Question 1

Implicit costs

Accepted Answer

A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost. 
A)  do not require an outlay of money by the firm. 
B)  do not enter into the economist's measurement of a firm's profit. 
C)  are also known as variable costs. 
D)  are not part of an economist's measurement of opportunity cost.

Question 2

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Accepted Answer

A) True 
 B)False

Question 3

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 4

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Accepted Answer

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

Question 5

Table 13-19  
-Refer to Table 13-19. What is the shape of the marginal-cost curve?

Accepted Answer

MC = change in TC/change in Q, so althou

Question 6

Implicit costs are costs that do not require an outlay of money by the firm.

Accepted Answer

A) True 
 B)False

Question 7

Economic profit

Accepted Answer

A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit. 
A)  will never exceed accounting profit. 
B)  is most often equal to accounting profit. 
C)  is always at least as large as accounting profit. 
D)  is a less complete measure of profitability than accounting profit.

Question 8

When economists speak of a firm's costs, they are usually excluding the opportunity costs.

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

Table 13-19  
-Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Accepted Answer

ATC = TC/Q

Question 11

Economies of scale occur when a firm's

Accepted Answer

A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  marginal costs are equal to average total costs for all levels of output. 
A)  marginal costs are constant as output increases. 
B)  long-run average total costs are decreasing as output increases. 
C)  long-run average total costs are increasing as output increases. 
D)  marginal costs are equal to average total costs for all levels of output.

Question 12

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A)  wages Patrice could earn giving tennis lessons 
B)  dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency 
C)  the cost of utilities for operating the storefront 
D)  Both b and c are correct. 
A)  wages Patrice could earn giving tennis lessons 
B)  dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency 
C)  the cost of utilities for operating the storefront 
D)  Both b and c are correct.

Question 13

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. Ellie's annual accounting costs will equal

Accepted Answer

A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700. 
A)  $55,200. 
B)  $75,200. 
C)  $80,500. 
D)  $165,700.

Question 14

Table 13-17
Consider the following table of long-run total cost for four different firms:  
-Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

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 15

Table 13-1  
-Refer to Table 13-1. What is total output when 3 workers are hired?

Accepted Answer

A)  15 
B)  60 
C)  105 
D)  135 
A)  15 
B)  60 
C)  105 
D)  135

Question 16

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Accepted Answer

A)  $1,000 if she sells 100 candles. 
B)  $500 if she sells 25 candles. 
C)  $20 regardless of how many candles she sells. 
D)  $200 if she sells 5 candles. 
A)  $1,000 if she sells 100 candles. 
B)  $500 if she sells 25 candles. 
C)  $20 regardless of how many candles she sells. 
D)  $200 if she sells 5 candles.

Question 17

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Accepted Answer

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

Question 18

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits 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 19

When comparing short-run average total cost with long-run average total cost at a given level of output,

Accepted Answer

A)  short-run average total cost is typically above long-run average total cost. 
B)  short-run average total cost is typically the same as long-run average total cost. 
C)  short-run average total cost is typically below long-run average total cost. 
D)  the relationship between short-run and long-run average total cost follows no clear pattern. 
A)  short-run average total cost is typically above long-run average total cost. 
B)  short-run average total cost is typically the same as long-run average total cost. 
C)  short-run average total cost is typically below long-run average total cost. 
D)  the relationship between short-run and long-run average total cost follows no clear pattern.

Question 20

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Implicit costs

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Implicit costs are costs that do not require an outlay of money by the firm.

Economic profit

When economists speak of a firm's costs, they are usually excluding the opportunity costs.

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

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Economies of scale occur when a firm's

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

When comparing short-run average total cost with long-run average total cost at a given level of output,

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve.

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 small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing