Question 1

A production function describes

Accepted Answer

A) how a firm maximizes profits. 
B) how a firm turns inputs into output. 
C) the minimal cost of producing a given level of output. 
D) the relationship between cost and output.

Question 2

Table 13-10 
-Refer to Table 13-10. The average variable cost of producing 240 units of output is

Accepted Answer

A) $0.06. 
B) $0.38. 
C) $0.44. 
D) $30.

Question 3

Describe the relationship between average variable cost and average total cost. How are the general shapes of the AVC and ATC curves related?

Accepted Answer

The answer of Describe the relationship between average variable cost...

Question 4

The difference between accounting profit and economic profit relates to

Accepted Answer

A) the manner in which revenues are defined. 
B) how marginal revenue is calculated. 
C) the manner in which costs are defined. 
D) the price of the good in the market.

Question 5

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.

Question 6

Figure 13-2 
-Refer to Figure 13-2. As the number of workers increases,

Accepted Answer

A) marginal product decreases. 
B) total output decreases. 
C) marginal product increases but at a decreasing rate. 
D) Both a and b are correct.

Question 7

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Accepted Answer

A) lemons and sugar. 
B) paper cups. 
C) the wages paid to her hourly workers. 
D) All of the above are correct.

Question 8

Economists assume that the goal of the firm is to maximize total

Accepted Answer

A) revenue. 
B) profits. 
C) costs. 
D) satisfaction.

Question 9

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

Accepted Answer

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

Question 10

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?

Accepted Answer

A) Bev's total explicit costs are $26,300. 
B) Bev's total implicit costs are $300. 
C) Bev's accounting profits exceed her economic profits by $300. 
D) Bev's economic profit is $3,700.

Question 11

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Accepted Answer

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

Question 12

Table 13-7
The Flying Elvis Copter Rides 
-Refer to Table 13-7. What is the value of J?

Accepted Answer

A) $25 
B) $50 
C) $110 
D) $220

Question 13

A firm's opportunity costs of production are equal to its

Accepted Answer

A) explicit costs only. 
B) implicit costs only. 
C) explicit costs + implicit costs. 
D) explicit costs + implicit costs + total revenue.

Question 14

Table 13-14 
-Refer to Table 13-14. What is the marginal cost of the 8th unit of output?

Accepted Answer

A) $20.00 
B) $21.86 
C) $23.13 
D) $32.00

Question 15

A firm that wants to achieve economies of scale could do so by

Accepted Answer

A) assigning limited tasks to its employees, so they can master those tasks. 
B) employing a smaller number of workers. 
C) producing a smaller quantity of output. 
D) producing an output level higher than the efficient scale.

Question 16

Suppose that a firm's long-run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) specialization.

Question 17

​Chloe's Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Café exhibits economies of scale between 1,000 and 2,000 cinnamon rolls, the long-run average total cost for 1,500 cinnamon rolls is

Accepted Answer

A) ​higher than $0.50. 
B) ​lower than $0.50. 
C) ​equal to $0.50. 
D) ​higher than $500.

Question 18

Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

Accepted Answer

A) True 
 B)False

Question 19

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Accepted Answer

A) gets flatter as output increases. 
B) gets steeper as output increases. 
C) is constant for all ranges of output. 
D) is unrelated to the production function.

Question 20

Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average fixed cost was

Accepted Answer

A) $0.29. 
B) $1.71. 
C) $2,00. 
D) $6.00.

Exam 13: The Costs of Production

A production function describes

Table 13-10 -Refer to Table 13-10. The average variable cost of producing 240 units of output is

Describe the relationship between average variable cost and average total cost. How are the general shapes of the AVC and ATC curves related?

The difference between accounting profit and economic profit relates to

Diseconomies of scale occur when a firm's

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Economists assume that the goal of the firm is to maximize total

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

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of J?