Question 1

In the long run, a firm that produces and sells textbooks gets to choose

Accepted Answer

A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct. 
A)  how many workers to hire. 
B)  the size of its factories. 
C)  which short-run average-total-cost curve to use. 
D)  All of the above are correct.

Question 2

Figure 13-10  
-Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Accepted Answer

A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5. 
A)  Q1 to Q2. 
B)  Q2 to Q3. 
C)  Q3 to Q4. 
D)  Q4 to Q5.

Question 3

Which of these assumptions is often realistic for a firm in the short run?

Accepted Answer

A)  The firm can vary both the size of its factory and the number of workers it employs. 
B)  The firm can vary the size of its factory but not the number of workers it employs. 
C)  The firm can vary the number of workers it employs but not the size of its factory. 
D)  The firm can vary neither the size of its factory nor the number of workers it employs. 
A)  The firm can vary both the size of its factory and the number of workers it employs. 
B)  The firm can vary the size of its factory but not the number of workers it employs. 
C)  The firm can vary the number of workers it employs but not the size of its factory. 
D)  The firm can vary neither the size of its factory nor the number of workers it employs.

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.  
-Refer to Figure 13-9. Which curve represents the long-run average total cost?

Accepted Answer

A)  ATCA 
B)  ATCB 
C)  ATCC 
D)  ATCD 
A)  ATCA 
B)  ATCB 
C)  ATCC 
D)  ATCD

Question 5

Figure 13-1  
-Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP1 to TP2?

Accepted Answer

A)  There is less capital equipment available to the firm. 
B)  Labor skills have become rusty and outdated in the firm. 
C)  The firm has developed improved production technology. 
D)  The firm is now receiving a higher price for its product. 
A)  There is less capital equipment available to the firm. 
B)  Labor skills have become rusty and outdated in the firm. 
C)  The firm has developed improved production technology. 
D)  The firm is now receiving a higher price for its product.

Question 6

Which of the following would be an example of an implicit cost? i) forgone investment opportunities
Ii) wages of workers
Iii) raw materials costs

Accepted Answer

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

Question 7

Although economists and accountants treat many costs differently, they both treat the cost of capital the same.

Accepted Answer

A) True 
 B)False

Question 8

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 9

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Question 10

Total revenue minus both explicit and implicit costs is called

Accepted Answer

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

Question 11

Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

450 - 350

Question 13

The amount of money that a firm receives from the sale of its output is called

Accepted Answer

A)  total gross profit. 
B)  total net profit. 
C)  total revenue. 
D)  net revenue. 
A)  total gross profit. 
B)  total net profit. 
C)  total revenue. 
D)  net revenue.

Question 14

Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.
-Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual economic profit of her cookie jar business?

Accepted Answer

A)  $36,000 
B)  $35,950 
C)  $30,000 
D)  $29,950 
A)  $36,000 
B)  $35,950 
C)  $30,000 
D)  $29,950

Question 15

Table 13-19
  
-Refer to Table 13-19. What is the average variable cost of producing 400 units of output?

Accepted Answer

AVC = VC/Q

Question 16

Table 13-4
Charles's Math Tutoring
  
-Refer to Table 13-4. What is the marginal product of the third worker?

Accepted Answer

A)  15 students 
B)  20 students 
C)  35 students 
D)  60 students 
A)  15 students 
B)  20 students 
C)  35 students 
D)  60 students

Question 17

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

Accepted Answer

A)  $25. 
B)  $75. 
C)  $100. 
D)  $175. 
A)  $25. 
B)  $75. 
C)  $100. 
D)  $175.

Question 18

Which of the following statements is correct?

Accepted Answer

A)  Assuming that explicit costs are positive, economic profit is greater than accounting profit. 
B)  Assuming that implicit costs are positive, accounting profit is greater than economic profit. 
C)  Assuming that explicit costs are positive, accounting profit is equal to economic profit. 
D)  Assuming that implicit costs are positive, economic profit is positive. 
A)  Assuming that explicit costs are positive, economic profit is greater than accounting profit. 
B)  Assuming that implicit costs are positive, accounting profit is greater than economic profit. 
C)  Assuming that explicit costs are positive, accounting profit is equal to economic profit. 
D)  Assuming that implicit costs are positive, economic profit is positive.

Question 19

Figure 13-10  
-Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Accepted Answer

A)  Q1 to Q2. 
B)  Q2 to Q4. 
C)  Q1 to Q3. 
D)  Q4 to Q5. 
A)  Q1 to Q2. 
B)  Q2 to Q4. 
C)  Q1 to Q3. 
D)  Q4 to Q5.

Question 20

When a firm is experiencing economies of scale, long-run

Accepted Answer

A)  average total cost is minimized. 
B)  average total cost is greater than long-run marginal cost. 
C)  average total cost is less than long-run marginal cost. 
D)  marginal cost is minimized. 
A)  average total cost is minimized. 
B)  average total cost is greater than long-run marginal cost. 
C)  average total cost is less than long-run marginal cost. 
D)  marginal cost is minimized.

Exam 12: The Costs of Production

In the long run, a firm that produces and sells textbooks gets to choose

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Which of these assumptions is often realistic for a firm in the short run?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which curve represents the long-run average total cost?

Figure 13-1 -Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP1 to TP2?

Which of the following would be an example of an implicit cost? i) forgone investment opportunities Ii) wages of workers Iii) raw materials costs

Although economists and accountants treat many costs differently, they both treat the cost of capital the same.

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Total revenue minus both explicit and implicit costs is called

Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

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

The amount of money that a firm receives from the sale of its output is called

Table 13-19 -Refer to Table 13-19. What is the average variable cost of producing 400 units of output?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. What is the marginal product of the third worker?

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

Which of the following statements is correct?

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

When a firm is experiencing economies of scale, long-run

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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