is hired. 
B)  the additional labor required to produce one more unit of output. 
C)  the additional labor cost of producing one more unit of output. 
D)  the change in output that a firm produces as a result of hiring one more worker. 
A)  the change in total revenue that results when an additional unit of a labor is hired. 
B)  the additional labor required to produce one more unit of output. 
C)  the additional labor cost of producing one more unit of output. 
D)  the change in output that a firm produces as a result of hiring one more worker.

Question 6

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A)  all economies of scale are exhausted. 
B)  diminishing returns affect average total cost. 
C)  the firm's long-run average total cost starts falling. 
D)  the maximum output is produced. 
A)  all economies of scale are exhausted. 
B)  diminishing returns affect average total cost. 
C)  the firm's long-run average total cost starts falling. 
D)  the maximum output is produced.

Question 7

Table 11-7
   Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Accepted Answer

A)  $420 
B)  $32 
C)  $11.1 
D)  $8.1 
A)  $420 
B)  $32 
C)  $11.1 
D)  $8.1

Question 8

Which of the following statements is true?

Accepted Answer

A)  As output increases, average fixed cost becomes smaller and smaller. 
B)  Average fixed cost does not change as output increases. 
C)  The marginal cost curve intersects the average fixed cost curve at its minimum point. 
D)  When marginal cost is greater than average fixed cost, average fixed cost increases. 
A)  As output increases, average fixed cost becomes smaller and smaller. 
B)  Average fixed cost does not change as output increases. 
C)  The marginal cost curve intersects the average fixed cost curve at its minimum point. 
D)  When marginal cost is greater than average fixed cost, average fixed cost increases.

Question 9

Increases in the marginal product of labor result from

Accepted Answer

A)  the use of new technology. 
B)  hiring more efficient workers. 
C)  the division of labor and specialization. 
D)  increasing the usage of all inputs. 
A)  the use of new technology. 
B)  hiring more efficient workers. 
C)  the division of labor and specialization. 
D)  increasing the usage of all inputs.

Question 10

Which of the following statements is false?

Accepted Answer

A)  An explicit cost is a nonmonetary opportunity cost. 
B)  In the short run: total cost = fixed cost + variable cost. 
C)  Variable costs are costs that change as output changes. 
D)  In the long run there are no fixed costs. 
A)  An explicit cost is a nonmonetary opportunity cost. 
B)  In the short run: total cost = fixed cost + variable cost. 
C)  Variable costs are costs that change as output changes. 
D)  In the long run there are no fixed costs.

Question 11

Which of the following statements best describes the economic short run?

Accepted Answer

A)  It is a period of one year or less. 
B)  It is a period during which firms are free to vary all of their inputs. 
C)  It is a period during which at least one of the firm's inputs is fixed. 
D)  It is a period during which fixed inputs become variable inputs because of depreciation. 
A)  It is a period of one year or less. 
B)  It is a period during which firms are free to vary all of their inputs. 
C)  It is a period during which at least one of the firm's inputs is fixed. 
D)  It is a period during which fixed inputs become variable inputs because of depreciation.

Question 12

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Accepted Answer

Explicit costs are costs that involve sp

Question 13

Figure 11-6   Figure 11-6 contains information about the short run cost structure of a firm.
-Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 14

Sally quit her job as an auto mechanic earning $50,000 per year to start her own business.To save money she operates her business out of a small building she owns which,until she started her own business,she had rented out for $10,000 per year.She also invested her $20,000 savings (which earned a market interest rate of 5% per year)in her business.You are given the following information about the first year of her operations.
Total revenue $120,000
Cost of labor 40,000
Cost of materials 15,000
Equipment rental 5,000
a.Calculate her economic costs.
b.Calculate her accounting costs.
c.Calculate her implicit costs.
d.Sally tells you that she would really like to move to a location closer to town but she decided against it because "right now I don't pay any rent and it will cost me $10,000 a year to rent near town." Do you agree with her reasoning?

Accepted Answer

a.$121,000 = 40,000 (labor)+ 15,000 (mat

Question 15

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can

Question 16

Diseconomies of scale occur when

Accepted Answer

A)  long-run average costs rise as a firm increases its output. 
B)  long-run average cost fall as a firm expands its plant size. 
C)  short-run average costs rise as a firm expands its plant size. 
D)  long-run labor costs rise as a firm increases its output. 
A)  long-run average costs rise as a firm increases its output. 
B)  long-run average cost fall as a firm expands its plant size. 
C)  short-run average costs rise as a firm expands its plant size. 
D)  long-run labor costs rise as a firm increases its output.

Question 17

Ford Motor Company started producing the Model A at plants scattered around the United States

Accepted Answer

A)  to save on transport costs. 
B)  because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C)  to locate its production centers closer to its customers. 
D)  because it was not able to attract skilled workers in Michigan (where its first plant was located). 
A)  to save on transport costs. 
B)  because diseconomies of scale at its initial River Rouge plant resulted in high production costs. 
C)  to locate its production centers closer to its customers. 
D)  because it was not able to attract skilled workers in Michigan (where its first plant was located).

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a reason why a firm would experience diseconomies of scale?

Accepted Answer

A)  To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. 
B)  As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C)  As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. 
D)  As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs. 
A)  To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. 
B)  As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. 
C)  As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. 
D)  As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs.

Question 20

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

The average total cost of production

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

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

The marginal product of labor is defined as

Minimum efficient scale is defined as the level of output at which

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Which of the following statements is true?

Increases in the marginal product of labor result from

Which of the following statements is false?

Which of the following statements best describes the economic short run?

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Diseconomies of scale occur when

Ford Motor Company started producing the Model A at plants scattered around the United States

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

Which of the following is a reason why a firm would experience diseconomies of scale?

State the law of diminishing marginal returns.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Exam 11: Technology, production, and Costs

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

The average total cost of production

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

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

The marginal product of labor is defined as

Minimum efficient scale is defined as the level of output at which

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Which of the following statements is true?

Increases in the marginal product of labor result from

Which of the following statements is false?

Which of the following statements best describes the economic short run?

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Diseconomies of scale occur when

Ford Motor Company started producing the Model A at plants scattered around the United States

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

Which of the following is a reason why a firm would experience diseconomies of scale?

State the law of diminishing marginal returns.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters