Question 1

A firm's total profit equals its marginal revenue minus its marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

Accepted Answer

A)  accounting profit was $9 million. 
B)  economic profit was $9 million. 
C)  total revenue was $9 million. 
D)  explicit costs were $9 million. 
A)  accounting profit was $9 million. 
B)  economic profit was $9 million. 
C)  total revenue was $9 million. 
D)  explicit costs were $9 million.

Question 3

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 4

Table 13-2  
-Refer to Table 13-2. What is the marginal product of the second worker?

Accepted Answer

A)  300 units 
B)  200 units 
C)  100 units 
D)  50 units 
A)  300 units 
B)  200 units 
C)  100 units 
D)  50 units

Question 5

When a firm experiences constant returns to scale,

Accepted Answer

A)  long-run average total cost is unchanged, even when output increases. 
B)  long-run marginal cost is greater than long-run average total cost. 
C)  long-run marginal cost is less than long-run average total cost. 
D)  the firm is likely to experience coordination problems. 
A)  long-run average total cost is unchanged, even when output increases. 
B)  long-run marginal cost is greater than long-run average total cost. 
C)  long-run marginal cost is less than long-run average total cost. 
D)  the firm is likely to experience coordination problems.

Question 6

Table 13-6
Wooden Chair Factory  
-Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Accepted Answer

A)  5 chairs per hour 
B)  10 chairs per hour 
C)  20 chairs per hour 
D)  25 chairs per hour 
A)  5 chairs per hour 
B)  10 chairs per hour 
C)  20 chairs per hour 
D)  25 chairs per hour

Question 7

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

Accepted Answer

A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  181 units of output. 
A)  10 units of output. 
B)  11 units of output. 
C)  16 units of output. 
D)  181 units of output.

Question 8

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 = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

Accepted Answer

A)  8 units of output. 
B)  10 units of output. 
C)  122 units of output. 
D)  132 units of output. 
A)  8 units of output. 
B)  10 units of output. 
C)  122 units of output. 
D)  132 units of output.

Question 9

Economists and accountants both include forgone income as a cost to a small business owner.

Accepted Answer

A) True 
 B)False

Question 10

Table 13-18  
-Refer to Table 13-18. What is the shape of the firm's total­cost curve?

Accepted Answer

The firm's total­cost curve wo

Question 11

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

Accepted Answer

A)  $25. 
B)  $75. 
C)  $100. 
D)  $175. 
A)  $25. 
B)  $75. 
C)  $100. 
D)  $175.

Question 12

Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Atul can bottle and sell three cases per week. What is the maximum total output possible if Riva hires Atul?

Accepted Answer

A)  3 cases 
B)  4 cases 
C)  7 cases 
D)  11 cases 
A)  3 cases 
B)  4 cases 
C)  7 cases 
D)  11 cases

Question 13

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are

Accepted Answer

A)  $100, and her economic profits are $25. 
B)  $100, and her economic profits are $75. 
C)  $25, and her economic profits are $100. 
D)  $75, and her economic profits are $125. 
A)  $100, and her economic profits are $25. 
B)  $100, and her economic profits are $75. 
C)  $25, and her economic profits are $100. 
D)  $75, and her economic profits are $125.

Question 14

Scenario 13-10
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each.
-Refer to Scenario 13-10. An economist would calculate the total cost for one photo frame to be

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $25. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $25.

Question 15

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 16

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs 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 17

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. What is the total opportunity cost of the day that Farmer Ziva spent in the field planting lettuce?

Accepted Answer

A)  $130 
B)  $250 
C)  $300 
D)  $380 
A)  $130 
B)  $250 
C)  $300 
D)  $380

Question 18

If long-run average total cost is rising, then the firm is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 19

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Accepted Answer

A) True 
 B)False

Question 20

How long does it take a firm to go from the short run to the long run?

Accepted Answer

A)  six months 
B)  one year 
C)  two years 
D)  It depends on the nature of the firm. 
A)  six months 
B)  one year 
C)  two years 
D)  It depends on the nature of the firm.

Exam 13: The Costs of Production

A firm's total profit equals its marginal revenue minus its marginal cost.

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

Variable costs usually change as the firm alters the quantity of output produced.

Table 13-2 -Refer to Table 13-2. What is the marginal product of the second worker?

When a firm experiences constant returns to scale,

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

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 = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

Economists and accountants both include forgone income as a cost to a small business owner.

Table 13-18 -Refer to Table 13-18. What is the shape of the firm's total­cost curve?

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Atul can bottle and sell three cases per week. What is the maximum total output possible if Riva hires Atul?

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

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

If long-run average total cost is rising, then the firm is experiencing economies of scale.

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

How long does it take a firm to go from the short run to the long run?

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

Table 13-18 -Refer to Table 13-18. What is the shape of the firm's totalcost curve?