Question 1

Examination of the costs of production is unnecessary to the field of industrial organization.

Accepted Answer

A) True 
 B)False

Question 2

When a firm's only variable input is labor,then the slope of the production function measures the

Accepted Answer

A) quantity of labor. 
B) quantity of output. 
C) total cost. 
D) marginal product of labor.

Question 3

If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would

Accepted Answer

A) slope downward. 
B) be horizontal. 
C) slope upward. 
D) slope downward for low output levels and upward for high output levels.

Question 4

Total revenue minus explicit and implicit costs is called

Accepted Answer

A) accounting profit 
B) economic profit 
C) average total cost 
D) fixed expenses

Question 5

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Accepted Answer

A) True 
 B)False

Question 6

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Accepted Answer

The answer of What are opportunity costs? How do explicit...

Question 7

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized.Because she can easily put her idle resources to use,

Accepted Answer

A) the marginal cost of an extra worker is large. 
B) the marginal cost of one more glass of lemonade is smaller than if output were high. 
C) the marginal product of an extra worker is small. 
D) her lemonade stand is likely to be crowded with workers.

Question 8

Those things that must be forgone to acquire a good are called

Accepted Answer

A) substitutes. 
B) opportunity costs. 
C) explicit costs. 
D) competitors.

Question 9

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.If Harry makes 15 hotdogs in his first hour of business and incurs a total cost of $16.50,his average total cost per hotdog is

Accepted Answer

A) $1.10 
B) $6.50 
C) $15.00 
D) $16.50

Question 10

Table 13-5
 
-Refer to Table 13-5.What is the variable cost of producing zero widgets?

Accepted Answer

A) $0.00 
B) $1.00 
C) $10.00 
D) $10.0

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Table 13-8
 
-Refer to Table 13-8.What is the average fixed cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

Accepted Answer

A) $1.67 
B) $2.67 
C) $5.33 
D) $8.33

Question 13

Figure 13-2
The figure below depicts a total cost function for a firm that produces cookies.
 
-Refer to Figure 13-2.The changing slope of the total cost curve reflects

Accepted Answer

A) decreasing average variable cost. 
B) decreasing average total cost. 
C) decreasing marginal product. 
D) increasing fixed cost.

Question 14

Marginal cost tells us the

Accepted Answer

A) value of all resources used in a production process. 
B) marginal increment to profitability when price is constant. 
C) amount by which total cost rises when output is increased by one unit. 
D) amount by which output rises when labor is increased by one unit.

Question 15

Table 13-7
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
 
-Refer to Table 13-7.How many instructional modules are produced when marginal cost is $1,300?

Accepted Answer

A) 4 
B) 5 
C) 7 
D) 8

Question 16

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Accepted Answer

A) A technological advance resulting in increased productivity. 
B) Higher property taxes charged by the municipal government. 
C) Increased wages to attract additional computer operators. 
D) A reduction in subsidies from the state government.

Question 18

Figure 13-7
 
-Refer to Figure 13-7.Which of the figures represents the production function for a firm?

Accepted Answer

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

Question 19

When trying to understand the decision making process of different firms,economists assume that people think at the margin.

Accepted Answer

A) True 
 B)False

Question 20

Fixed costs are incurred even when a firm does not produce anything.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Examination of the costs of production is unnecessary to the field of industrial organization.

When a firm's only variable input is labor,then the slope of the production function measures the

If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would

Total revenue minus explicit and implicit costs is called

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized.Because she can easily put her idle resources to use,

Those things that must be forgone to acquire a good are called

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.If Harry makes 15 hotdogs in his first hour of business and incurs a total cost of $16.50,his average total cost per hotdog is

Table 13-5 -Refer to Table 13-5.What is the variable cost of producing zero widgets?

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

Table 13-8 -Refer to Table 13-8.What is the average fixed cost of producing 3 gigaplots at Jimmy's Gigaplot factory?

Figure 13-2 The figure below depicts a total cost function for a firm that produces cookies. -Refer to Figure 13-2.The changing slope of the total cost curve reflects

Marginal cost tells us the

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Figure 13-7 -Refer to Figure 13-7.Which of the figures represents the production function for a firm?

When trying to understand the decision making process of different firms,economists assume that people think at the margin.

Fixed costs are incurred even when a firm does not produce anything.