Question 1

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 2

A firm that wants to achieve economies of scale could do so by

Accepted Answer

A)   assigning limited tasks to its employees,so they can master those tasks.
B)   employing a smaller number of workers.
C)   producing a smaller quantity of output.
D)   producing an output level higher than the efficient scale.E) A) and B)
F) A) and C)

Question 3

Table 13-15
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 13-13.Which firm has constant returns to scale over the entire range of output?

Accepted Answer

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

Question 4

Describe the relationship between average variable cost and marginal cost.

Accepted Answer

If marginal cost (MC)is greater than ave...

Question 5

Economic profit

Accepted Answer

A)   will never exceed accounting profit.
B)   is most often equal to accounting profit.
C)   is always at least as large as accounting profit.
D)   is a less complete measure of profitability than accounting profit.E) A) and C)
F) C) and D)

Question 6

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

Accepted Answer

A)   250 units
B)   200 units
C)   150 units
D)   50 unitsE) A) and B)
F) A) and C)

Question 7

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes) .The firm's total cost is

Accepted Answer

A)   $100.
B)   $200.
C)   $300.
D)   $500.E) All of the above
F) A) and D)

Question 8

In the long run,a firm that produces and sells electronic book readers gets to choose

Accepted Answer

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

Question 9

Figure 13-5 
-Refer to Figure 13-5.Curve D represents which type of cost curve?

Accepted Answer

A)   marginal cost
B)   average total cost
C)   average variable cost
D)   average fixed costE) B) and C)
F) All of the above

Question 10

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   diseconomies of scale because average total cost is rising as output rises.
C)   economies of scale because total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) A) and B)
F) B) and C)

Question 11

The difference between accounting profit and economic profit is

Accepted Answer

A)   explicit costs.
B)   implicit costs.
C)   total revenue.
D)   marginal product.E) A) and D)
F) B) and D)

Question 12

Table 13-12
Betty's Bakery
 
-Refer to Table 13-12.What is the variable cost of producing 5 cakes at Betty's Bakery?

Accepted Answer

A)   $64
B)   $85
C)   $90
D)   $100E) A) and B)
F) All of the above

Question 13

Suppose that a firm has only one variable input,labor,and firm output is zero when labor is zero.When the firm hires 6 workers the firm produces 90 units of output.Fixed costs of production are $6 and the variable cost per unit of labor is $10.The marginal product of the seventh unit of labor is 4.Given this information,what is the marginal cost of production when the firm hires the 7th worker?

Accepted Answer

A)   $1.50
B)   $2.50
C)   $5
D)   $10E) A) and D)
F) None of the above

Question 14

Figure 13-5 
-Refer to Figure 13-5.Curve D intersects curve C

Accepted Answer

A)   where the firm maximizes profit.
B)   at the minimum of average fixed cost.
C)   at the efficient scale.
D)   where fixed costs equal variable costs.E) B) and C)
F) C) and D)

Question 15

When average cost is greater than marginal cost,marginal cost must be

Accepted Answer

A)   rising.
B)   falling.
C)   constant.
D)   The direction of change in marginal cost cannot be determined from this information.E) B) and D)
F) B) and C)

Question 16

Economies of scale occur when

Accepted Answer

A)   long-run average total costs rise as output increases.
B)   long-run average total costs fall as output increases.
C)   average fixed costs are falling.
D)   average fixed costs are constant.E) B) and D)
F) A) and C)

Question 17

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Accepted Answer

A)   accounting profit was $20 million.
B)   economic profit was $20 million.
C)   total revenue was $20 million.
D)   explicit costs was $20 million.E) A) and D)
F) B) and C)

Question 18

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Accepted Answer

A)   both labor and capital to be fixed.
B)   both labor and capital to be variable.
C)   labor to be variable and capital to be fixed.
D)   capital to be variable and labor to be fixed.E) A) and C)
F) All of the above

Question 19

If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

Accepted Answer

When average total cost curve ...

Question 20

The average-fixed-cost curve

Accepted Answer

A)   is constant.
B)   is always decreasing.
C)   intersects marginal cost at the minimum of average fixed cost.
D)   intersects marginal cost at the minimum of marginal cost.E) A) and B)
F) A) and C)

Exam 13: The Costs of Production

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Correct Answer
verified

A firm that wants to achieve economies of scale could do so by

Correct Answer
verified

The average-fixed-cost curve

Correct Answer
verified

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

Correct Answer
verified

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes) .The firm's total cost is

Correct Answer
verified

Economies of scale occur when

Correct Answer
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If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

Correct Answer
verified
When average total cost curve ...
View Answer

When average cost is greater than marginal cost,marginal cost must be

Correct Answer
verified

The difference between accounting profit and economic profit is

Correct Answer
verified

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm has constant returns to scale over the entire range of output?

Correct Answer
verified

In the long run,a firm that produces and sells electronic book readers gets to choose

Correct Answer
verified

Economic profit

Correct Answer
verified

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Correct Answer
verified

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the variable cost of producing 5 cakes at Betty's Bakery?

Correct Answer
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Figure 13-5 -Refer to Figure 13-5.Curve D intersects curve C

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

Correct Answer
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Figure 13-5 -Refer to Figure 13-5.Curve D represents which type of cost curve?

Correct Answer
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Describe the relationship between average variable cost and marginal cost.

Correct Answer
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If marginal cost (MC)is greater than ave...
View Answer

Correct Answer
verified

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct Answer
verified

Exam 13: The Costs of Production

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Correct AnswerverifiedShow Answer

A firm that wants to achieve economies of scale could do so by

Correct AnswerverifiedShow Answer

The average-fixed-cost curve

Correct AnswerverifiedShow Answer

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

Correct AnswerverifiedShow Answer

Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes) .The firm's total cost is

Correct AnswerverifiedShow Answer

Economies of scale occur when

Correct AnswerverifiedShow Answer

If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

Correct AnswerverifiedWhen average total cost curve ...View AnswerShow Answer

When average cost is greater than marginal cost,marginal cost must be

Correct AnswerverifiedShow Answer

The difference between accounting profit and economic profit is

Correct AnswerverifiedShow Answer

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm has constant returns to scale over the entire range of output?

Correct AnswerverifiedShow Answer

In the long run,a firm that produces and sells electronic book readers gets to choose

Correct AnswerverifiedShow Answer

Economic profit

Correct AnswerverifiedShow Answer

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Correct AnswerverifiedShow Answer

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the variable cost of producing 5 cakes at Betty's Bakery?

Correct AnswerverifiedShow Answer

Figure 13-5 -Refer to Figure 13-5.Curve D intersects curve C

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

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Figure 13-5 -Refer to Figure 13-5.Curve D represents which type of cost curve?

Correct AnswerverifiedShow Answer

Describe the relationship between average variable cost and marginal cost.

Correct AnswerverifiedIf marginal cost (MC)is greater than ave...View AnswerShow Answer

Correct AnswerverifiedShow Answer

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct AnswerverifiedShow Answer

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When average total cost curve ...
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If marginal cost (MC)is greater than ave...
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