Question 1

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants one bag of seeds, he gets 30 watermelons. If he plants two bags of seeds, he gets 50 watermelons. If he plants three bags of seeds he gets 60 watermelons. A bag of seeds costs $100 and seeds are his only costs.
-Harry's Hotdogs is a small street vendor business owned by Harry Huggins. If Harry makes 10 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)   $1.65
B)   $6.50
C)   this is impossible to determine without specific information on fixed cost
D)   this is impossible to determine without specific information on variable costE) B) and D)
F) A) and B)

Question 2

Graph 13-5
  The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) .
-When a factory is operating in the short run:

Accepted Answer

A)   total cost and variable cost are usually the same
B)   average fixed cost rises as output increases
C)   it cannot adjust the quantity of fixed inputs
D)   it cannot alter variable costsE) All of the above
F) A) and B)

Question 3

Graph 13-6
 A B)  ATCB C)  ATCC D)  any of the above" class="answers-bank-image d-inline" rel="preload" > This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-6. 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)   any of the aboveE) B) and D)
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The amount of money that a firm pays to buy inputs is called:

Accepted Answer

A)   variable cost
B)   marginal cost
C)   fixed cost
D)   total costE) B) and C)
F) A) and B)

Question 6

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Accepted Answer

A)   variable cost
B)   total cost
C)   average cost
D)   all of the aboveE) All of the above
F) A) and B)

Question 7

Which of the following describes the marginal product of labour?

Accepted Answer

A)   the increase in labour necessary to generate a one-unit increase in output
B)   the increase in output obtained from a one-unit increase in labour
C)   the additional profit created with a one-unit increase in labour
D)   the additional cost created with a one-unit increase in labourE) B) and D)
F) C) and D)

Question 8

Accountants keep track of the money that flows into and out of firms.

Accepted Answer

A) True 
 B)False

Question 9

Amy owns a photography business. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A)   the bank interest payments on her savings before she used them to buy her cameras and lenses
B)   the cost of developing her film
C)   the salary Amy was previously earning as a teacher
D)   all of the aboveE) A) and B)
F) None of the above

Question 10

Graph 13-5
  The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) .
-Refer to Graph 13-5. This particular firm is necessarily experiencing diminishing marginal product when which of the following is occurring? (i)  line A is rising
(ii)  line B is rising
(iii)  line C is rising

Accepted Answer

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

Question 11

Accounting profit is equal to which of the following? (i)  economic profit + implicit costs
(ii)  total revenue - implicit costs
(iii)  total revenue - opportunity costs

Accepted Answer

A)   (iii)  only
B)   (i)  and (ii) 
C)   (i)  only
D)   none of the aboveE) B) and D)
F) A) and B)

Question 12

Graph 13-6
 A B)  ATCB C)  ATCC D)  ATCD" class="answers-bank-image d-inline" rel="preload" > This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-6. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory?

Accepted Answer

A)   ATCA
B)   ATCB
C)   ATCC
D)   ATCDE) B) and C)
F) A) and D)

Question 13

At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost:

Accepted Answer

A)   falls
B)   rises
C)   remains unaffected
D)   all of the above are possible; it depends on the shape of the marginal cost curveE) All of the above
F) None of the above

Question 14

Amy runs a successful wedding photography business. Examples of her variable costs include:

Accepted Answer

A)   the cost of developing her film
B)   the cost of buying a camera for her work
C)   the cost of hiring a graphic designer to design a business card.
D)   all of the aboveE) B) and D)
F) A) and C)

Question 15

Table 13-2
Adrienne's Premium Boxing Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail order catalogue business. Adrienne 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. Costs are in dollars per week.
 
-Refer to Table 13-2. What is the total cost associated with making 890 boxes of premium chocolates per week?

Accepted Answer

A)   $975
B)   $1100
C)   $1250
D)   $1375E) A) and C)
F) B) and D)

Question 16

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants one bag of seeds, he gets 30 watermelons. If he plants two bags of seeds, he gets 50 watermelons. If he plants three bags of seeds he gets 60 watermelons. A bag of seeds costs $100 and seeds are his only costs.
-According to the information provided, which of the following statements is(are)  true of Jack's marginal cost? (i)  his marginal cost curve is U-shaped
(ii)  his marginal cost increases with increased watermelon output
(iii)  his marginal cost reflects diminishing marginal product

Accepted Answer

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

Question 17

Variable costs equal fixed costs when nothing is produced.

Accepted Answer

A) True 
 B)False

Question 18

Average total cost necessarily rises due to which of the following? (i)  rising marginal cost
(ii)  increasing marginal product
(iii)  decreasing marginal cost

Accepted Answer

A)   (i)  only
B)   (i)  and (ii) 
C)   (ii)  only
D)   none of the aboveE) B) and C)
F) A) and D)

Question 19

The firm's total cost can be used to determine both the firm's average total cost and its marginal cost.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

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

Correct Answer
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Accountants keep track of the money that flows into and out of firms.

Correct Answer
verified

Graph 13-5 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -When a factory is operating in the short run:

Correct Answer
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Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-6. In the long run, the firm can operate on which of the following average total cost curves?

Correct Answer
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Average total cost necessarily rises due to which of the following? (i) rising marginal cost (ii) increasing marginal product (iii) decreasing marginal cost

Correct Answer
verified

Correct Answer
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The firm's total cost can be used to determine both the firm's average total cost and its marginal cost.

Correct Answer
verified

Amy runs a successful wedding photography business. Examples of her variable costs include:

Correct Answer
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Which of the following describes the marginal product of labour?

Correct Answer
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Amy owns a photography business. Her accountant most likely includes which of the following costs on her financial statements?

Correct Answer
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Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-6. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory?

Correct Answer
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The amount of money that a firm pays to buy inputs is called:

Correct Answer
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Accounting profit is equal to which of the following? (i) economic profit + implicit costs (ii) total revenue - implicit costs (iii) total revenue - opportunity costs

Correct Answer
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At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost:

Correct Answer
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If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Correct Answer
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Variable costs equal fixed costs when nothing is produced.

Correct Answer
verified

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

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

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

Correct AnswerverifiedShow Answer

Accountants keep track of the money that flows into and out of firms.

Correct AnswerverifiedShow Answer

Graph 13-5 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -When a factory is operating in the short run:

Correct AnswerverifiedShow Answer

Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-6. In the long run, the firm can operate on which of the following average total cost curves?

Correct AnswerverifiedShow Answer

Average total cost necessarily rises due to which of the following? (i) rising marginal cost (ii) increasing marginal product (iii) decreasing marginal cost

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The firm's total cost can be used to determine both the firm's average total cost and its marginal cost.

Correct AnswerverifiedShow Answer

Amy runs a successful wedding photography business. Examples of her variable costs include:

Correct AnswerverifiedShow Answer

Which of the following describes the marginal product of labour?

Correct AnswerverifiedShow Answer

Amy owns a photography business. Her accountant most likely includes which of the following costs on her financial statements?

Correct AnswerverifiedShow Answer

Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-6. Which of the curves is most likely to characterise the short-run average total cost curve of the biggest factory?

Correct AnswerverifiedShow Answer

The amount of money that a firm pays to buy inputs is called:

Correct AnswerverifiedShow Answer

Accounting profit is equal to which of the following? (i) economic profit + implicit costs (ii) total revenue - implicit costs (iii) total revenue - opportunity costs

Correct AnswerverifiedShow Answer

At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost:

Correct AnswerverifiedShow Answer

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Correct AnswerverifiedShow Answer

Variable costs equal fixed costs when nothing is produced.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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