Question 1

In the short run, ATC is not always higher than

Accepted Answer

A) AVC 
B) AFC 
C) MC 
D) Zero 
A) AVC 
B) AFC 
C) MC 
D) Zero

Question 2

Fixed costs are best defined as:

Accepted Answer

A) costs that do not vary with output. 
B) costs that vary with output. 
C) the sum of all marginal costs. 
D) the change in total cost when one more unit of output is produced. 
E) costs that decline as output increases. 
A) costs that do not vary with output. 
B) costs that vary with output. 
C) the sum of all marginal costs. 
D) the change in total cost when one more unit of output is produced. 
E) costs that decline as output increases.

Question 3

Figure 6-D  
-Refer to Figure 6-D.At output level 0Q, average variable cost equals:

Accepted Answer

A) QF. 
B) FE. 
C) QD. 
D) QE. 
A) QF. 
B) FE. 
C) QD. 
D) QE.

Question 4

A firm's total fixed cost equals $2,500.The firm's average fixed cost at 1, 5, and 10 units of output, respectively, will be:

Accepted Answer

A) $2,500, $2,500, and $2,500. 
B) $2,500, $500, and $250. 
C) $2,500, $12,500, and $25,000. 
D) $2,500, $1,250, and $250. 
E) average fixed cost remains the same. 
A) $2,500, $2,500, and $2,500. 
B) $2,500, $500, and $250. 
C) $2,500, $12,500, and $25,000. 
D) $2,500, $1,250, and $250. 
E) average fixed cost remains the same.

Question 5

When there are diseconomies of scale in production:

Accepted Answer

A) long-run average total cost declines as output expands. 
B) long-run average total cost increases as output expands. 
C) average fixed cost increases as output expands. 
D) marginal cost decreases as output expands. 
E) the marginal product of an input diminishes with increased utilization. 
A) long-run average total cost declines as output expands. 
B) long-run average total cost increases as output expands. 
C) average fixed cost increases as output expands. 
D) marginal cost decreases as output expands. 
E) the marginal product of an input diminishes with increased utilization.

Question 6

In the table below, diminishing marginal product is first evident with the addition of the ____ worker. $$\begin{array} { c c } 
\hline \text { Labor } & \text { T-shirts } \
\hline 3 & 50 \
4 & 70 \
5 & 100 \
6 & 120 \
7 & 130 \
8 & 120
\end{array}$$

Accepted Answer

A) 5 
B) 6 
C) 7 
D) 8 
A) 5 
B) 6 
C) 7 
D) 8

Question 7

Figure 7-H  
-If the marginal cost is less than average total cost, average total cost will decrease.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not an explicit cost for the owner of a local pizza parlor?

Accepted Answer

A) flour 
B) cleaning products 
C) other uses for the land that the parlor sits on 
D) pizza ovens 
E) food preparers 
A) flour 
B) cleaning products 
C) other uses for the land that the parlor sits on 
D) pizza ovens 
E) food preparers

Question 9

A firm has $300 million in revenues and explicit costs of $100 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's accounting profit is:

Accepted Answer

A) $50 million. 
B) $150 million. 
C) $185 million. 
D) $200 million. 
E) $215 million. 
A) $50 million. 
B) $150 million. 
C) $185 million. 
D) $200 million. 
E) $215 million.

Question 10

A firm has $350 million in revenues and explicit costs of $150 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's economic profit is:

Accepted Answer

A) $50 million. 
B) $150 million. 
C) $185 million. 
D) $200 million. 
E) $215 million. 
A) $50 million. 
B) $150 million. 
C) $185 million. 
D) $200 million. 
E) $215 million.

Question 11

Which of the following is most likely to be a fixed cost for a business?

Accepted Answer

A) payment for raw materials used in manufacturing goods 
B) interest payments on a loan used to finance the construction of a building 
C) shipping charges for the delivery of products 
D) wages paid to temporary workers 
A) payment for raw materials used in manufacturing goods 
B) interest payments on a loan used to finance the construction of a building 
C) shipping charges for the delivery of products 
D) wages paid to temporary workers

Question 12

Figure 6-E  
-Refer to Figure 6-E.Which of the following curves represent the SRATC for the medium plant?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 13

Figure 6-F  
-What is the law of diminishing marginal product? What causes it?

Accepted Answer

The law of diminishing marginal product

Question 14

Figure 6-E  
-Refer to Figure 6-E.In the short run the firm moves from

Accepted Answer

A) A to B 
B) A to C 
C) C to A 
D) all of the above 
A) A to B 
B) A to C 
C) C to A 
D) all of the above

Question 15

The production function describes:

Accepted Answer

A) the relationship between the quantity of inputs utilized and the quantity of output produced. 
B) how inputs are most profitably used in production. 
C) the most cost-effective method of combining various inputs in the production process. 
D) the relationship between a firm's revenue and its level of production. 
A) the relationship between the quantity of inputs utilized and the quantity of output produced. 
B) how inputs are most profitably used in production. 
C) the most cost-effective method of combining various inputs in the production process. 
D) the relationship between a firm's revenue and its level of production.

Question 16

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11th unit is $30, what do average fixed costs equal at 11 units of output?

Accepted Answer

A) $18.18 
B) $20.90 
C) $37.86 
D) $200.00 
A) $18.18 
B) $20.90 
C) $37.86 
D) $200.00

Question 17

If average total cost equals $15 at 20 units of output and average total cost equals $15 at 21 units of output, then the marginal cost of the 21st unit is ____.

Accepted Answer

A) zero 
B) $15 
C) $20 
D) $21 
A) zero 
B) $15 
C) $20 
D) $21

Question 18

The sum of AVC and AFC equals:

Accepted Answer

A) total variable cost. 
B) economic profit. 
C) accounting profit. 
D) average total cost. 
E) marginal cost. 
A) total variable cost. 
B) economic profit. 
C) accounting profit. 
D) average total cost. 
E) marginal cost.

Question 19

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company, his:

Accepted Answer

A) accounting profit equaled $10,000 and he would be rational to stop working as a contractor. 
B) accounting profit equaled $50,000 and he would be rational to continue working as a contractor. 
C) economic profit equaled $50,000 and he would be rational to continue working as a contractor. 
D) economic profit equaled -$10,000 and he would be rational to stop working as a contractor. 
A) accounting profit equaled $10,000 and he would be rational to stop working as a contractor. 
B) accounting profit equaled $50,000 and he would be rational to continue working as a contractor. 
C) economic profit equaled $50,000 and he would be rational to continue working as a contractor. 
D) economic profit equaled -$10,000 and he would be rational to stop working as a contractor.

Question 20

If Rocco's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:

Accepted Answer

A) it is clear that Rocco made an economic profit of $3,500. 
B) Rocco really didn't make any economic profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. 
C) it is not clear whether Rocco earned any economic profit last week because it depends on the magnitude of the implicit costs. 
D) Rocco clearly did not earn an economic profit. 
A) it is clear that Rocco made an economic profit of $3,500. 
B) Rocco really didn't make any economic profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. 
C) it is not clear whether Rocco earned any economic profit last week because it depends on the magnitude of the implicit costs. 
D) Rocco clearly did not earn an economic profit.

In the short run, ATC is not always higher than

Fixed costs are best defined as:

Figure 6-D -Refer to Figure 6-D.At output level 0Q, average variable cost equals:

A firm's total fixed cost equals $2,500.The firm's average fixed cost at 1, 5, and 10 units of output, respectively, will be:

When there are diseconomies of scale in production:

In the table below, diminishing marginal product is first evident with the addition of the ____ worker. Labor T-shirts 3 50 4 70 5 100 6 120 7 130 8 120

Figure 7-H -If the marginal cost is less than average total cost, average total cost will decrease.

Which of the following is not an explicit cost for the owner of a local pizza parlor?

A firm has $300 million in revenues and explicit costs of $100 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's accounting profit is:

A firm has $350 million in revenues and explicit costs of $150 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's economic profit is:

Which of the following is most likely to be a fixed cost for a business?

Figure 6-E -Refer to Figure 6-E.Which of the following curves represent the SRATC for the medium plant?

Figure 6-F -What is the law of diminishing marginal product? What causes it?

Figure 6-E -Refer to Figure 6-E.In the short run the firm moves from

The production function describes:

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11^th unit is $30, what do average fixed costs equal at 11 units of output?

If average total cost equals $15 at 20 units of output and average total cost equals $15 at 21 units of output, then the marginal cost of the 21^st unit is ____.

The sum of AVC and AFC equals:

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company, his:

If Rocco's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:

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

In the short run, ATC is not always higher than

Fixed costs are best defined as:

Figure 6-D -Refer to Figure 6-D.At output level 0Q, average variable cost equals:

A firm's total fixed cost equals $2,500.The firm's average fixed cost at 1, 5, and 10 units of output, respectively, will be:

When there are diseconomies of scale in production:

In the table below, diminishing marginal product is first evident with the addition of the ____ worker. Labor T-shirts 3 50 4 70 5 100 6 120 7 130 8 120

Figure 7-H -If the marginal cost is less than average total cost, average total cost will decrease.

Which of the following is not an explicit cost for the owner of a local pizza parlor?

A firm has $300 million in revenues and explicit costs of $100 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's accounting profit is:

A firm has $350 million in revenues and explicit costs of $150 million.If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's economic profit is:

Which of the following is most likely to be a fixed cost for a business?

Figure 6-E -Refer to Figure 6-E.Which of the following curves represent the SRATC for the medium plant?

Figure 6-F -What is the law of diminishing marginal product? What causes it?

Figure 6-E -Refer to Figure 6-E.In the short run the firm moves from

The production function describes:

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11th unit is $30, what do average fixed costs equal at 11 units of output?

If average total cost equals $15 at 20 units of output and average total cost equals $15 at 21 units of output, then the marginal cost of the 21st unit is ____.

The sum of AVC and AFC equals:

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company, his:

If Rocco's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:

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

If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11^th unit is $30, what do average fixed costs equal at 11 units of output?

If average total cost equals $15 at 20 units of output and average total cost equals $15 at 21 units of output, then the marginal cost of the 21^st unit is ____.