Question 1

Figure 13-2  
-Refer to Figure 13-2. As the number of workers increases,

Accepted Answer

A)  total output increases but at a decreasing rate. 
B)  marginal product increases but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases. 
A)  total output increases but at a decreasing rate. 
B)  marginal product increases but at a decreasing rate. 
C)  marginal product increases at an increasing rate. 
D)  total output decreases.

Question 2

Figure 13-1  
-Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Accepted Answer

A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share. 
A)  costs of production. 
B)  productivity. 
C)  product price. 
D)  market share.

Question 3

Table 13-5
  
-Refer to Table 13-5. The marginal product of the fourth worker is

Accepted Answer

A)  9,000 units. 
B)  8,000 units. 
C)  7,000 units. 
D)  5,000 units. 
A)  9,000 units. 
B)  8,000 units. 
C)  7,000 units. 
D)  5,000 units.

Question 4

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Accepted Answer

A)  are long-run decisions. 
B)  are short-run decisions. 
C)  involve only maintenance of the factory. 
D)  are zero because the cost decisions were made at the beginning of the business. 
A)  are long-run decisions. 
B)  are short-run decisions. 
C)  involve only maintenance of the factory. 
D)  are zero because the cost decisions were made at the beginning of the business.

Question 5

Scenario 13-12
Ariana withdrew $400,000 out of her personal savings account and used it to start her new Internet cafe. The savings account pays 3 percent interest per year. During the first year of her business, Ariana sold 2,000 cups of coffee for $2.50 per cup and 4,000 hours of Internet time, also at $2.50 per hour. During the first year, the business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Ariana's time.
-Refer to Scenario 13-12. Ariana's economic profit for the year was

Accepted Answer

A)  $-394,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000. 
A)  $-394,000. 
B)  $-6,000. 
C)  $3,000. 
D)  $6,000.

Question 6

Constant returns to scale occur when a firm's

Accepted Answer

A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  long-run average total costs do not vary as output increases. 
A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  long-run average total costs do not vary as output increases.

Question 7

Diseconomies of scale occur when

Accepted Answer

A)  average fixed costs are falling. 
B)  average fixed costs are constant. 
C)  long-run average total costs rise as output increases. 
D)  long-run average total costs fall as output increases. 
A)  average fixed costs are falling. 
B)  average fixed costs are constant. 
C)  long-run average total costs rise as output increases. 
D)  long-run average total costs fall as output increases.

Question 8

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. Ziva's economic profit from farming equals

Accepted Answer

A)  $-130. 
B)  $-80. 
C)  $130. 
D)  $170. 
A)  $-130. 
B)  $-80. 
C)  $130. 
D)  $170.

Question 9

Which of the following expressions is correct?

Accepted Answer

A)  accounting profit = total revenue - explicit costs 
B)  economic profit = total revenue - implicit costs 
C)  economic profit = total revenue - explicit costs 
D)  Both a and b are correct. 
A)  accounting profit = total revenue - explicit costs 
B)  economic profit = total revenue - implicit costs 
C)  economic profit = total revenue - explicit costs 
D)  Both a and b are correct.

Question 10

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Accepted Answer

A) True 
 B)False

Question 11

The long-run average total cost curve is always

Accepted Answer

A)  flatter than the short-run average total cost curve, but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases. 
A)  flatter than the short-run average total cost curve, but not necessarily horizontal. 
B)  horizontal. 
C)  falling as output increases. 
D)  rising as output increases.

Question 12

Economists normally assume that the goal of a firm is to i) sell as much of its product as possible.
Ii) set the price of the product as high as possible.
Iii) maximize profit.

Accepted Answer

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

Question 13

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. According to an economist, which of the following revenue totals will yield Ellie's business $50,000 in economic profits?

Accepted Answer

A)  $55,200 
B)  $100,200 
C)  $132,500 
D)  $185,700 
A)  $55,200 
B)  $100,200 
C)  $132,500 
D)  $185,700

Question 14

For a typical firm, fixed costs increase in direct proportion to the increases in output.

Accepted Answer

A) True 
 B)False

Question 15

Table 13-1
  
-Refer to Table 13-1. What is total output when 1 worker is hired?

Accepted Answer

A)  10 
B)  30 
C)  45 
D)  75 
A)  10 
B)  30 
C)  45 
D)  75

Question 16

Consider a small hair styling salon. List some examples of explicit costs of this business.

Accepted Answer

shampoo, conditioner, other products for

Question 17

Scenario 13-10
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each.
-Refer to Scenario 13-10. An economist would calculate the total profit for one photo frame to be

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $25. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $25.

Question 18

Explicit costs

Accepted Answer

A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include the value of the business owner's time. 
D)  Both b and c are correct. 
A)  require an outlay of money by the firm. 
B)  include all of the firm's opportunity costs. 
C)  include the value of the business owner's time. 
D)  Both b and c are correct.

Question 19

Table 13-18
  
-Refer to Table 13-18. What is the marginal product of the sixth worker?

Accepted Answer

Total output of four workers =

Question 20

The most likely explanation for economies of scale is

Accepted Answer

A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost. 
A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost.

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Table 13-5 -Refer to Table 13-5. The marginal product of the fourth worker is

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Constant returns to scale occur when a firm's

Diseconomies of scale occur when

Which of the following expressions is correct?

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

The long-run average total cost curve is always

Economists normally assume that the goal of a firm is to i) sell as much of its product as possible. Ii) set the price of the product as high as possible. Iii) maximize profit.

For a typical firm, fixed costs increase in direct proportion to the increases in output.

Table 13-1 -Refer to Table 13-1. What is total output when 1 worker is hired?

Consider a small hair styling salon. List some examples of explicit costs of this business.

Explicit costs

Table 13-18 -Refer to Table 13-18. What is the marginal product of the sixth worker?

The most likely explanation for economies of scale is

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

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Exam 12: The Costs of Production

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Table 13-5 -Refer to Table 13-5. The marginal product of the fourth worker is

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Constant returns to scale occur when a firm's

Diseconomies of scale occur when

Which of the following expressions is correct?

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

The long-run average total cost curve is always

Economists normally assume that the goal of a firm is to i) sell as much of its product as possible. Ii) set the price of the product as high as possible. Iii) maximize profit.

For a typical firm, fixed costs increase in direct proportion to the increases in output.

Table 13-1 -Refer to Table 13-1. What is total output when 1 worker is hired?

Consider a small hair styling salon. List some examples of explicit costs of this business.

Explicit costs

Table 13-18 -Refer to Table 13-18. What is the marginal product of the sixth worker?

The most likely explanation for economies of scale is

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