Question 1

The paramount goal of a firm is to

Accepted Answer

A) maximize profit. 
B) maximize sales. 
C) maximize total revenue. 
D) minimize costs. 
E) force its competitors into bankruptcy. 
A) maximize profit. 
B) maximize sales. 
C) maximize total revenue. 
D) minimize costs. 
E) force its competitors into bankruptcy.

Question 2

Economies of scale and diseconomies of scale explain

Accepted Answer

A) cost behavior in the short run. 
B) profit maximization in the long run. 
C) the U-shape of the long-run average cost curve. 
D) the U-shape of the short-run average total cost curve. 
E) the U-shape of the marginal cost curves. 
A) cost behavior in the short run. 
B) profit maximization in the long run. 
C) the U-shape of the long-run average cost curve. 
D) the U-shape of the short-run average total cost curve. 
E) the U-shape of the marginal cost curves.

Question 3

The average product curve

Accepted Answer

A) initially falls then rises. 
B) rises as average variable cost increases. 
C) initially rises and then falls. 
D) shows how productivity changes as output changes. 
E) intersects the marginal cost curve when the average product curve is at its maximum. 
A) initially falls then rises. 
B) rises as average variable cost increases. 
C) initially rises and then falls. 
D) shows how productivity changes as output changes. 
E) intersects the marginal cost curve when the average product curve is at its maximum.

Question 4

The long-run average cost curve is U-shaped because of which of the following?

Accepted Answer

A) decreasing marginal returns as more labor is hired 
B) constant fixed costs as output is increased 
C) economies and diseconomies of scale 
D) increasing marginal returns as more labor is hired 
E) decreasing average fixed costs as output is increased 
A) decreasing marginal returns as more labor is hired 
B) constant fixed costs as output is increased 
C) economies and diseconomies of scale 
D) increasing marginal returns as more labor is hired 
E) decreasing average fixed costs as output is increased

Question 5

Which of the following is true?

Accepted Answer

A) Profit as calculated by accountants and economic profit are not necessarily equal. 
B) Profit as calculated by accountants is always smaller than economic profit. 
C) Economic profit ignores implicit costs. 
D) The Internal Revenue Service taxes the firm's economic profit but not its normal profit. 
E) The Internal Revenue Service taxes the firm's normal profit but not its economic profit. 
A) Profit as calculated by accountants and economic profit are not necessarily equal. 
B) Profit as calculated by accountants is always smaller than economic profit. 
C) Economic profit ignores implicit costs. 
D) The Internal Revenue Service taxes the firm's economic profit but not its normal profit. 
E) The Internal Revenue Service taxes the firm's normal profit but not its economic profit.

Question 6

Suppose that a firm earned $500,000 in total revenue.At the same time,it incurred labor costs of $200,000;economic depreciation of $50,000;normal profit of $75,000;interest paid to the bank of $25,000;and used other factors of production that cost $100,000.The economic profit earned by the firm equals

Accepted Answer

A) $275,000. 
B) $175,000. 
C) $50,000. 
D) $200,000. 
E) $500,000. 
A) $275,000. 
B) $175,000. 
C) $50,000. 
D) $200,000. 
E) $500,000.

Question 7

John fishes for a living.Last year,he sold $100,000 of fish.Bait,nets and other fishing supplies cost John $10,000 and he paid $40,000 in salaries to his helpers.Depreciation on his boat and other equipment,as calculated using IRS rules,was $15,000.What was John's profit as would be calculated by an accountant?

Accepted Answer

A) $165,000 
B) $100,000 
C) $65,000 
D) $35,000 
E) None of the above answers is correct. 
A) $165,000 
B) $100,000 
C) $65,000 
D) $35,000 
E) None of the above answers is correct.

Question 8

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve C is the firm's

Accepted Answer

A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve. 
A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve.

Question 9

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Accepted Answer

A) increasing marginal returns 
B) diseconomies of scale 
C) economies of scale 
D) random luck 
E) decreasing cost of marginal returns 
A) increasing marginal returns 
B) diseconomies of scale 
C) economies of scale 
D) random luck 
E) decreasing cost of marginal returns

Question 10

Marginal product equals

Accepted Answer

A) the total product produced by a certain amount of labor. 
B) the change in total product that results from a one-unit increase in the quantity of labor employed. 
C) total product divided by the quantity of labor. 
D) the amount of labor needed to produce an increase in production. 
E) total product minus the quantity of labor. 
A) the total product produced by a certain amount of labor. 
B) the change in total product that results from a one-unit increase in the quantity of labor employed. 
C) total product divided by the quantity of labor. 
D) the amount of labor needed to produce an increase in production. 
E) total product minus the quantity of labor.

Question 11

What does the long-run average cost curve show?

Accepted Answer

A) the interaction between average fixed cost and marginal cost 
B) the lowest average cost to produce each output level in the long run 
C) the distinction between long-run fixed and long-run variable costs 
D) the lowest average marginal cost of producing each output level at any time 
E) Answers A,B,and C are correct. 
A) the interaction between average fixed cost and marginal cost 
B) the lowest average cost to produce each output level in the long run 
C) the distinction between long-run fixed and long-run variable costs 
D) the lowest average marginal cost of producing each output level at any time 
E) Answers A,B,and C are correct.

Question 12

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

Accepted Answer

The normal profit is

Question 13

What is the difference between decreasing marginal returns and negative marginal returns?

Accepted Answer

Decreasing marginal returns occur when t

Question 14

-The above table gives the total cost schedule for oil changes at the local Jiffy Lube.
a.What is Jiffy Lube's total fixed cost?
b.What is the total variable cost of 2 oil changes?
c.What is the average variable cost of 4 oil changes?
d.What is the average fixed cost of 2 oil changes?
e.What is the marginal cost of the 3rd oil change?

Accepted Answer

a.The total fixed cost is $10.At zero ou

Question 15

The figure above shows some of a firm's cost curves.
-Based on the figure above,curve D is the firm's

Accepted Answer

A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve. 
A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve.

Question 16

-The above figure represents the average total cost curves of a wheat farmer.
a.Which average total cost curve has the lowest average total cost of producing 30,000 bushels of wheat?
b.Over what range of output is the farmer experiencing economies of scale?
c.Over what range of output is the farmer experiencing diseconomies of scale?
d.Which average total cost curve has the lowest possible average cost of production?
e.Which average total cost curve represents the largest plant?

Accepted Answer

a.ATC3 has the lowest average total cost

Question 17

Jay set up his hot dog stand near the business district.His total variable cost includes the

Accepted Answer

A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day. 
A) annual insurance for the hot dog stand. 
B) cost of buying the hot dog stand. 
C) cost of the hot dogs and condiments. 
D) interest he pays on the funds he borrowed to pay for advertising. 
E) revenue he gets when he sells his first hot dog each day.

Question 18

Suppose Billy owns a hair salon in Dallas.He has one large hair dryer for which he paid $1,000.If he can sell the dryer one year later for $800,his total economic depreciation equals

Accepted Answer

A) $1,000. 
B) $200. 
C) $800. 
D) $1,800. 
E) None of the above answers is correct. 
A) $1,000. 
B) $200. 
C) $800. 
D) $1,800. 
E) None of the above answers is correct.

Question 19

A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Accepted Answer

A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift 
A) only curve A shifts 
B) only curve B shifts 
C) only curve C shifts 
D) both curves A and C shift 
E) both curves B and C shift

Question 20

Decreasing marginal returns

Accepted Answer

A) can be avoided if a firm watches costs. 
B) affect all firms,but at different production levels. 
C) affect all firms at the same level of production. 
D) disappear when the firm produces a large enough level of output. 
E) mean that the average product of labor starts as a negative number and then becomes positive. 
A) can be avoided if a firm watches costs. 
B) affect all firms,but at different production levels. 
C) affect all firms at the same level of production. 
D) disappear when the firm produces a large enough level of output. 
E) mean that the average product of labor starts as a negative number and then becomes positive.

The paramount goal of a firm is to

Economies of scale and diseconomies of scale explain

The average product curve

The long-run average cost curve is U-shaped because of which of the following?

Which of the following is true?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve C is the firm's

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Marginal product equals

What does the long-run average cost curve show?

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

What is the difference between decreasing marginal returns and negative marginal returns?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve D is the firm's

Jay set up his hot dog stand near the business district.His total variable cost includes the

Suppose Billy owns a hair salon in Dallas.He has one large hair dryer for which he paid $1,000.If he can sell the dryer one year later for $800,his total economic depreciation equals

A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Decreasing marginal returns

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 10: Production and Cost

The paramount goal of a firm is to

Economies of scale and diseconomies of scale explain

The average product curve

The long-run average cost curve is U-shaped because of which of the following?

Which of the following is true?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve C is the firm's

If a firm increases its output and its average cost decreases,the firm is experiencing which of the following?

Marginal product equals

What does the long-run average cost curve show?

What is a normal profit? Is it part of the firm's opportunity costs,total revenue,or neither?

What is the difference between decreasing marginal returns and negative marginal returns?

The figure above shows some of a firm's cost curves. -Based on the figure above,curve D is the firm's

Jay set up his hot dog stand near the business district.His total variable cost includes the

Suppose Billy owns a hair salon in Dallas.He has one large hair dryer for which he paid $1,000.If he can sell the dryer one year later for $800,his total economic depreciation equals

A firm's rent is a fixed cost.If the rent increases,then in the figure above ________ upward.

Decreasing marginal returns

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters