Question 1

Diminishing marginal productivity implies decreasing total product.

Accepted Answer

A) True 
 B)False

Question 2

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that

Accepted Answer

A)  consumers do not react to changing prices. 
B)  there are diseconomies of scale in retail sales. 
C)  there are economies of scale in retail sales. 
D)  there are diminishing returns to producing and selling retail goods. 
A)  consumers do not react to changing prices. 
B)  there are diseconomies of scale in retail sales. 
C)  there are economies of scale in retail sales. 
D)  there are diminishing returns to producing and selling retail goods.

Question 3

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 0 to 45 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 4

How can the average-fixed-cost curve be declining when fixed cost is constant?

Accepted Answer

Although fixed cost is unchang

Question 5

Table 13-3  
-Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 6

Average variable cost will decrease if .

Accepted Answer

marginal c

Question 7

Table 13-19  
-Refer to Table 13-19. What is the total output of five workers?

Accepted Answer

Total output of four workers =

Question 8

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. The implicit cost for one birdhouse is

Accepted Answer

A)  $4. 
B)  $5. 
C)  $8. 
D)  $9. 
A)  $4. 
B)  $5. 
C)  $8. 
D)  $9.

Question 9

Economists in the field of industrial organization study how

Accepted Answer

A)  central banking policies affect financial markets. 
B)  firms' demand for labor and individuals' supply of labor affect resource markets. 
C)  firms' decisions about prices and quantities depend on market conditions. 
D)  externalities and public goods affect the environment. 
A)  central banking policies affect financial markets. 
B)  firms' demand for labor and individuals' supply of labor affect resource markets. 
C)  firms' decisions about prices and quantities depend on market conditions. 
D)  externalities and public goods affect the environment.

Question 10

Table 13-17
Consider the following table of long-run total cost for four different firms:  
-Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

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 11

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 12

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Accepted Answer

A)  accounting profit was $20 million. 
B)  economic profit was $20 million. 
C)  total revenue was $20 million. 
D)  explicit costs was $20 million. 
A)  accounting profit was $20 million. 
B)  economic profit was $20 million. 
C)  total revenue was $20 million. 
D)  explicit costs was $20 million.

Question 13

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Accepted Answer

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

Question 14

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 15

The most likely explanation for economies of scale is

Accepted Answer

A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost. 
A)  coordination problems. 
B)  specialization of labor. 
C)  increasing marginal cost. 
D)  decreasing marginal cost.

Question 16

Foregone investment opportunities are an example of

Accepted Answer

A)  an explicit cost. 
B)  an implicit cost. 
C)  revenues. 
D)  profits. 
A)  an explicit cost. 
B)  an implicit cost. 
C)  revenues. 
D)  profits.

Question 17

Describe how an accounting firm could experience economies of scale.

Accepted Answer

Specialization of labor can produce econ

Question 18

Define profit.

Accepted Answer

Profit = T

Question 19

Diseconomies 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 20

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Accepted Answer

A)  competition. 
B)  opportunity costs. 
C)  specialization. 
D)  incentives. 
A)  competition. 
B)  opportunity costs. 
C)  specialization. 
D)  incentives.

Exam 13: The Costs of Production

Diminishing marginal productivity implies decreasing total product.

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 0 to 45 students, Charles's total cost curve

How can the average-fixed-cost curve be declining when fixed cost is constant?

Table 13-3 -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

Average variable cost will decrease if .

Table 13-19 -Refer to Table 13-19. What is the total output of five workers?

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Economists in the field of industrial organization study how

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Average total cost and marginal cost express information that is already contained in a firm's total cost.

The most likely explanation for economies of scale is

Foregone investment opportunities are an example of

Describe how an accounting firm could experience economies of scale.

Define profit.

Diseconomies of scale occur when a firm's

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

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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