Question 1

As a typical firm increases its output,its marginal cost

Accepted Answer

A)  is constant. 
B)  decreases at first and then increases. 
C)  increases at first and then decreases. 
D)  decreases. 
E)  is negative at first and then positive. 
A)  is constant. 
B)  decreases at first and then increases. 
C)  increases at first and then decreases. 
D)  decreases. 
E)  is negative at first and then positive.

Question 2

What are economies of scale? What is the main source of economies of scale?

Accepted Answer

Economies of scale are features of the f

Question 3

Because the amount of labor a firm employs can be changed,the cost of labor is known as

Accepted Answer

A)  minimum cost. 
B)  variable cost. 
C)  maximum cost. 
D)  fixed cost. 
E)  an unavoidable cost. 
A)  minimum cost. 
B)  variable cost. 
C)  maximum cost. 
D)  fixed cost. 
E)  an unavoidable cost.

Question 4

Total cost includes

Accepted Answer

A)  the cost of variable resources only. 
B)  the cost of fixed resources only. 
C)  the cost of both variable and fixed resources. 
D)  the cost of neither variable nor fixed resources. 
E)  all explicit costs and all the implicit costs that actually must be paid using money. 
A)  the cost of variable resources only. 
B)  the cost of fixed resources only. 
C)  the cost of both variable and fixed resources. 
D)  the cost of neither variable nor fixed resources. 
E)  all explicit costs and all the implicit costs that actually must be paid using money.

Question 5

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

Accepted Answer

A)  less efficient and less productive workers are hired. 
B)  adding more workers exhausts the possible gains from specialization. 
C)  the entrepreneur does not know how to manage more workers. 
D)  each worker will produce more than the worker previously hired. 
E)  the plant becomes less specialized. 
A)  less efficient and less productive workers are hired. 
B)  adding more workers exhausts the possible gains from specialization. 
C)  the entrepreneur does not know how to manage more workers. 
D)  each worker will produce more than the worker previously hired. 
E)  the plant becomes less specialized.

Question 6

Which of the following is a list of fixed inputs for a hospital?

Accepted Answer

A)  bandages, casts, and other materials 
B)  antibiotics, pain medication, and other prescription drugs 
C)  the emergency room, intensive care unit, and other facilities 
D)  the nurses, receptionists, and other employees 
E)  the lobby, the doctors, and the electricity it uses 
A)  bandages, casts, and other materials 
B)  antibiotics, pain medication, and other prescription drugs 
C)  the emergency room, intensive care unit, and other facilities 
D)  the nurses, receptionists, and other employees 
E)  the lobby, the doctors, and the electricity it uses

Question 7

Which of the following costs can be positive when output is zero?

Accepted Answer

A)  average variable cost 
B)  total variable cost 
C)  marginal cost 
D)  total fixed cost 
E)  None of the above because when output is zero there are no costs. 
A)  average variable cost 
B)  total variable cost 
C)  marginal cost 
D)  total fixed cost 
E)  None of the above because when output is zero there are no costs.

Question 8

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

Accepted Answer

A)  first 
B)  fourth 
C)  fifth 
D)  sixth 
E)  third 
A)  first 
B)  fourth 
C)  fifth 
D)  sixth 
E)  third

Question 9

A cost paid in money is

Accepted Answer

A)  not an opportunity cost. 
B)  an implicit cost and an opportunity cost. 
C)  an explicit cost and an opportunity cost. 
D)  not an accounting cost. 
E)  an explicit cost but not an opportunity cost. 
A)  not an opportunity cost. 
B)  an implicit cost and an opportunity cost. 
C)  an explicit cost and an opportunity cost. 
D)  not an accounting cost. 
E)  an explicit cost but not an opportunity cost.

Question 10

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

Accepted Answer

A)  $250,000 
B)  $200,000 
C)  $190,000 
D)  $167,000 
E)  $180,000 
A)  $250,000 
B)  $200,000 
C)  $190,000 
D)  $167,000 
E)  $180,000

Question 11

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds,then

Accepted Answer

A)  she would be unable to earn a normal profit. 
B)  there is no cost associated with the expansion. 
C)  she would forego the opportunity to earn interest on the money. 
D)  the amount of her funds she used is an explicit cost. 
E)  the amount of her funds she used is part of her normal profit. 
A)  she would be unable to earn a normal profit. 
B)  there is no cost associated with the expansion. 
C)  she would forego the opportunity to earn interest on the money. 
D)  the amount of her funds she used is an explicit cost. 
E)  the amount of her funds she used is part of her normal profit.

Question 12

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so,carefully explain these reasons.If not,explain why each curve is U-shaped.

Accepted Answer

The curves are U-shaped for quite differ

Question 13

-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 2 workers,her average fixed cost equals

Accepted Answer

A)  $600. 
B)  $6.00. 
C)  $7.50. 
D)  $10.00. 
E)  $2,400. 
A)  $600. 
B)  $6.00. 
C)  $7.50. 
D)  $10.00. 
E)  $2,400.

Question 14

The long run is defined as

Accepted Answer

A)  any time after six months. 
B)  any time after one year. 
C)  the period of time when all resources are fixed. 
D)  the period of time when most (more than 50 percent) resources are variable. 
E)  the period of time when all resources are variable. 
A)  any time after six months. 
B)  any time after one year. 
C)  the period of time when all resources are fixed. 
D)  the period of time when most (more than 50 percent) resources are variable. 
E)  the period of time when all resources are variable.

Question 15

Rufus runs a skunk-skinning service in West Virginia.He employs skinners at a wage rate of $240 a week for each one.He leases the shack where his workers work for $200 per week.The rent is fixed for the next two years.Last week his 10 employees managed to skin a total of 300 skunks.
a.What is the average product of labor for Rufus's company?
b.What is Rufus' total variable cost per week?
c.What is the average variable cost for Rufus's company?
d.If Rufus adds his brother Jethro to his staff,at a wage rate of $240 a week,and his company can now skin 310 skunks per week,what is Rufus's new average variable cost?

Accepted Answer

a.The average product of labor is 30 sku

Question 16

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

Accepted Answer

A technological change that increases pr

Question 17

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

Accepted Answer

A)  a minimized 
B)  a maximized 
C)  an explicit 
D)  an implicit 
E)  a total 
A)  a minimized 
B)  a maximized 
C)  an explicit 
D)  an implicit 
E)  a total

Question 18

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

Accepted Answer

The drivers' wages are a variable cost b

Question 19

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

Accepted Answer

A)  diseconomies of scale. 
B)  decreasing marginal returns. 
C)  increasing marginal returns. 
D)  economies of scale. 
E)  Both answers C and D are correct. 
A)  diseconomies of scale. 
B)  decreasing marginal returns. 
C)  increasing marginal returns. 
D)  economies of scale. 
E)  Both answers C and D are correct.

Question 20

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

Accepted Answer

Decreasing marginal returns occur when t

As a typical firm increases its output,its marginal cost

What are economies of scale? What is the main source of economies of scale?

Because the amount of labor a firm employs can be changed,the cost of labor is known as

Total cost includes

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

Which of the following is a list of fixed inputs for a hospital?

Which of the following costs can be positive when output is zero?

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

A cost paid in money is

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds,then

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so,carefully explain these reasons.If not,explain why each curve is U-shaped.

-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 2 workers,her average fixed cost equals

The long run is defined as

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

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

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

As a typical firm increases its output,its marginal cost

What are economies of scale? What is the main source of economies of scale?

Because the amount of labor a firm employs can be changed,the cost of labor is known as

Total cost includes

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

Which of the following is a list of fixed inputs for a hospital?

Which of the following costs can be positive when output is zero?

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Decreasing marginal returns start to occur after the ________ worker is hired.

A cost paid in money is

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner,$10,000 of forgone interest by the owner,$3,000 worth of economic depreciation,and $20,000 worth of normal profit.What is the firm's economic profit?

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds,then

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so,carefully explain these reasons.If not,explain why each curve is U-shaped.

-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 2 workers,her average fixed cost equals

The long run is defined as

Explain how new technologies,which increase productivity,affect the average variable cost,average total cost,and marginal cost curves.

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased.How does this wage hike affect the Rent-A-Limo Company's average fixed cost,average variable cost,average total cost,and marginal cost?

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

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

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