Question 1

Consider a small family wheat farm. List some examples of explicit costs of farming.

Accepted Answer

seeds, fertilizer, pesticide,

Question 2

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are L=6,Q=147) and L=7,Q=184). The marginal product of the seventh worker is

Accepted Answer

A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  184 units of output. 
A)  25 units of output. 
B)  27 units of output. 
C)  37 units of output. 
D)  184 units of output.

Question 3

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

Accepted Answer

A)  55 bouquets 
B)  35 bouquets 
C)  22.5 bouquets 
D)  15 bouquets 
A)  55 bouquets 
B)  35 bouquets 
C)  22.5 bouquets 
D)  15 bouquets

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 less than M, the firm experiences

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  constant returns to scale. 
D)  both diminishing marginal productivity and coordination problems.

Question 5

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i) shoe polish
Ii) rent on the shoe stand
Iii) wages Pete could earn delivering newspapers
Iv) interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Accepted Answer

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

Question 6

Total revenue equals

Accepted Answer

A)  price x quantity. 
B)  price/quantity. 
C)  price x quantity) - total cost. 
D)  output - input. 
A)  price x quantity. 
B)  price/quantity. 
C)  price x quantity) - total cost. 
D)  output - input.

Question 7

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Accepted Answer

A)  -$3,875. 
B)  $26,125. 
C)  $28,500. 
D)  $30,000. 
A)  -$3,875. 
B)  $26,125. 
C)  $28,500. 
D)  $30,000.

Question 8

In the short run, a firm that produces and sells house paint can adjust

Accepted Answer

A)  where to produce along its long-run average-total-cost curve. 
B)  the size of its factories. 
C)  how many workers to hire. 
D)  All of the above are correct. 
A)  where to produce along its long-run average-total-cost curve. 
B)  the size of its factories. 
C)  how many workers to hire. 
D)  All of the above are correct.

Question 9

The difference between accounting profit and economic profit is

Accepted Answer

A)  explicit costs. 
B)  implicit costs. 
C)  total revenue. 
D)  marginal product. 
A)  explicit costs. 
B)  implicit costs. 
C)  total revenue. 
D)  marginal product.

Question 10

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Accepted Answer

A)  increasing marginal product. 
B)  diminishing marginal product. 
C)  diminishing total product. 
D)  Both b and c are correct. 
A)  increasing marginal product. 
B)  diminishing marginal product. 
C)  diminishing total product. 
D)  Both b and c are correct.

Question 11

When a firm is experiencing diseconomies 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.

Question 12

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues 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 13

Average total cost will increase if .

Accepted Answer

marginal c

Question 14

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Accepted Answer

A) True 
 B)False

Question 15

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

Accepted Answer

A)  $-55,000 
B)  $-5,000 
C)  $5,000 
D)  $20,000 
A)  $-55,000 
B)  $-5,000 
C)  $5,000 
D)  $20,000

Question 16

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits

Accepted Answer

A)  diseconomies of scale because total cost is rising as output rises. 
B)  diseconomies of scale because average total cost is rising as output rises. 
C)  economies of scale because total cost is rising as output rises. 
D)  economies of scale because average total cost is falling as output rises. 
A)  diseconomies of scale because total cost is rising as output rises. 
B)  diseconomies of scale because average total cost is rising as output rises. 
C)  economies of scale because total cost is rising as output rises. 
D)  economies of scale because average total cost is falling as output rises.

Question 17

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 18

Table 13-17
Consider the following table of long-run total cost for four different firms:
  
-Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Accepted Answer

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

Question 19

Define profit.

Accepted Answer

Profit = T

Question 20

Table 13-18
  
-Refer to Table 13-18. What is the average total cost of producing 525 units of output?

Accepted Answer

ATC = TC/Q

Exam 12: The Costs of Production

Consider a small family wheat farm. List some examples of explicit costs of farming.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are L=6,Q=147) and L=7,Q=184). The marginal product of the seventh worker is

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William'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 levels of output less than M, the firm experiences

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i) shoe polish Ii) rent on the shoe stand Iii) wages Pete could earn delivering newspapers Iv) interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Total revenue equals

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

In the short run, a firm that produces and sells house paint can adjust

The difference between accounting profit and economic profit is

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

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

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

Average total cost will increase if .

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Define profit.

Table 13-18 -Refer to Table 13-18. What is the average total cost of producing 525 units of output?

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

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i) shoe polish Ii) rent on the shoe stand Iii) wages Pete could earn delivering newspapers Iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business