Question 1

Figure 7-H  
-Total cost equals total variable cost plus marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Figure 7-H  
-If a firm experiences economies of scale, the average total cost of production increases as output expands.

Accepted Answer

A) True 
 B)False

Question 3

Given the following information about the cost function for Bob's Beautiful Bowling Balls: $\begin{array}{c}
\begin{array}{lc}
\text { Out put } &\text { Total } \
&\text { Fixed } \
&\text { Costs }\
1 & 10 \
2 & \
3 & \
4 & \
5 & \
6 & \
7 & \
8 & 
\end{array}
\begin{array}{c}
\text { Total }&\text { Total } \
\text { Variable }&\text { Costs } \
 \text { Costs } &\
60 & \
& 100 \
& 120 \
& 128 \
& 180 \
& 252 \
& 316 \
& 436 
\end{array}
\begin{array}{cccc}
\text { Average } & \text { Average } & \text { Average } & \text { IMargina } \
\text { Fixed } & \text { Variable } & \text { Total } & \text { Cost } \
\text { Cost } & \text { Cost } & \text { Cost } & 
\
\
\
\
\
\
\
\
\
\end{array}
\end{array}$
 Which of the following is true?

Accepted Answer

A) The average fixed cost of producing 3 units is $200. 
B) The total cost of producing 5 units is $230. 
C) The marginal cost of the 4th unit is lower than for any other unit. 
D) AVC falls through the first five units of output. 
E) None of the above is true. 
A) The average fixed cost of producing 3 units is $200. 
B) The total cost of producing 5 units is $230. 
C) The marginal cost of the 4th unit is lower than for any other unit. 
D) AVC falls through the first five units of output. 
E) None of the above is true.

Question 4

Figure 6-F  
-A one-day ticket to Sea World costs $37, but a two-day pass costs $42.What is the average cost per day for a one-day pass? For a two-day pass? What is the marginal cost of a second day at Sea World? Why might Sea World charge such a price for a second day's entrance to the park?

Accepted Answer

The one-day pass average cost is $37. Th

Question 5

A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents.The firm's total fixed costs equal $700.The total cost of producing 1,000 units of output equals:

Accepted Answer

A) $700. 
B) $500. 
C) $1,000. 
D) $1,200. 
E) $1,700. 
A) $700. 
B) $500. 
C) $1,000. 
D) $1,200. 
E) $1,700.

Question 6

Scarlett recently began running her husband's lumber mill.Last month she took in $5,000 in sales revenue and paid $3,400 in out-of-pocket costs.Did the lumberyard make an economic profit last month?

Accepted Answer

A) Definitely not. 
B) Yes. After considering non-zero explicit and implicit costs, it is clear that her profit is exactly equal to $1,600. 
C) Without knowing the magnitude of implicit costs, it is not possible to state whether the lumberyard earned an economic profit last month. 
D) Yes, after factoring implicit costs, it is clear that her profit will exceed $1,600. 
A) Definitely not. 
B) Yes. After considering non-zero explicit and implicit costs, it is clear that her profit is exactly equal to $1,600. 
C) Without knowing the magnitude of implicit costs, it is not possible to state whether the lumberyard earned an economic profit last month. 
D) Yes, after factoring implicit costs, it is clear that her profit will exceed $1,600.

Question 7

The change in total cost resulting from a one-unit increase in production is called:

Accepted Answer

A) average fixed cost. 
B) average variable cost. 
C) marginal cost. 
D) average opportunity cost. 
E) marginal revenue. 
A) average fixed cost. 
B) average variable cost. 
C) marginal cost. 
D) average opportunity cost. 
E) marginal revenue.

Question 8

Which of the following are variable costs of production?

Accepted Answer

A) the wages paid to non-salaried employees 
B) the cost of wood used to produce furniture 
C) the cost of electricity that powers the lighting and computer systems in an office building 
D) All of the above are variable costs of production. 
A) the wages paid to non-salaried employees 
B) the cost of wood used to produce furniture 
C) the cost of electricity that powers the lighting and computer systems in an office building 
D) All of the above are variable costs of production.

Question 9

Which of the following is true at the output level where diminishing marginal product first set in?

Accepted Answer

A) Both marginal product and marginal cost are at a minimum. 
B) Both marginal product and marginal cost are at a maximum. 
C) Marginal product is at a maximum and marginal cost is at a minimum. 
D) Marginal product is at a minimum and marginal cost is at a maximum. 
A) Both marginal product and marginal cost are at a minimum. 
B) Both marginal product and marginal cost are at a maximum. 
C) Marginal product is at a maximum and marginal cost is at a minimum. 
D) Marginal product is at a minimum and marginal cost is at a maximum.

Question 10

Diminishing marginal product first sets in at the minimum point of the

Accepted Answer

A) ATC curve. 
B) AVC curve. 
C) AFC curve. 
D) MC curve. 
A) ATC curve. 
B) AVC curve. 
C) AFC curve. 
D) MC curve.

Question 11

When average total cost is decreasing as output expands:

Accepted Answer

A) average fixed cost must be increasing. 
B) total fixed costs must be increasing. 
C) average variable cost must be falling. 
D) marginal cost must be greater than average total cost. 
E) marginal cost must be less than average total cost. 
A) average fixed cost must be increasing. 
B) total fixed costs must be increasing. 
C) average variable cost must be falling. 
D) marginal cost must be greater than average total cost. 
E) marginal cost must be less than average total cost.

Question 12

The long-run average total cost curve is less u-shaped than the short-run average total cost curve.

Accepted Answer

A) True 
 B)False

Question 13

What do foregone interest on money invested in a firm, wages paid to production workers, interest paid on bank loans, and the purchase of parts for assembly have in common?

Accepted Answer

A) All are explicit costs. 
B) All are implicit costs. 
C) All are opportunity costs. 
D) None are opportunity costs. 
A) All are explicit costs. 
B) All are implicit costs. 
C) All are opportunity costs. 
D) None are opportunity costs.

Question 14

Table 6-B
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Units af Output } & \begin{array} { c } 
\text { Variable Cast } \
\text { (dallars) }
\end{array} & \text { Tatal Cast (dollars) } & \begin{array} { c } 
\text { Marginal Cast } \
\text { (dallars) }
\end{array} \
\hline0 & 0& 40 & \
\hline 1 & 30 & 70 & 30 \
\hline 2 & 50 & 90 & 20 \
\hline 3 & 60 & 100 & 10 \
\hline 4 & 80 & 120 & 20 \
\hline 5 & 105 & 145 & 25 \
\hline 6 & 150 & 190 & 45 \
\hline
\end{array}$$
-Refer to Table 6-B.How much are total fixed costs (in dollars)?

Accepted Answer

A) 20 
B) 30 
C) 40 
D) 50 
E) There is insufficient information to determine the level of total fixed costs. 
A) 20 
B) 30 
C) 40 
D) 50 
E) There is insufficient information to determine the level of total fixed costs.

Question 15

AVC is falling, while ATC is falling

Accepted Answer

A) when MC is above ATC. 
B) when MC is above AVC but below ATC. 
C) when MC is below AVC. 
D) under no circumstance. 
A) when MC is above ATC. 
B) when MC is above AVC but below ATC. 
C) when MC is below AVC. 
D) under no circumstance.

Question 16

Figure 6-F  
-Complete the following table describing the short-run daily costs of the Kangaroo Backpack Company. \(\begin{array} { | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Tatal } \
\text { Praduct } \
\text { (Eackpack } \
\text { s) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Fixad } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Tatal } \
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Tatal } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixad } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Tatal } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & & 0 & & - \cdot & - \cdot & - & \
\hline 1 & & 30 & & & & & \
\hline 2 & & 50 & & & & & \
\hline 3 & & 60 & & & & & \
\hline 4 & & 64 & 159 & & & & \
\hline 5 & & 90 & & & & & \
\hline 6 & & 150 & & & & & \
\hline 7 & & 196 & & & & & \
\hline 8 & & 240 & & & & & \
\hline
\end{array}\)

Accepted Answer

The answer of Figure 6-F  
-Complete the following table...

Question 17

Average fixed cost is:

Accepted Answer

A) total cost divided by the number of units produced over a given period. 
B) total fixed cost divided by the number of units produced over a given period. 
C) the price of a fixed factor of production. 
D) fixed cost divided by the number of units of a fixed input employed over a given period. 
A) total cost divided by the number of units produced over a given period. 
B) total fixed cost divided by the number of units produced over a given period. 
C) the price of a fixed factor of production. 
D) fixed cost divided by the number of units of a fixed input employed over a given period.

Question 18

Economists normally assume that the goal of a firm is to:

Accepted Answer

A) sell as many units of output as possible. 
B) maximize profits. 
C) sell products at the highest prices possible. 
D) maximize sales revenue. 
A) sell as many units of output as possible. 
B) maximize profits. 
C) sell products at the highest prices possible. 
D) maximize sales revenue.

Question 19

Figure 7-H  
-In the short run, all costs are variable.

Accepted Answer

A) True 
 B)False

Question 20

If a firm experiences increasing returns to scale at all levels of output:

Accepted Answer

A) the slope of its long-run total cost curve is everywhere negative. 
B) the slope of its short-run average cost curve is everywhere negative. 
C) the slope of its long-run average total cost curve is everywhere negative. 
D) the slope of its production function is everywhere negative. 
A) the slope of its long-run total cost curve is everywhere negative. 
B) the slope of its short-run average cost curve is everywhere negative. 
C) the slope of its long-run average total cost curve is everywhere negative. 
D) the slope of its production function is everywhere negative.

Figure 7-H -Total cost equals total variable cost plus marginal cost.

Figure 7-H -If a firm experiences economies of scale, the average total cost of production increases as output expands.

Figure 6-F -A one-day ticket to Sea World costs $37, but a two-day pass costs $42.What is the average cost per day for a one-day pass? For a two-day pass? What is the marginal cost of a second day at Sea World? Why might Sea World charge such a price for a second day's entrance to the park?

A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents.The firm's total fixed costs equal $700.The total cost of producing 1,000 units of output equals:

Scarlett recently began running her husband's lumber mill.Last month she took in $5,000 in sales revenue and paid $3,400 in out-of-pocket costs.Did the lumberyard make an economic profit last month?

The change in total cost resulting from a one-unit increase in production is called:

Which of the following are variable costs of production?

Which of the following is true at the output level where diminishing marginal product first set in?

Diminishing marginal product first sets in at the minimum point of the

When average total cost is decreasing as output expands:

The long-run average total cost curve is less u-shaped than the short-run average total cost curve.

What do foregone interest on money invested in a firm, wages paid to production workers, interest paid on bank loans, and the purchase of parts for assembly have in common?

Table 6-B Units af Output Variable Cast (dallars) Tatal Cast (dollars) Marginal Cast (dallars) 0 0 40 1 30 70 30 2 50 90 20 3 60 100 10 4 80 120 20 5 105 145 25 6 150 190 45 -Refer to Table 6-B.How much are total fixed costs (in dollars)?

AVC is falling, while ATC is falling

Average fixed cost is:

Economists normally assume that the goal of a firm is to:

Figure 7-H -In the short run, all costs are variable.

If a firm experiences increasing returns to scale at all levels of output:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

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Exam 6: Production and Costs

Figure 7-H -Total cost equals total variable cost plus marginal cost.

Figure 7-H -If a firm experiences economies of scale, the average total cost of production increases as output expands.

Figure 6-F -A one-day ticket to Sea World costs $37, but a two-day pass costs $42.What is the average cost per day for a one-day pass? For a two-day pass? What is the marginal cost of a second day at Sea World? Why might Sea World charge such a price for a second day's entrance to the park?

A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents.The firm's total fixed costs equal $700.The total cost of producing 1,000 units of output equals:

Scarlett recently began running her husband's lumber mill.Last month she took in $5,000 in sales revenue and paid $3,400 in out-of-pocket costs.Did the lumberyard make an economic profit last month?

The change in total cost resulting from a one-unit increase in production is called:

Which of the following are variable costs of production?

Which of the following is true at the output level where diminishing marginal product first set in?

Diminishing marginal product first sets in at the minimum point of the

When average total cost is decreasing as output expands:

The long-run average total cost curve is less u-shaped than the short-run average total cost curve.

What do foregone interest on money invested in a firm, wages paid to production workers, interest paid on bank loans, and the purchase of parts for assembly have in common?

Table 6-B Units af Output Variable Cast (dallars) Tatal Cast (dollars) Marginal Cast (dallars) 0 0 40 1 30 70 30 2 50 90 20 3 60 100 10 4 80 120 20 5 105 145 25 6 150 190 45 -Refer to Table 6-B.How much are total fixed costs (in dollars)?

AVC is falling, while ATC is falling

Average fixed cost is:

Economists normally assume that the goal of a firm is to:

Figure 7-H -In the short run, all costs are variable.

If a firm experiences increasing returns to scale at all levels of output:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters