Question 1

A total-cost curve shows the relationship between the

Accepted Answer

A)   quantity of an input used and the total cost of production.
B)   quantity of output produced and the total cost of production.
C)   total cost of production and profit.
D)   total cost of production and total revenue.E) A) and D)
F) All of the above

Question 2

Scenario 13-15
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost.
-Refer to Scenario 13-15. Joan's production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   decreasing marginal product.
C)   constant marginal product.
D)   Any of the above could be correct.E) A) and B)
F) A) and C)

Question 3

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are

Accepted Answer

A)   $100, and her economic profits are $25.
B)   $100, and her economic profits are $75.
C)   $25, and her economic profits are $100.
D)   $75, and her economic profits are $125.E) All of the above
F) A) and D)

Question 4

How can the average-fixed-cost curve be declining when fixed cost is constant?

Accepted Answer

Although fixed cost is unchang...

Question 5

Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop's average total cost ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explains that ATC is U-shaped for two reasons. The first is the existence of diminishing marginal product, which causes it to rise. What would be the second reason? Assume that the marginal cost curve is linear. Hint: The second reason relates to average fixed cost)

Accepted Answer

Average fixed cost always decl...

Question 6

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

Accepted Answer

A)   300 units
B)   200 units
C)   100 units
D)   50 unitsE) None of the above
F) A) and B)

Question 7

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.E) A) and B)
F) A) and C)

Question 8

When a firm experiences diseconomies of scale,

Accepted Answer

A)   short-run average total cost is minimized.
B)   long-run average total cost is minimized.
C)   long-run average total cost increases as output increases.
D)   long-run average total cost decreases as output increases.E) A) and B)
F) A) and C)

Question 9

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   constant returns to scale because average total cost is constant as output rises.
C)   diseconomies of scale because average total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) All of the above
F) None of the above

Question 10

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.

Accepted Answer

A) True 
 B)False

Question 11

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

Accepted Answer

A)   ATCA
B)   ATCB
C)   ATCC
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 12

Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-2. Suppose Chelsea purchases the factory using her own money. What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)   $2,000
B)   $3,000
C)   $4,500
D)   $5,000E) None of the above
F) C) and D)

Question 13

Economists and accountants both include forgone income as a cost to a small business owner.

Accepted Answer

A) True 
 B)False

Question 14

Table 13-2
 
-Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) A) and C)

Question 15

Table 13-6
Wooden Chair Factory
 
-Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Accepted Answer

A)   5 chairs per hour
B)   10 chairs per hour
C)   20 chairs per hour
D)   25 chairs per hourE) A) and D)
F) A) and C)

Question 16

Total revenue minus only implicit costs is called

Accepted Answer

A)   accounting profit.
B)   economic profit.
C)   opportunity cost.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 17

Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.
-Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual accounting profit of her cookie jar business?

Accepted Answer

A)   $36,000
B)   $35,950
C)   $30,000
D)   $29,950E) All of the above
F) B) and C)

Question 18

Scenario 13-14
If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.
-Refer to Scenario 13-14. Farmer Brown's production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   constant marginal product.
C)   diminishing marginal product.
D)   The production function is unrelated to the marginal product.E) A) and B)
F) All of the above

Question 19

Figure 13-2 
-Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Accepted Answer

A)   diminishing marginal product of workers.
B)   diminishing marginal cost of cookie production.
C)   decreasing cost of cookie production.
D)   decreasing output of cookies.E) A) and B)
F) None of the above

Question 20

Profit is defined as

Accepted Answer

A)   net revenue minus depreciation.
B)   total revenue minus total cost.
C)   average revenue minus average total cost.
D)   marginal revenue minus marginal cost.E) A) and B)
F) A) and C)

Exam 12: The Costs of Production

Correct Answer
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Average fixed cost always decl...
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Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

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Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Correct Answer
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Diseconomies of scale occur when a firm's

Correct Answer
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Correct Answer
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How can the average-fixed-cost curve be declining when fixed cost is constant?

Correct Answer
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Although fixed cost is unchang...
View Answer

Correct Answer
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Profit is defined as

Correct Answer
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Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Correct Answer
verified

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Correct Answer
verified

Economists and accountants both include forgone income as a cost to a small business owner.

Correct Answer
verified

Correct Answer
verified

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.

Correct Answer
verified

When a firm experiences diseconomies of scale,

Correct Answer
verified

Total revenue minus only implicit costs is called

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

Correct Answer
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A total-cost curve shows the relationship between the

Correct Answer
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Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

Correct Answer
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Correct Answer
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Exam 12: The Costs of Production

Correct AnswerverifiedAverage fixed cost always decl...View AnswerShow Answer

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Correct AnswerverifiedShow Answer

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Correct AnswerverifiedShow Answer

Diseconomies of scale occur when a firm's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How can the average-fixed-cost curve be declining when fixed cost is constant?

Correct AnswerverifiedAlthough fixed cost is unchang...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Profit is defined as

Correct AnswerverifiedShow Answer

Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Correct AnswerverifiedShow Answer

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Correct AnswerverifiedShow Answer

Economists and accountants both include forgone income as a cost to a small business owner.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.

Correct AnswerverifiedShow Answer

When a firm experiences diseconomies of scale,

Correct AnswerverifiedShow Answer

Total revenue minus only implicit costs is called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A total-cost curve shows the relationship between the

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
Average fixed cost always decl...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Although fixed cost is unchang...
View Answer

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