Question 1

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 2

When a factory is operating in the short run,

Accepted Answer

A)   it cannot alter variable costs.
B)   total cost and variable cost are usually the same.
C)   average fixed cost rises as output increases.
D)   it cannot adjust the quantity of fixed inputs.E) None of the above
F) All of the above

Question 3

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 4

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business.To invest in his painting business,he withdrew $20,000 from his savings,which paid 3 percent interest,and borrowed $30,000 from his uncle,whom he pays 3 percent interest per year.Last year Walter paid $25,000 for supplies and had revenue of $60,000.Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs.

Accepted Answer

A)   Tyler says his costs are $25,900,and Greg says his costs are $66,500.
B)   Tyler says his costs are $25,000,and Greg says his costs are $65,000.
C)   Tyler says his costs are $66,500,and Greg says his costs are $66,500.
D)   Tyler says his costs are $75,000,and Greg says his costs are $41,500.E) All of the above
F) A) and B)

Question 5

A student might describe information about the costs of production as

Accepted Answer

A)   exciting and fresh.
B)   unimportant for understanding market structure.
C)   dry and technical.
D)   vibrant and enthralling.E) B) and C)
F) None of the above

Question 6

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) B) and D)
F) B) and C)

Question 7

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

Question 8

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.E) B) and D)
F) A) and D)

Question 9

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.Which of the following statements is correct?

Accepted Answer

A)   Bev's total explicit costs are $25,300.
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 $4,700.E) All of the above
F) C) and D)

Question 10

In the short run,a firm that produces and sells cell phones can adjust

Accepted Answer

A)   how many workers to hire.
B)   the size of its factories.
C)   where to produce along its long-run average-total-cost curve.
D)   All of the above are correct.E) All of the above
F) A) and C)

Question 11

Table 13-1
 
-Refer to Table 13-1.What is total output when 1 worker is hired?

Accepted Answer

A)   30
B)   40
C)   120
D)   160E) B) and C)
F) A) and D)

Question 12

When a firm is experiencing diseconomies of scale,long-run

Accepted Answer

A)   average total cost is minimized.
B)   average total cost is greater than long-run marginal cost.
C)   average total cost is less than long-run marginal cost.
D)   marginal cost is minimized.E) None of the above
F) B) and C)

Question 13

Profit is defined as total revenue

Accepted Answer

A)   plus total cost.
B)   times total cost.
C)   minus total cost.
D)   divided by total cost.E) A) and B)
F) A) and C)

Question 14

For a typical firm,fixed costs increase in direct proportion to the increases in output.

Accepted Answer

A) True 
 B)False

Question 15

Table 13-1
 
-Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its average-variable-cost curve is

Accepted Answer

A)   constant.
B)   decreasing.
C)   increasing.
D)   U-shaped.E) All of the above
F) A) and B)

Question 16

The cost of producing the typical unit of output is the firm's

Accepted Answer

A)   average total cost.
B)   opportunity cost.
C)   variable cost.
D)   marginal cost.E) B) and D)
F) B) and C)

Question 17

A certain firm produces and sells potato chips.Last year it sold 3 million bags of chips at a price of $3 per bag.For last year,the firm's

Accepted Answer

A)   accounting profit was $9 million.
B)   economic profit was $9 million.
C)   total revenue was $9 million.
D)   explicit costs was $9 million.E) A) and B)
F) B) and D)

Question 18

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) .Johnny's cumulative GPA will fall even further next semester if he performs worse than 
(i) His cumulative GPA.
(ii) He ever performed before.
(iii) He did last semester.

Accepted Answer

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

Question 19

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 20

Diminishing marginal product suggests that

Accepted Answer

A)   additional units of output become less costly as more output is produced.
B)   marginal cost is upward sloping.
C)   the firm is at full capacity.
D)   adding additional workers will lower total cost.E) C) and D)
F) A) and B)

Exam 13: The Costs of Production

A certain firm produces and sells potato chips.Last year it sold 3 million bags of chips at a price of $3 per bag.For last year,the firm's

Correct Answer
verified

When a firm is experiencing diseconomies of scale,long-run

Correct Answer
verified

In the short run,a firm that produces and sells cell phones can adjust

Correct Answer
verified

Profit is defined as total revenue

Correct Answer
verified

A production function describes

Correct Answer
verified

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

Correct Answer
verified

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Correct Answer
verified

A student might describe information about the costs of production as

Correct Answer
verified

The cost of producing the typical unit of output is the firm's

Correct Answer
verified

Table 13-1 -Refer to Table 13-1.What is total output when 1 worker is hired?

Correct Answer
verified

Variable costs usually change as the firm alters the quantity of output produced.

Correct Answer
verified

Correct Answer
verified

Table 13-1 -Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its average-variable-cost curve is

Correct Answer
verified

Diminishing marginal product suggests that

Correct Answer
verified

Correct Answer
verified

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Correct Answer
verified

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

For a typical firm,fixed costs increase in direct proportion to the increases in output.

Correct Answer
verified

When a factory is operating in the short run,

Correct Answer
verified

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) .Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) His cumulative GPA. (ii) He ever performed before. (iii) He did last semester.

Correct Answer
verified

Exam 13: The Costs of Production

A certain firm produces and sells potato chips.Last year it sold 3 million bags of chips at a price of $3 per bag.For last year,the firm's

Correct AnswerverifiedShow Answer

When a firm is experiencing diseconomies of scale,long-run

Correct AnswerverifiedShow Answer

In the short run,a firm that produces and sells cell phones can adjust

Correct AnswerverifiedShow Answer

Profit is defined as total revenue

Correct AnswerverifiedShow Answer

A production function describes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.

Correct AnswerverifiedShow Answer

A student might describe information about the costs of production as

Correct AnswerverifiedShow Answer

The cost of producing the typical unit of output is the firm's

Correct AnswerverifiedShow Answer

Table 13-1 -Refer to Table 13-1.What is total output when 1 worker is hired?

Correct AnswerverifiedShow Answer

Variable costs usually change as the firm alters the quantity of output produced.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 13-1 -Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its average-variable-cost curve is

Correct AnswerverifiedShow Answer

Diminishing marginal product suggests that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

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

For a typical firm,fixed costs increase in direct proportion to the increases in output.

Correct AnswerverifiedShow Answer

When a factory is operating in the short run,

Correct AnswerverifiedShow Answer

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) .Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) His cumulative GPA. (ii) He ever performed before. (iii) He did last semester.

Correct AnswerverifiedShow Answer

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