Question 1

A student might describe information about the costs of production as

Accepted Answer

A)   dry and technical.
B)   boring.
C)   crucial to understanding firms and market structures.
D)   All of the above could be correct.E) A) and C)
F) C) and D)

Question 2

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Accepted Answer

A) True 
 B)False

Question 3

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
 
-Refer to Figure 13-9.At levels of output less than M,the firm experiences

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   both diminishing marginal productivity and coordination problems.E) All of the above
F) None of the above

Question 5

Figure 13-5
 
-Refer to Figure 13-5.Which curve is most likely to represent average total cost?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) A) and B)

Question 6

Accounting profit is greater than or equal to economic profit.

Accepted Answer

A) True 
 B)False

Question 7

An example of an explicit cost would be the wages that a business owner pays her employees.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   $40
B)   $140
C)   $360
D)   $410E) A) and B)
F) All of the above

Question 9

If a production function shows declining marginal product of an input as the quantity of the input increases,then the production function exhibits

Accepted Answer

A)   diminishing profitability.
B)   increasing returns to scale.
C)   increasing marginal product.
D)   decreasing marginal product.E) A) and C)
F) B) and C)

Question 10

Which of the following statements is correct?

Accepted Answer

A)   Opportunity costs equal explicit minus implicit costs.
B)   Economists consider opportunity costs to be included in a firm's total revenues.
C)   Economists consider opportunity costs to be included in a firm's costs of production.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 11

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 C)
F) A) and B)

Question 12

Table 13-3
 
-Refer to Table 13-3.The marginal product of the third worker is

Accepted Answer

A)   230 units.
B)   100 units.
C)   77 units.
D)   60 units.E) All of the above
F) B) and C)

Question 13

As a firm moves along its long-run average cost curve,it is adjusting the size of its factory to the quantity of production.

Accepted Answer

A) True 
 B)False

Question 14

Marginal cost increases as the quantity of output increases.This reflects the property of

Accepted Answer

A)   increasing total cost.
B)   diminishing total cost.
C)   increasing marginal product.
D)   diminishing marginal product.E) A) and D)
F) A) and C)

Question 15

Figure 13-1
 
-Refer to Figure 13-1.Which of the following could explain why the total product curve would shift from TP1 to TP2?

Accepted Answer

A)   There is less capital equipment available to the firm.
B)   Labor skills have become rusty and outdated in the firm.
C)   The firm has developed improved production technology.
D)   The firm is now receiving a higher price for its product.E) None of the above
F) All of the above

Question 16

Table 13-10
Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs.
 
-Refer to Table 13-10.Eileen has received an order for 3,000 boxes of earrings for next week.If she expects that the trend in the marginal product of labor will continue in the same direction,it is most likely that her best decision will be to

Accepted Answer

A)   not commit to meeting the order until she can move to a larger room and hire more workers to produce the earrings.
B)   close her business until she is able to hire more productive workers.
C)   hire about 12 new workers and hope she can satisfy the order.
D)   commit to meeting the order and then take three weeks to complete the job.E) None of the above
F) C) and D)

Question 17

In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   efficient scale.E) B) and C)
F) A) and C)

Question 18

Economic profit is equal to total revenue minus the

Accepted Answer

A)   explicit cost of producing goods and services.
B)   opportunity cost of producing goods and services.
C)   accounting cost of producing goods and services.
D)   implicit cost of producing goods and services.E) None of the above
F) A) and B)

Question 19

Suppose that for a particular business there are no implicit costs.Then

Accepted Answer

A)   accounting profit will be greater than economic profit.
B)   accounting profit will be the same as economic profit.
C)   accounting profit will be less than economic profit.
D)   the relationship between accounting profit and economic profit cannot be determined without more information.E) B) and D)
F) All of the above

Question 20

In the long run,a factory is usually considered a fixed input.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production.

In the long run,a factory is usually considered a fixed input.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Table 13-3 -Refer to Table 13-3.The marginal product of the third worker is

Correct Answer
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Marginal cost increases as the quantity of output increases.This reflects the property of

Correct Answer
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The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct Answer
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Economic profit is equal to total revenue minus the

Correct Answer
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Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Correct Answer
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Figure 13-1 -Refer to Figure 13-1.Which of the following could explain why the total product curve would shift from TP1 to TP2?

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.At levels of output less than M,the firm experiences

Correct Answer
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As a firm moves along its long-run average cost curve,it is adjusting the size of its factory to the quantity of production.

Correct Answer
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If a production function shows declining marginal product of an input as the quantity of the input increases,then the production function exhibits

Correct Answer
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A student might describe information about the costs of production as

Correct Answer
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An example of an explicit cost would be the wages that a business owner pays her employees.

Correct Answer
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In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Correct Answer
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Accounting profit is greater than or equal to economic profit.

Correct Answer
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Figure 13-5 -Refer to Figure 13-5.Which curve is most likely to represent average total cost?

Correct Answer
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Correct Answer
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Suppose that for a particular business there are no implicit costs.Then

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

Correct Answer
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Exam 13: The Costs of Production.

In the long run,a factory is usually considered a fixed input.

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Which of the following statements is correct?

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Table 13-3 -Refer to Table 13-3.The marginal product of the third worker is

Correct AnswerverifiedShow Answer

Marginal cost increases as the quantity of output increases.This reflects the property of

Correct AnswerverifiedShow Answer

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct AnswerverifiedShow Answer

Economic profit is equal to total revenue minus the

Correct AnswerverifiedShow Answer

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Correct AnswerverifiedShow Answer

Figure 13-1 -Refer to Figure 13-1.Which of the following could explain why the total product curve would shift from TP1 to TP2?

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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.At levels of output less than M,the firm experiences

Correct AnswerverifiedShow Answer

As a firm moves along its long-run average cost curve,it is adjusting the size of its factory to the quantity of production.

Correct AnswerverifiedShow Answer

If a production function shows declining marginal product of an input as the quantity of the input increases,then the production function exhibits

Correct AnswerverifiedShow Answer

A student might describe information about the costs of production as

Correct AnswerverifiedShow Answer

An example of an explicit cost would be the wages that a business owner pays her employees.

Correct AnswerverifiedShow Answer

In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Correct AnswerverifiedShow Answer

Accounting profit is greater than or equal to economic profit.

Correct AnswerverifiedShow Answer

Figure 13-5 -Refer to Figure 13-5.Which curve is most likely to represent average total cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that for a particular business there are no implicit costs.Then

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

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