Question 1

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's implicit cost of capital is

Accepted Answer

A)   $2,000.
B)   $4,000.
C)   $12,000.
D)   $14,000.E) C) and D)
F) All of the above

Question 2

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Accepted Answer

A)   gets flatter as output increases.
B)   gets steeper as output increases.
C)   is constant for all ranges of output.
D)   is unrelated to the production function.E) All of the above
F) B) and C)

Question 3

What might cause economies of scale?

Accepted Answer

specializa...

Question 4

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A)   The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
B)   The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers.
C)   The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers.
D)   Any of the above could be correct.E) B) and D)
F) All of the above

Question 5

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

Accepted Answer

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

Question 6

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

Accepted Answer

A) True 
 B)False

Question 7

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) All of the above
F) B) and C)

Question 8

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   negative profits.E) A) and B)
F) None of the above

Question 9

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

Accepted Answer

A)   $60
B)   $280
C)   $340
D)   $660E) A) and C)
F) A) and B)

Question 10

Table 13-17
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Accepted Answer

A)   Firm 1
B)   Firm 2
C)   Firm 3
D)   Firm 4E) All of the above
F) C) and D)

Question 11

The marginal product of any input is the

Accepted Answer

A)   increase in total cost associated with a one-unit increase in production.
B)   change in total output associated with a $1.00 increase in total cost.
C)   increase in total cost resulting from the hiring of an additional worker.
D)   increase in total output obtained from one additional unit of that input.E) B) and C)
F) A) and B)

Question 12

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

Accepted Answer

A)   10 units.
B)   60 units.
C)   230 units.
D)   240 units.E) C) and D)
F) B) and D)

Question 13

Table 13-19
 
-Refer to Table 13-19. What is the shape of the marginal-cost curve?

Accepted Answer

MC = change in TC/change in Q, so althou...

Question 14

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 Ellie's accountant, which of the following revenue totals will yield her business $50,000 in profits?

Accepted Answer

A)   $55,200
B)   $105,200
C)   $132,500
D)   $185,700E) None of the above
F) C) and D)

Question 15

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. Ellie's annual accounting costs will equal

Accepted Answer

A)   $55,200.
B)   $75,200.
C)   $80,500.
D)   $165,700.E) B) and D)
F) A) and C)

Question 16

The things that must be forgone to acquire a good are called

Accepted Answer

A)   implicit costs.
B)   opportunity costs.
C)   explicit costs.
D)   accounting costs.E) B) and C)
F) A) and D)

Question 17

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A)   wages Patrice could earn giving tennis lessons
B)   dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency
C)   the cost of utilities for operating the storefront
D)   Both b and c are correct.E) A) and B)
F) All of the above

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) A) and D)
F) A) and C)

Question 19

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Accepted Answer

ATC = AVC + AFC, so the vertical distanc...

Question 20

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Accepted Answer

A)   slope downward.
B)   be horizontal.
C)   slope upward.
D)   slope downward for low output levels and upward for high output levels.E) All of the above
F) C) and D)

Exam 12: The Costs of Production

What might cause economies of scale?

Correct Answer
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specializa...
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Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Correct Answer
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Economic profit is equal to total revenue minus the

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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On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Correct Answer
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Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct Answer
verified

Correct Answer
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If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Correct Answer
verified

Correct Answer
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The marginal product of any input is the

Correct Answer
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Correct Answer
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The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

Correct Answer
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Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Correct Answer
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MC = change in TC/change in Q, so althou...
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Table 13-2 -Refer to Table 13-2. What is the marginal product of the fourth worker?

Correct Answer
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Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

Correct Answer
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David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Correct Answer
verified

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Correct Answer
verified
ATC = AVC + AFC, so the vertical distanc...
View Answer

The things that must be forgone to acquire a good are called

Correct Answer
verified

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

Correct Answer
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Exam 12: The Costs of Production

What might cause economies of scale?

Correct Answerverifiedspecializa...View AnswerShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Correct AnswerverifiedShow Answer

Economic profit is equal to total revenue minus the

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

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Correct AnswerverifiedShow Answer

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal product of any input is the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Correct AnswerverifiedMC = change in TC/change in Q, so althou...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester, his GPA may or may not fall.

Correct AnswerverifiedShow Answer

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Correct AnswerverifiedShow Answer

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Correct AnswerverifiedATC = AVC + AFC, so the vertical distanc...View AnswerShow Answer

The things that must be forgone to acquire a good are called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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specializa...
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MC = change in TC/change in Q, so althou...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
ATC = AVC + AFC, so the vertical distanc...
View Answer

Correct Answer
verified

Correct Answer
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