Question 1

Jayanthi moves her yoga studio from her home to a space she rents in Oakland,California.Holding everything else constant,as a result of this move

Accepted Answer

A) her explicit cost falls and her implicit cost rises. 
B) her implicit cost falls and her explicit cost rises. 
C) her economic cost rises. 
D) her opportunity cost rises. 
A) her explicit cost falls and her implicit cost rises. 
B) her implicit cost falls and her explicit cost rises. 
C) her economic cost rises. 
D) her opportunity cost rises.

Question 2

In economics,technology only refers to the development of new products.

Accepted Answer

A) True 
 B)False

Question 3

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

Accepted Answer

A) economic;legal 
B) real;explicit 
C) total;economic 
D) explicit;accounting 
A) economic;legal 
B) real;explicit 
C) total;economic 
D) explicit;accounting

Question 4

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Accepted Answer

A) at the same level of output as the minimum point of the average variable cost. 
B) at a larger level of output than the minimum point of the average variable cost. 
C) at a lower level of output than the minimum point of the average variable cost. 
D) at the same level of output as the maximum of the total product curve. 
A) at the same level of output as the minimum point of the average variable cost. 
B) at a larger level of output than the minimum point of the average variable cost. 
C) at a lower level of output than the minimum point of the average variable cost. 
D) at the same level of output as the maximum of the total product curve.

Question 5

Figure 11-9  
-Refer to Figure 11-9 above to solve the following problems.
a.Calculate the fixed cost of production.
b.Calculate the average total cost of production when the firm produces 20 units of output.
c.Calculate the average variable cost of production when the firm produces 20 units of output.
d.Calculate the average fixed cost of production when the firm produces 20 units of output.
e.Calculate the average fixed cost of production when the firm produces 15 units of output.
f.If the firm increases output from 15 to 20 units,what is the marginal cost of output?

Accepted Answer

a.$100
b.$

Question 6

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material.Based on this information,what is the amount of her explicit costs?

Accepted Answer

A) $45,000 
B) $45,500 
C) $47,000 
D) $87,000 
A) $45,000 
B) $45,500 
C) $47,000 
D) $87,000

Question 7

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 8

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc.
-Refer to Figure 11-11.Constant returns to scale

Accepted Answer

A) occur for output rates greater than 5,000 picture frames. 
B) occur between 5,000 and 20,000 picture frames per month. 
C) occur between 10,000 and 20,000 pictures frames per month. 
D) will shift the long-run average cost curve downward. 
A) occur for output rates greater than 5,000 picture frames. 
B) occur between 5,000 and 20,000 picture frames per month. 
C) occur between 10,000 and 20,000 pictures frames per month. 
D) will shift the long-run average cost curve downward.

Question 9

State the law of diminishing returns.How do diminishing returns differ from diseconomies of scale? Be sure to define diseconomies of scale in your answer.

Accepted Answer

The law of diminishing returns states th

Question 10

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Accepted Answer

A) The shape of the LRATC is affected by the law of diminishing returns. 
B) The SRATC,but not the LRATC,can be used by a firm's managers for planning. 
C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. 
A) The shape of the LRATC is affected by the law of diminishing returns. 
B) The SRATC,but not the LRATC,can be used by a firm's managers for planning. 
C) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. 
D) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

Question 11

The difference between technology and technological change is that

Accepted Answer

A) technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B) technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. 
C) technology is product-centered,that is,developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D) technology involves the use of capital equipment while technological change requires the use of brain power. 
A) technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. 
B) technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. 
C) technology is product-centered,that is,developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. 
D) technology involves the use of capital equipment while technological change requires the use of brain power.

Question 12

If average product is decreasing,then marginal product must be negative.

Accepted Answer

A) True 
 B)False

Question 13

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

Accepted Answer

A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information. 
A) $300 
B) $15 
C) $12 
D) It is impossible to determine without additional information.

Question 14

Over the past twenty years,the number of small family farms has fallen significantly and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

Accepted Answer

A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labor in farming 
D) declining productivity 
A) diseconomies of scale in farming 
B) economies of scale in farming 
C) diminishing returns to labor in farming 
D) declining productivity

Question 15

Average variable cost can be calculated using any of the formulas below except

Accepted Answer

A) TVC/Q. 
B) (TC - F
C) /Q. 
C) Δ(TC - F
C) /ΔQ. 
D) (TC/Q)- AFC. 
A) TVC/Q. 
B) (TC - F
C) /Q. 
C) Δ(TC - F
C) /ΔQ. 
D) (TC/Q)- AFC.

Question 16

Increases in the marginal product of labor result from

Accepted Answer

A) the use of new technology. 
B) hiring more efficient workers. 
C) the division of labor and specialization. 
D) increasing the usage of all inputs. 
A) the use of new technology. 
B) hiring more efficient workers. 
C) the division of labor and specialization. 
D) increasing the usage of all inputs.

Question 17

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material.Based on this information,what is the amount of her implicit costs?

Accepted Answer

A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500 
A) $80,000 
B) $70,000 
C) $42,000 
D) $41,500

Question 18

If production displays economies of scale,the long-run average cost curve is

Accepted Answer

A) above the short-run average total cost curve. 
B) downward sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve. 
A) above the short-run average total cost curve. 
B) downward sloping. 
C) upward sloping. 
D) below the long-run marginal cost curve.

Question 19

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

Accepted Answer

A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries 
A) postage and supplies 
B) travel 
C) rent 
D) wages and salaries

Question 20

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis,multiplied by -1.

Accepted Answer

A) True 
 B)False

Exam 11: Technology,production,and Costs

Jayanthi moves her yoga studio from her home to a space she rents in Oakland,California.Holding everything else constant,as a result of this move

In economics,technology only refers to the development of new products.

The rules of accounting generally require that ________ costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called ________ costs.

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc. -Refer to Figure 11-11.Constant returns to scale

State the law of diminishing returns.How do diminishing returns differ from diseconomies of scale? Be sure to define diseconomies of scale in your answer.

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

The difference between technology and technological change is that

If average product is decreasing,then marginal product must be negative.

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700,calculate the firm's average fixed cost of production if it expands output to 25 units.

Over the past twenty years,the number of small family farms has fallen significantly and in their place there are fewer,but larger,farms owned by corporations.Which of the following best explains this trend?

Average variable cost can be calculated using any of the formulas below except

Increases in the marginal product of labor result from

If production displays economies of scale,the long-run average cost curve is

Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis,multiplied by -1.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The rules of accounting generally require that costs be used for purposes of keeping a company's financial records and for paying taxes.These costs are sometimes called costs.