Question 1

Figure 11-17  
-A firm's expansion path

Accepted Answer

A)  is the same thing as its long-run average cost curve. 
B)  is a curve that shows a firm's cost-minimizing combination of inputs for every level of output, holding input prices constant. 
C)  shows the targeted growth rate in sales over the long run. 
D)  is a curve that shows expected profits at various price levels. 
A)  is the same thing as its long-run average cost curve. 
B)  is a curve that shows a firm's cost-minimizing combination of inputs for every level of output, holding input prices constant. 
C)  shows the targeted growth rate in sales over the long run. 
D)  is a curve that shows expected profits at various price levels.

Question 2

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Accepted Answer

A) True 
 B)False

Question 3

Consider a manufacturing operation that uses specialized machinery and labor to produce its output.In this case,the input that is not fixed in the short run is labor.

Accepted Answer

A) True 
 B)False

Question 4

Figure 11-13  
-Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labor and capital remain unchanged?

Accepted Answer

A)  the movement from CE to BF 
B)  the movement from CE to AF 
C)  the movement from BD to AF 
D)  the movement from BD to CE 
A)  the movement from CE to BF 
B)  the movement from CE to AF 
C)  the movement from BD to AF 
D)  the movement from BD to CE

Question 5

The shape of the average total cost curve is determined by the shape of

Accepted Answer

A)  the marginal cost curve. 
B)  the average fixed cost curve. 
C)  the average product curve. 
D)  the firm's production function. 
A)  the marginal cost curve. 
B)  the average fixed cost curve. 
C)  the average product curve. 
D)  the firm's production function.

Question 6

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material.Based on this information,what is the amount of her implicit costs?

Accepted Answer

A)  $80,000 
B)  $70,000 
C)  $42,000 
D)  $41,500 
A)  $80,000 
B)  $70,000 
C)  $42,000 
D)  $41,500

Question 7

Which of the following would be categorized as an opportunity cost? 
a.not being able to spend your $10,000 savings if you sink the money in your business
b.the cost of purchasing supplies for your house-cleaning business
c.the cost of purchasing auto insurance for your dry-cleaning delivery business

Accepted Answer

A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above 
A)  a only 
B)  a and c only 
C)  b and c only 
D)  all of the above

Question 8

Economic costs include implicit costs but not explicit costs.

Accepted Answer

A) True 
 B)False

Question 9

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 total cost curve?

Accepted Answer

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

Question 10

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.

Question 11

An explicit cost is defined as

Accepted Answer

A)  a cost that does not change as output changes. 
B)  a nonmonetary opportunity cost. 
C)  a cost that involves spending money. 
D)  a nonmonetary accounting cost. 
A)  a cost that does not change as output changes. 
B)  a nonmonetary opportunity cost. 
C)  a cost that involves spending money. 
D)  a nonmonetary accounting cost.

Question 12

In the long run

Accepted Answer

A)  the firm's fixed costs are greater than its fixed costs in the short run. 
B)  all of the firm's costs are explicit costs; there are no implicit costs of production. 
C)  the firm is more profitable than it is in the short run. 
D)  all of the firm's costs are variable costs. 
A)  the firm's fixed costs are greater than its fixed costs in the short run. 
B)  all of the firm's costs are explicit costs; there are no implicit costs of production. 
C)  the firm is more profitable than it is in the short run. 
D)  all of the firm's costs are variable costs.

Question 13

If marginal product is greater than average product,then

Accepted Answer

A)  average product must be decreasing. 
B)  marginal product must be decreasing. 
C)  marginal product must be increasing. 
D)  marginal product could either be increasing or decreasing. 
A)  average product must be decreasing. 
B)  marginal product must be decreasing. 
C)  marginal product must be increasing. 
D)  marginal product could either be increasing or decreasing.

Question 14

In economics,technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A)  An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B)  Economic costs include both explicit costs and implicit costs. 
C)  An explicit cost is more important, dollar for dollar, than an implicit cost. 
D)  Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs. 
A)  An explicit cost is an actual cost; an implicit cost is a theoretical cost. 
B)  Economic costs include both explicit costs and implicit costs. 
C)  An explicit cost is more important, dollar for dollar, than an implicit cost. 
D)  Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs.

Question 16

The financial success of the movies The Lion King and Toy Story led to

Accepted Answer

A)  a decrease in the salaries of animators and an increase in the number of animators used to produce films. 
B)  an increase in demand for actors to play roles in animated films. 
C)  the Disney studio's attempt to buy Pixar Animation Studios. 
D)  a reduction in the price of computers and software relative to the price of labor (animators) used to produce animated films. 
A)  a decrease in the salaries of animators and an increase in the number of animators used to produce films. 
B)  an increase in demand for actors to play roles in animated films. 
C)  the Disney studio's attempt to buy Pixar Animation Studios. 
D)  a reduction in the price of computers and software relative to the price of labor (animators) used to produce animated films.

Question 17

All of the following statements are true of the minimum efficient scale except one.Which one?

Accepted Answer

A)  All possible economies of scale have been exhausted. 
B)  The short-run average total cost curve's minimum point is equal to the long run average cost curve's minimum point. 
C)  Any increase in the scale of operation will encounter diseconomies of scale. 
D)  An increase in the output level will increase profit. 
A)  All possible economies of scale have been exhausted. 
B)  The short-run average total cost curve's minimum point is equal to the long run average cost curve's minimum point. 
C)  Any increase in the scale of operation will encounter diseconomies of scale. 
D)  An increase in the output level will increase profit.

Question 18

The division of labor and specialization explain

Accepted Answer

A)  why, when the marginal product of labor increases, so does the average product of labor. 
B)  why the average product of labor falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labor rises as a firm hires its first units of labor. 
D)  why firms may find it profitable to use more workers when the marginal product of labor is negative. 
A)  why, when the marginal product of labor increases, so does the average product of labor. 
B)  why the average product of labor falls when firms use more capital or change the layout of their businesses. 
C)  why the marginal product of labor rises as a firm hires its first units of labor. 
D)  why firms may find it profitable to use more workers when the marginal product of labor is negative.

Question 19

Table 11-3
  
-Refer to Table 11-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.The highest value of the average product is labor is ________ when Manny hires ________ workers.

Accepted Answer

A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4 
A)  80; 3 
B)  100; 3 
C)  100; 2 
D)  80; 4

Question 20

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

Accepted Answer

A) True 
 B)False

Figure 11-17 -A firm's expansion path

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Consider a manufacturing operation that uses specialized machinery and labor to produce its output.In this case,the input that is not fixed in the short run is labor.

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labor and capital remain unchanged?

The shape of the average total cost curve is determined by the shape of

Which of the following would be categorized as an opportunity cost? a.not being able to spend your $10,000 savings if you sink the money in your business b.the cost of purchasing supplies for your house-cleaning business c.the cost of purchasing auto insurance for your dry-cleaning delivery business

Economic costs include implicit costs but not explicit costs.

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 total cost curve?

The explicit cost of production is also called

An explicit cost is defined as

In the long run

If marginal product is greater than average product,then

In economics,technology only refers to the development of new products.

Which of the following statements is true?

The financial success of the movies The Lion King and Toy Story led to

All of the following statements are true of the minimum efficient scale except one.Which one?

The division of labor and specialization explain

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

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

Figure 11-17 -A firm's expansion path

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Consider a manufacturing operation that uses specialized machinery and labor to produce its output.In this case,the input that is not fixed in the short run is labor.

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labor and capital remain unchanged?

The shape of the average total cost curve is determined by the shape of

Economic costs include implicit costs but not explicit costs.

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 total cost curve?

The explicit cost of production is also called

An explicit cost is defined as

In the long run

If marginal product is greater than average product,then

In economics,technology only refers to the development of new products.

Which of the following statements is true?

The financial success of the movies The Lion King and Toy Story led to

All of the following statements are true of the minimum efficient scale except one.Which one?

The division of labor and specialization explain

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

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