Question 1

Figure 13-2  
-Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Accepted Answer

A)  diminishing marginal product of workers. 
B)  diminishing marginal cost of cookie production. 
C)  decreasing cost of cookie production. 
D)  decreasing output of cookies. 
A)  diminishing marginal product of workers. 
B)  diminishing marginal cost of cookie production. 
C)  decreasing cost of cookie production. 
D)  decreasing output of cookies.

Question 2

In the long run, a factory is usually considered a fixed input.

Accepted Answer

A) True 
 B)False

Question 3

Average total cost reveals how much total cost will change as the firm alters its level of production.

Accepted Answer

A) True 
 B)False

Question 4

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Accepted Answer

Danita's store size is likely to be fixe

Question 6

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Accepted Answer

A) True 
 B)False

Question 7

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Accepted Answer

A)  diminishing labor. 
B)  diminishing output. 
C)  diminishing marginal product. 
D)  negative marginal product. 
A)  diminishing labor. 
B)  diminishing output. 
C)  diminishing marginal product. 
D)  negative marginal product.

Question 8

Describe the general shape of the average-fixed-cost curve.

Accepted Answer

AFC = FC/Q. Fixed cost is unch

Question 9

Table 13-17
Consider the following table of long-run total cost for four different firms:  
-Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
A)  2 
B)  3 
C)  4 
D)  5

Question 10

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 11

Economic profit is greater than or equal to accounting profit.

Accepted Answer

A) True 
 B)False

Question 12

When a firm's only variable input is labor, then the slope of the production function measures the

Accepted Answer

A)  quantity of labor. 
B)  quantity of output. 
C)  total cost. 
D)  marginal product of labor. 
A)  quantity of labor. 
B)  quantity of output. 
C)  total cost. 
D)  marginal product of labor.

Question 13

Table 13-4
Charles's Math Tutoring  
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Accepted Answer

A)  increases but gets flatter. 
B)  increases and gets steeper. 
C)  decreases and gets flatter. 
D)  decreases but gets steeper. 
A)  increases but gets flatter. 
B)  increases and gets steeper. 
C)  decreases and gets flatter. 
D)  decreases but gets steeper.

Question 14

The average-total-cost curve is unaffected by diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 15

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn 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 16

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Scenario 13-1
Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-1. If Korie purchases the factory with her own money, what is the annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)  $0 
B)  $3,000 
C)  $12,000 
D)  $15,000 
A)  $0 
B)  $3,000 
C)  $12,000 
D)  $15,000

Question 19

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 20

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

Accepted Answer

A)  Firm 1 only 
B)  Firm 2 only 
C)  Firms 1 and 2 only 
D)  Firm 3 only 
A)  Firm 1 only 
B)  Firm 2 only 
C)  Firms 1 and 2 only 
D)  Firm 3 only

Exam 13: The Costs of Production

Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

In the long run, a factory is usually considered a fixed input.

Average total cost reveals how much total cost will change as the firm alters its level of production.

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Describe the general shape of the average-fixed-cost curve.

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

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

Economic profit is greater than or equal to accounting profit.

When a firm's only variable input is labor, then the slope of the production function measures the

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

The average-total-cost curve is unaffected by diminishing marginal product.

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Several related measures of cost can be derived from a firm's total cost.

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

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

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

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

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