Question 1

If a firm produces nothing, it still incurs its fixed costs.

Accepted Answer

A) True 
 B)False

Question 2

Economists assume that the typical person who starts her own business does so with the intention of

Accepted Answer

A)  donating the profits from her business to charity. 
B)  capturing the highest number of sales in her industry. 
C)  maximizing profits. 
D)  minimizing costs. 
A)  donating the profits from her business to charity. 
B)  capturing the highest number of sales in her industry. 
C)  maximizing profits. 
D)  minimizing costs.

Question 3

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 4

Describe how a study group of economics students could experience economies of scale as they study for an economics exam.

Accepted Answer

In this example, the costs of production

Question 5

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

Accepted Answer

A) True 
 B)False

Question 6

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

Accepted Answer

A)  economies of scale. 
B)  diseconomies of scale. 
C)  coordination problems arising from the large size of the firm. 
D)  fixed costs greatly exceeding variable costs. 
A)  economies of scale. 
B)  diseconomies of scale. 
C)  coordination problems arising from the large size of the firm. 
D)  fixed costs greatly exceeding variable costs.

Question 7

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A)  The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B)  The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C)  The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D)  Any of the above could be correct. 
A)  The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. 
B)  The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. 
C)  The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers. 
D)  Any of the above could be correct.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The opportunity cost of capital is an implicit cost almost every business incurs.

Accepted Answer

A) True 
 B)False

Question 10

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Accepted Answer

The opportunity cost of an ite

Question 11

A total-cost curve shows the relationship between the

Accepted Answer

A)  quantity of an input used and the total cost of production. 
B)  quantity of output produced and the total cost of production. 
C)  total cost of production and profit. 
D)  total cost of production and total revenue. 
A)  quantity of an input used and the total cost of production. 
B)  quantity of output produced and the total cost of production. 
C)  total cost of production and profit. 
D)  total cost of production and total revenue.

Question 12

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 13

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Accepted Answer

A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $32,000. 
A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $32,000.

Question 14

Profit equals total revenue minus total cost.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that a firm's long­run average total costs of producing hand­crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Accepted Answer

A)  economies of scale. 
B)  constant returns to scale. 
C)  specialization. 
D)  coordination problems. 
A)  economies of scale. 
B)  constant returns to scale. 
C)  specialization. 
D)  coordination problems.

Question 16

Economists assume that the goal of the firm is to maximize total

Accepted Answer

A)  revenue. 
B)  profits. 
C)  costs. 
D)  satisfaction. 
A)  revenue. 
B)  profits. 
C)  costs. 
D)  satisfaction.

Question 17

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith described a visit he made to a

Accepted Answer

A)  car factory. 
B)  pin factory. 
C)  washing machine factory. 
D)  farm. 
A)  car factory. 
B)  pin factory. 
C)  washing machine factory. 
D)  farm.

Question 18

Economists normally assume that the goal of a firm is to

Accepted Answer

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

Question 19

What might cause diseconomies of scale?

Accepted Answer

coordinati

Question 20

Economies of scale occur when

Accepted Answer

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

Exam 13: The Costs of Production

If a firm produces nothing, it still incurs its fixed costs.

Economists assume that the typical person who starts her own business does so with the intention of

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?

Describe how a study group of economics students could experience economies of scale as they study for an economics exam.

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

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

The opportunity cost of capital is an implicit cost almost every business incurs.

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

A total-cost curve shows the relationship between the

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

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Profit equals total revenue minus total cost.

Suppose that a firm's long­run average total costs of producing hand­crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Economists assume that the goal of the firm is to maximize total

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith described a visit he made to a

Economists normally assume that the goal of a firm is to

What might cause diseconomies of scale?

Economies of scale occur when

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

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Suppose that a firm's longrun average total costs of producing handcrafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing