Question 1

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Accepted Answer

A) True 
 B)False

Question 2

Table 13-1
  
-Refer to Table 13-1. What is total output when 5 workers are hired?

Accepted Answer

A)  -10 
B)  90 
C)  185 
D)  225 
A)  -10 
B)  90 
C)  185 
D)  225

Question 3

Scenario 13-7
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business.
-Refer to Scenario 13-7. Julia's accounting profits are

Accepted Answer

A)  $160,000. 
B)  $150,000. 
C)  $135,000. 
D)  $125,000. 
A)  $160,000. 
B)  $150,000. 
C)  $135,000. 
D)  $125,000.

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both the benefits of specialization and diminishing marginal productivity. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both the benefits of specialization and diminishing marginal productivity.

Question 5

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's total economic profits?

Accepted Answer

A)  $150 
B)  $126 
C)  $96 
D)  $54 
A)  $150 
B)  $126 
C)  $96 
D)  $54

Question 6

Economic profit

Accepted Answer

A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit. 
A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit.

Question 7

Can economic profit ever exceed accounting profit?

Accepted Answer

No. Economic profit = Accounting profit

Question 8

Describe how an accounting firm could experience economies of scale.

Accepted Answer

Specialization of labor can produce econ

Question 9

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Accepted Answer

A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses 
A)  2 houses 
B)  3 houses 
C)  5 houses 
D)  8 houses

Question 10

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. At output levels greater than N, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  minimum efficient scale. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  minimum efficient scale.

Question 11

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  efficient scale. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  efficient scale.

Question 12

A firm that wants to achieve economies of scale could do so by

Accepted Answer

A)  assigning limited tasks to its employees, so they can master those tasks. 
B)  employing a smaller number of workers. 
C)  producing a smaller quantity of output. 
D)  producing an output level higher than the efficient scale. 
A)  assigning limited tasks to its employees, so they can master those tasks. 
B)  employing a smaller number of workers. 
C)  producing a smaller quantity of output. 
D)  producing an output level higher than the efficient scale.

Question 13

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Accepted Answer

A)  $7,500. 
B)  $25,000. 
C)  $32,500. 
D)  $67,500. 
A)  $7,500. 
B)  $25,000. 
C)  $32,500. 
D)  $67,500.

Question 14

Explicit costs

Accepted Answer

A)  do not require an outlay of money by the firm. 
B)  enter into the accountant's measurement of a firm's profit. 
C)  enter into the economist's measurement of a firm's profit. 
D)  Both b and c are correct. 
A)  do not require an outlay of money by the firm. 
B)  enter into the accountant's measurement of a firm's profit. 
C)  enter into the economist's measurement of a firm's profit. 
D)  Both b and c are correct.

Question 15

Table 13-19
  
-Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Accepted Answer

AVC = VC/Q, where VC is graphed on the v

Question 16

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Accepted Answer

A) True 
 B)False

Question 17

Total revenue minus only explicit costs is called

Accepted Answer

A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  implicit profit. 
A)  accounting profit. 
B)  economic profit. 
C)  average total cost. 
D)  implicit profit.

Question 18

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 19

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? i) workbooks containing practice problems
Ii) rent for the storefront
Iii) wages Katya could earn as a bookkeeper
Iv) interest that Katya's money was earning before she spent her savings to set up the
Tutoring business

Accepted Answer

A)  i) only 
B)  i) and ii) only 
C)  iii) and iv) only 
D)  i), ii), iii), and iv) 
A)  i) only 
B)  i) and ii) only 
C)  iii) and iv) only 
D)  i), ii), iii), and iv)

Question 20

Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.
-Refer to Scenario 13-4. Abdul's explicit cost of capital is

Accepted Answer

A)  $8,000. 
B)  $4,000. 
C)  $2,000. 
D)  $1,000. 
A)  $8,000. 
B)  $4,000. 
C)  $2,000. 
D)  $1,000.

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Economic profit

Can economic profit ever exceed accounting profit?

Describe how an accounting firm could experience economies of scale.

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

A firm that wants to achieve economies of scale could do so by

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Explicit costs

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Total revenue minus only explicit costs is called

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Filters

Exam 12: The Costs of Production

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Economic profit

Can economic profit ever exceed accounting profit?

Describe how an accounting firm could experience economies of scale.

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

A firm that wants to achieve economies of scale could do so by

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Explicit costs

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Total revenue minus only explicit costs is called

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Filters