Question 1

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

A)   The cost of something is what you give up to get it.
B)   A country's standard of living depends on its ability to produce goods and services.
C)   Prices rise when the government prints too much money.
D)   Governments can sometimes improve market outcomes.E) None of the above
F) B) and C)

Question 2

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. What is the total opportunity cost of the day that Farmer Ziva spent in the field planting lettuce?

Accepted Answer

A)   $130
B)   $250
C)   $300
D)   $380E) A) and D)
F) B) and D)

Question 3

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Accepted Answer

A) True 
 B)False

Question 4

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Accepted Answer

A)   $20
B)   $40
C)   $200
D)   $400E) A) and D)
F) A) and C)

Question 5

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. According to an economist, which of the following revenue totals will yield Ellie's business $50,000 in economic profits?

Accepted Answer

A)   $55,200
B)   $100,200
C)   $132,500
D)   $185,700E) None of the above
F) C) and D)

Question 6

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

Accepted Answer

A)   300 units
B)   200 units
C)   100 units
D)   50 unitsE) A) and D)
F) B) and C)

Question 7

A firm that produces and sells furniture gets to choose

Accepted Answer

A)   how many workers to hire in both the short run and the long run.
B)   the size of its factories in the short run but not in the long run.
C)   which short-run average-total-cost curve to use in both the short tun and the long run.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 8

Which of the following is an example of an implicit cost? (i)  the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
(ii)  interest paid on the firm's debt
(iii)  rent paid by the firm to lease office space

Accepted Answer

A)   (ii)  and (iii)  only
B)   (i)  and (iii)  only
C)   (i)  only
D)   (iii)  onlyE) A) and B)
F) A) and C)

Question 9

Table 13-5
 
-Refer to Table 13-5. Diminishing marginal product begins with the addition of the

Accepted Answer

A)   second worker.
B)   third worker.
C)   fourth worker.
D)   fifth worker.E) B) and D)
F) B) and C)

Question 10

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Accepted Answer

A)   the number of workers and the quantity of output.
B)   marginal product and marginal cost.
C)   the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor.
D)   fixed inputs and variable inputs in the short run.E) A) and B)
F) A) and D)

Question 11

Scenario 13-7
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business.
-Refer to Scenario 13-7. Julia's explicit costs are

Accepted Answer

A)   0.
B)   $10,000.
C)   $15,000.
D)   $25,000.E) A) and B)
F) All of the above

Question 12

Table 13-6
Wooden Chair Factory
 
-Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?

Accepted Answer

A)   $40
B)   $48
C)   $384
D)   $424E) A) and B)
F) A) and C)

Question 13

At low levels of production, the firm

Accepted Answer

A)   benefits from increased size because it can take advantage of greater specialization.
B)   has the potential for economies of scale.
C)   is unlikely to experiences acute problems with coordination.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 14

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. An accountant would calculate the total profit for one birdhouse to be

Accepted Answer

A)   $11.
B)   $7.
C)   $12.
D)   $15.E) A) and B)
F) None of the above

Question 15

Figure 13-3 
-Refer to Figure 13-3. 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.E) A) and B)
F) All of the above

Question 16

For a firm, the relationship between the quantity of inputs and quantity of output is called the

Accepted Answer

A)   profit function.
B)   production function.
C)   total-cost function.
D)   quantity function.E) All of the above
F) C) and D)

Question 17

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

Accepted Answer

A)   $-55,000
B)   $-5,000
C)   $5,000
D)   $20,000E) All of the above
F) B) and C)

Question 18

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 19

Consider a small family wheat farm. List some examples of implicit costs of farming.

Accepted Answer

the lost earnings of any famil...

Question 20

Which of the following expressions is correct?

Accepted Answer

A)   accounting profit = total revenue - explicit costs
B)   economic profit = total revenue - implicit costs
C)   economic profit = total revenue - explicit costs
D)   Both a and b are correct.E) A) and D)
F) A) and C)

Exam 13: The Costs of Production

A firm that produces and sells furniture gets to choose

Correct Answer
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Correct Answer
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Correct Answer
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If a firm uses labor to produce output, the firm's production function depicts the relationship between

Correct Answer
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Table 13-5 -Refer to Table 13-5. Diminishing marginal product begins with the addition of the

Correct Answer
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The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Correct Answer
verified

At low levels of production, the firm

Correct Answer
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When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Correct Answer
verified

Consider a small family wheat farm. List some examples of implicit costs of farming.

Correct Answer
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the lost earnings of any famil...
View Answer

Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space

Correct Answer
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Which of the following expressions is correct?

Correct Answer
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Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Correct Answer
verified

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Correct Answer
verified

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

Correct Answer
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Table 13-2 -Refer to Table 13-2. What is the marginal product of the first worker?

Correct Answer
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Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?

Correct Answer
verified

For a firm, the relationship between the quantity of inputs and quantity of output is called the

Correct Answer
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Figure 13-3 -Refer to Figure 13-3. The changing slope of the total cost curve reflects

Correct Answer
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Correct Answer
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Correct Answer
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Exam 13: The Costs of Production

A firm that produces and sells furniture gets to choose

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Correct AnswerverifiedShow Answer

Table 13-5 -Refer to Table 13-5. Diminishing marginal product begins with the addition of the

Correct AnswerverifiedShow Answer

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Correct AnswerverifiedShow Answer

At low levels of production, the firm

Correct AnswerverifiedShow Answer

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Correct AnswerverifiedShow Answer

Consider a small family wheat farm. List some examples of implicit costs of farming.

Correct Answerverifiedthe lost earnings of any famil...View AnswerShow Answer

Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space

Correct AnswerverifiedShow Answer

Which of the following expressions is correct?

Correct AnswerverifiedShow Answer

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Correct AnswerverifiedShow Answer

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Correct AnswerverifiedShow Answer

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?

Correct AnswerverifiedShow Answer

For a firm, the relationship between the quantity of inputs and quantity of output is called the

Correct AnswerverifiedShow Answer

Figure 13-3 -Refer to Figure 13-3. The changing slope of the total cost curve reflects

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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the lost earnings of any famil...
View Answer

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Correct Answer
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