Question 1

In the long run,

Accepted Answer

A)  all inputs can be varied. 
B)  all inputs are fixed. 
C)  some inputs are variable and other inputs are fixed. 
D)  output is fixed. 
E)  total variable cost cannot be changed. 
A)  all inputs can be varied. 
B)  all inputs are fixed. 
C)  some inputs are variable and other inputs are fixed. 
D)  output is fixed. 
E)  total variable cost cannot be changed.

Question 2

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

Accepted Answer

A)  The firm might be making an economic profit but we need more information about implicit costs to know for sure. 
B)  The firm is definitely making an economic profit because it must be minimizing its opportunity cost. 
C)  The firm is incurring an economic loss if implicit costs are $10,000. 
D)  The firm is making a normal profit if implicit costs are $0. 
E)  The firm may be making an economic profit but only if implicit costs are negative. 
A)  The firm might be making an economic profit but we need more information about implicit costs to know for sure. 
B)  The firm is definitely making an economic profit because it must be minimizing its opportunity cost. 
C)  The firm is incurring an economic loss if implicit costs are $10,000. 
D)  The firm is making a normal profit if implicit costs are $0. 
E)  The firm may be making an economic profit but only if implicit costs are negative.

Question 3

When Ford hires Ernst and Young Consulting to help Ford redesign its marketing,Ford's payment to Ernst and Young is classified as

Accepted Answer

A)  an explicit cost. 
B)  depreciation. 
C)  an implicit cost. 
D)  normal profit. 
E)  economic profit. 
A)  an explicit cost. 
B)  depreciation. 
C)  an implicit cost. 
D)  normal profit. 
E)  economic profit.

Question 4

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.When output i

Question 5

-In the above figure,curve A is the ________ curve and curve B is the ________ curve.

Accepted Answer

A)  total variable cost; total fixed cost 
B)  total cost; total fixed cost 
C)  total fixed cost; total variable cost 
D)  total cost; total variable cost 
E)  total variable cost; total cost 
A)  total variable cost; total fixed cost 
B)  total cost; total fixed cost 
C)  total fixed cost; total variable cost 
D)  total cost; total variable cost 
E)  total variable cost; total cost

Question 6

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

Accepted Answer

A)  less than $5. 
B)  more than $5 and less than $110. 
C)  more than $110 and less than $120. 
D)  more than $120 and less than $150. 
E)  more than $150. 
A)  less than $5. 
B)  more than $5 and less than $110. 
C)  more than $110 and less than $120. 
D)  more than $120 and less than $150. 
E)  more than $150.

Question 7

Increasing marginal returns always occurs when the

Accepted Answer

A)  marginal product of an additional worker exceeds the marginal product of the previous worker. 
B)  average product of an additional worker exceeds the average product of the previous worker. 
C)  marginal product of an additional worker is less than the marginal product of the previous worker. 
D)  average product of an additional worker is less than the average product of the previous worker. 
E)  marginal product of an additional worker exceeds the average product of the previous worker. 
A)  marginal product of an additional worker exceeds the marginal product of the previous worker. 
B)  average product of an additional worker exceeds the average product of the previous worker. 
C)  marginal product of an additional worker is less than the marginal product of the previous worker. 
D)  average product of an additional worker is less than the average product of the previous worker. 
E)  marginal product of an additional worker exceeds the average product of the previous worker.

Question 8

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total variable cost of producing 80 units equals

Accepted Answer

A)  less than $50. 
B)  more than $50 and less than $70. 
C)  more than $70 and less than $90. 
D)  more than $90 and less than $120. 
E)  more than $120. 
A)  less than $50. 
B)  more than $50 and less than $70. 
C)  more than $70 and less than $90. 
D)  more than $90 and less than $120. 
E)  more than $120.

Question 9

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 10

When a firm becomes so large it is difficult to coordinate and control,it is most likely that

Accepted Answer

A)  economies of scale have begun. 
B)  diseconomies of scale have begun. 
C)  average total cost begins to fall. 
D)  long-run average costs become negative. 
E)  there are increasing marginal returns to increasing the firm's plant size. 
A)  economies of scale have begun. 
B)  diseconomies of scale have begun. 
C)  average total cost begins to fall. 
D)  long-run average costs become negative. 
E)  there are increasing marginal returns to increasing the firm's plant size.

Question 11

Total fixed cost is the cost of

Accepted Answer

A)  labor. 
B)  production. 
C)  a firm's fixed factors of production. 
D)  only implicit factors of production. 
E)  only explicit factors of production. 
A)  labor. 
B)  production. 
C)  a firm's fixed factors of production. 
D)  only implicit factors of production. 
E)  only explicit factors of production.

Question 12

-The above table shows the total product schedule for Hair Today,a hair styling salon.Based on the table,the marginal product for Hair Today

Accepted Answer

A)  never reaches a maximum. 
B)  decreases after the 1st worker. 
C)  reaches a maximum with the 4th worker. 
D)  reaches a maximum with the 3rd worker. 
E)  reaches a maximum with the 5th worker. 
A)  never reaches a maximum. 
B)  decreases after the 1st worker. 
C)  reaches a maximum with the 4th worker. 
D)  reaches a maximum with the 3rd worker. 
E)  reaches a maximum with the 5th worker.

Question 13

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total fixed cost of producing 64 bikes?

Accepted Answer

A)  $200 
B)  $300 
C)  $400 
D)  $500 
E)  $600 
A)  $200 
B)  $300 
C)  $400 
D)  $500 
E)  $600

Question 14

April quit her job as an accountant at Ernst and Young,where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

Accepted Answer

A)  Her accountant calculates her profit as $40,000. 
B)  She has an economic loss. 
C)  Her explicit cost is $105,000. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  Her accountant calculates her profit as $40,000. 
B)  She has an economic loss. 
C)  Her explicit cost is $105,000. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 15

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Increasing marginal returns

Accepted Answer

A)  end when the fourth worker is hired. 
B)  occur at all levels of employment. 
C)  occur as long as output increases. 
D)  end when the second worker is hired. 
E)  never occur. 
A)  end when the fourth worker is hired. 
B)  occur at all levels of employment. 
C)  occur as long as output increases. 
D)  end when the second worker is hired. 
E)  never occur.

Question 16

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The average total cost of producing 80 units equals ________ per unit.

Accepted Answer

A)  $0.75 
B)  $1.00 
C)  $1.75 
D)  $60 
E)  $0.25 
A)  $0.75 
B)  $1.00 
C)  $1.75 
D)  $60 
E)  $0.25

Question 17

The marginal product of labor equals the change in ________ from a one-unit increase in the quantity of labor.

Accepted Answer

A)  total product 
B)  average product 
C)  total cost 
D)  the slope of the average product curve 
E)  the wage rate 
A)  total product 
B)  average product 
C)  total cost 
D)  the slope of the average product curve 
E)  the wage rate

Question 18

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average fixed cost equals

Accepted Answer

A)  $600. 
B)  $2.50. 
C)  $7.50. 
D)  $10.00. 
E)  $6.00. 
A)  $600. 
B)  $2.50. 
C)  $7.50. 
D)  $10.00. 
E)  $6.00.

Question 19

Which of the following is an example of an implicit cost?

Accepted Answer

A)  wages paid to employees 
B)  interest paid to a bank on a building loan 
C)  the cost of using capital an owner donates to the business 
D)  dollars paid to a supplier for materials used in production 
E)  liability insurance payments made only once a year 
A)  wages paid to employees 
B)  interest paid to a bank on a building loan 
C)  the cost of using capital an owner donates to the business 
D)  dollars paid to a supplier for materials used in production 
E)  liability insurance payments made only once a year

Question 20

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.

In the long run,

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

When Ford hires Ernst and Young Consulting to help Ford redesign its marketing,Ford's payment to Ernst and Young is classified as

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

-In the above figure,curve A is the curve and curve B is the curve.

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

Increasing marginal returns always occurs when the

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total variable cost of producing 80 units equals

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

When a firm becomes so large it is difficult to coordinate and control,it is most likely that

Total fixed cost is the cost of

-The above table shows the total product schedule for Hair Today,a hair styling salon.Based on the table,the marginal product for Hair Today

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total fixed cost of producing 64 bikes?

April quit her job as an accountant at Ernst and Young,where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Increasing marginal returns

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The average total cost of producing 80 units equals ________ per unit.

The marginal product of labor equals the change in ________ from a one-unit increase in the quantity of labor.

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average fixed cost equals

Which of the following is an example of an implicit cost?

What does the long-run average cost curve show?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 14: Production and Cost

In the long run,

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

When Ford hires Ernst and Young Consulting to help Ford redesign its marketing,Ford's payment to Ernst and Young is classified as

"In the short run,even when output is zero,the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.

-In the above figure,curve A is the ________ curve and curve B is the ________ curve.

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total cost of producing 80 units equals

Increasing marginal returns always occurs when the

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The total variable cost of producing 80 units equals

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

When a firm becomes so large it is difficult to coordinate and control,it is most likely that

Total fixed cost is the cost of

-The above table shows the total product schedule for Hair Today,a hair styling salon.Based on the table,the marginal product for Hair Today

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total fixed cost of producing 64 bikes?

April quit her job as an accountant at Ernst and Young,where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Increasing marginal returns

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The average total cost of producing 80 units equals ________ per unit.

The marginal product of labor equals the change in ________ from a one-unit increase in the quantity of labor.

-Anna owns a dog grooming salon in Brunswick,Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers,her average fixed cost equals

Which of the following is an example of an implicit cost?

What does the long-run average cost curve show?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-In the above figure,curve A is the curve and curve B is the curve.